Last week, I had the honor of speaking at the World Investment Forum, organized by the United Nations and hosted at the UN Palais de Nations in Geneva. The central theme for this gathering that brought together government and business leaders from over 150 countries was “Investing in Sustainable Development”. The Sustainable Development Goals, or SDGs as they are known, is a set of 17 proposed goals, which together reflect the UN’s plan for ensuring the world is on a sustainable path by the year 2030 from economic, social, and environmental perspectives. The proposal covers areas such as poverty, hunger, health, education, sustainable cities, and combating climate change. The goals are ambitious, noble — and expensive. $5 to $7 trillion USD of investment per year is required if these goals are to be met, $3.3 to $4.5 trillion of which must flow into developing countries. The problem, however, is that the UN estimates a $2.5 trillion annual gap that the public sector cannot fill. It is the private sector that is being called upon in action and investment to help make the SDGs a reality.
One of the issues when it comes to past calls for support from the private sector on sustainable investments is that it has been a plea too often made on the grounds of social responsibility; an appeal to doing the right thing. While it is hard to disagree with these perspectives – we should, after all, strive to do the right thing and be socially responsible, whether as individuals or organizations – the approach fails to take into consideration the priorities and objectives of the private sector. I believe it is helpful to look at the private sector the way the private sector looks at its customers. Rather than resort to exhortations, think of the private sector as the customer and focus on the value proposition. The goal should be to deliver a crystal clear understanding of tangible value to be gained by the private sector from investing in sustainable development. After all, the easiest way to get a corporation to do something is to convince it that doing so will yield a good return on the investment.
At SAP, we have a broad portfolio of investments into sustainability, both internal and external. These investments have gained us recognition such as being named the Most Sustainable Company in our sector by the Dow Jones Sustainability Index for eight years running and among the top 100 most sustainable companies globally for the last ten years. Most importantly, we are able to realize tangible value from each of these investments. For example, at the World Investment Forum, His Royal Highness, Prince Charles called upon companies to embrace integrated reporting. This is something SAP is familiar with. Our annual report looks at our performance with a triple bottom line that includes not only financial metrics, but also our social and environmental impact. This is further supported by our Sustainability Dashboard, which enables us to measure our performance across the entire company on dimensions such as CO2 emissions, waste, and women in management, to name a few. The effort to improve results is supported by a network of 100 “sustainability champions” around the world that drive awareness and develop new regional programs. This has supported a variety of corporate initiatives such as running all of our facilities on renewable electricity, launching corporate ride-sharing programs and apps, and introducing incentives to increase electric vehicle adoption in our corporate fleet.
Do we benefit from this beyond generating goodwill and reputation? Of course. Monitoring our carbon emissions helps us improve our operations and reduce our total energy expenses. Cost avoidance leads to margin expansion. Increased workforce diversity leads to higher customer satisfaction, productivity, and profitability. Involving our people in creating new sustainability programs drives employee engagement, development, and retention. And from a stock price standpoint, it’s worth noting that a growing proportion of our institutional investors formally classify themselves as sustainable and responsible investors.
The topic of education and knowledge transfer was prevalent at the WIF with calls for increased focus on skills training coming from a broad spectrum of voices such as the Prime minister of Tunisia, Mehdi Jomaa, the chairman of Nestle, Peter Brabeck-Letmathe, and the chairman of Mcgraw Hill, Harold McGraw III. Education is a core pillar of SAP’s CSR efforts and manifests itself in partnerships with programs like KIPP (Knowledge is Power Program) and the National Foundation for Teaching Entrepreneurship, but it’s also a critical component of our business development roadmap in emerging markets. Over the next seven years, SAP plans to invest $500 million in support of our growth plan to expand our business in Africa. One of the most critical components of that investment is our Skills for Africa program, which will provide 10,000 students in key African markets with specialized technology skills training. Why are we doing this? Does it help these young people and these nations develop? Of course. But it is also critical to our success.
