UN SDG — A Guidance for boards (1)
We are on track to face a world soon to be populated with disillusioned, angry, hungry and desperate people, a surefire formula for social upheaval. COVID-19 could very well be the spark that will fast-track us to this nightmarish scenario
During the case discussion I facilitated recently for the Institute of Corporate Directors on policy-setting for corporate boards, I started the session with an overview of the United Nations Sustainable Development Goals (UN SDG) in order to provide hopefully a clearer understanding of what “looking after stakeholders’ interests and not just stockholders” mean in the context of corporate governance. Why did I do this? Well, stockholders are easy to understand, but stakeholders? Who in fact are the corporation’s stakeholders, and how should a business enterprise look after their interests?
Corporate governance defines stakeholders as the greater community an enterprise is interacting with, which includes employees, customers, suppliers, financial institutions, regulators, the public and government. Other than providing a return to its stockholders, a board would also have to clearly define what the company’s stakeholders’ interests are. In 2015, the UN embarked on an ambitious goal to create by 2030 an almost utopian world where there is no poverty, nations are at peace with each other, people are prosperous, and all are united to ensure the health of Planet Earth. The UN SDG agenda provides all UN member-nations and its peoples a framework of several sustainable development goals that seek to transform the world’s economic, financial and political systems of our society to ensure that dignity and human rights of all are upheld and that Mother Earth shall continue to sustain life as we know it. What better way then to guide corporate boards than to be one with the UN SDG goals?
Five years have now elapsed since the call for transformation of our world was made. With 10 more years to go until 2030 and now that we are in the midst of a pandemic, how has the world fared so far? In this regard, I would like to share some salient portions of the September 2020 report of UN Secretary General Antonio Guterres that reviews the progress, or lack of it, in attaining the UN SDG by 2030: the goal to end extreme poverty (defined as living on less $1.25 per day) in all its forms everywhere.
Where are we? Poverty reduction was happening although already trending off track before COVID-19. Poverty decreased by 10 percent in 2015, 8.2 percent in 2019 and was expected to end at a six percent target shortfall by 2030 with young workers twice as likely to be in extreme poverty as adult workers. In 2016, four billion people did not have any form of social protection from governments. In 2018, natural disasters exacerbated poverty with $23.6 billion in direct economic losses in 63 countries. As of the first half of 2020, COVID-19 reversed the pace of poverty reduction by registering the first increase in extreme poverty in decades, a jump of 71 million people. With vaccines expected to be widely available only by about the end of 2021, nobody can really predict what the ramifications on poverty will be, except that it will certainly exponentially increase.
What does this mean? We are on track to face a world soon to be populated with disillusioned, angry, hungry and desperate people, a surefire formula for social upheaval. COVID-19 could very well be the spark that will fast-track us to this nightmarish scenario. Governments, business enterprises, as well as all of us in our own personal way, need to step up and help people in need in any way we can.
The goal is to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
Where are we? COVID-19 has thrown a monkey wrench on the world’s economic growth which pre-COVID-19 was already slowing down, two percent GDP (gross domestic product) per capita growth from 2010 to 2018 and 1.5 percent growth in 2019. UN estimates GDP per capita to decline by 4.2 percent in 2020, the world’s worst economic recession since the great depression. In the second quarter alone, 400 million job losses have been registered and up to 1.6 billion workers are expected to lose their livelihood during the pandemic.
With 10 more years to go until 2030 and now that we are in the midst of a pandemic, how has the world fared so far.
What does this mean? If every worker translates to a family of four people, this means up to about 6.4 billion people out of the estimated 7.8 billion population of the world will be facing economic hardships. It will do well for corporate boards to think long and hard first before deciding on more layoffs. Governments will have to face up to the challenge of the financial and social welfare support that will be needed by the displaced citizenry. Until next week… One big fight! For comments, email bing_matoto@yahoo.com.
(To be continued)