While Africa directs a higher percentage of its government spending to education than the OECD average (20 percent vs. 11 percent), unemployment is a massive problem with rates ranging from 25 percent in places like South Africa to upwards of 48 percent in Senegal. Part of the reason for that is that education does not directly translate into jobs when it does not provide in-demand skills. One of those skills that are lacking in much of Africa is technology. This is a fundamental inhibitor to our ability as a company to grow this market. By training young people on directly relevant skills, we are helping to develop resources that will help our customers innovate and realize returns on their investments into our products, resources for our partners to grow their businesses, resources that will enable the existence of a healthy ecosystem on which our business so depends. Higher rates of employment in higher paying jobs leads to an expanding middle class and greater prosperity. This is a positive externality and contributes to a virtuous cycle that we directly benefit from as well. We recently completed the first phase of the Skills for Africa program by training 80 young university graduates to be SAP certified professionals in Nairobi, in partnership with the Kenyan ICT Authority. The graduates were matched with a job coming out of the program with one of our customers or partners in the region. That is a truly unique outcome when it comes to training programs and one that only a private sector player like SAP can enable. Public institutions are starting to realize this. One of the leaders in that awareness is the World Bank, with whom we’ve recently signed a cooperation agreement on skills development.
The Honorable Bronwyn Bishop, Australia’s Speaker of the House, noted the overwhelmingly important impact of small businesses and entrepreneurship on economies; A message echoed by the UN Secretary General’s Envoy on Youth and countless others. If there is any one area of social investment at SAP that rivals education, it’s entrepreneurship, and for good reason. One such program is the Emerging Entrepreneur Initiative which has been launched in Brazil and India and will soon launch in Africa. SAP partners with entrepreneurship organizations (Endeavor in Brazil, National Entrepreneur Network in India) to select and support entrepreneurial ventures that are ready to scale, in need of technology to grow, and are driving social impact in their local markets. SAP then provides these entrepreneurs with technology, a mentorship network, and access to impact capital. The benefit to these entrepreneurs and societies is obvious, but since SMEs, entrepreneurship, and the innovations they bring are key growth drivers and job creators, we stand to benefit too. SMEs make up 80 percent of our global customer base. Working with entrepreneurs helps us understand the SME market at a very local level so that we can serve it better and continuously innovate our products to meet their evolving needs. Experimental efforts in partnership with nonprofits to build procurement networks and mobile applications for rural shea nut and cashew farmers in Ghana have given us invaluable insights that can only be gained on the ground. And by deploying our own people into mentorship roles in projects like these, it helps us promote an entrepreneurial mindset within our own company – an important quality as we become a “forty-something” corporation.
SAP also recently launched our global Social Sabbatical program in which we give our top performers the opportunity to join a team of SAP colleagues from around the world to spend one month helping a social business or NGO to solve critical business problems full time. These skill-based volunteers are offered pro-bono as an investment in both our employees and the emerging economies in which SAP operates. The value to these developing market organizations is tremendous, but once again, we stand to benefit as well. SAP is a global company and we need to develop our future generation of global leaders; Leaders with intercultural sensitivity and an ability to operate in diverse teams of people with different backgrounds and perspectives. Programs like these enable us to provide our best talent with invaluable international exposure and learning experiences. Furthermore, today’s young generation, the millennial generation, cares deeply about sustainability. It’s a major factor in deciding which jobs they choose. What better way to enable this generation to express their support for sustainability, than by letting them roll up their sleeves and directly contribute with our help? Doing so allows us to attract and retain the best talent; something that is absolutely critical to sustaining competitive advantage in the technology industry.
The sustainable development challenge is a daunting one, to say the least. Yes, the private sector needs to play a role if we are to meet it. The sooner the private sector understands the benefits to be gained from investing in sustainable development and the more we do to help make that value proposition tangible, clear, and compelling, the more we’ll be able to make the world Run Better, together.
Alexander Meyer is Vice President, Global Business Development at SAP. With over 260,000 customers spanning 180 countries and nearly 70,000 employees, SAP is the global leader in enterprise software technology and innovation.