The United Nations launched 17 Sustainable Development Goals (SDGs) in 2015 which were to be achieved or revisited in 2030. Their main objective is to achieve a better future for all and reduce inequalities in our societies. The inequalities to be addressed include poverty, climate change, dilapidation of environment, substandard or unbearable living conditions for marginalized communities in most societies. These SDGs and the role international business (IB) research and multinational enterprises (MNEs) can play in achieving these goals has yet to receive proper attention from IB researchers (Ghauri, Fu, & Vaatanen, 2018; van Zanten & van Tulder, 2018).
This paper argues that MNEs need to go beyond their mission to create value for their shareholders and embrace creating value for stakeholders in the wider society as it is not only investors and consumers who benefit/suffer from their strategies (Comyns, 2019; Patnaik, 2020). In this paper we analyze whether MNEs can play a role in achieving SDGS or not. What SDGs are dependent on direct participation by MNES? And how can IB research contribute towards this pursuit?
MNEs are often considered as one of the main causes for these inequalities, particularly for marginalizing major parts of the population in developing countries (Kourula, Pisani, & Kolk, 2017). Recently, however, MNEs have been looked upon as a powerful mechanism to resolve these inequalities (Ghauri, Strange, & Cooke, 2021; Wood, Pereira, Temouri, & Wilkinson, 2021). IB researchers have mostly been looking at CSR and ethics for doing business but not at the externalities created by MNEs (Kolk, 2016; Shapiro, Hobdari, & Oh, 2018).
The main contention of this paper is that without MNEs’ participation and commitment, it is not possible to achieve the SDGs. Some earlier studies, in fact prior to the announcement of the SDGs, have proposed that collaboration between businesses, society, and governments is needed to achieve an inclusive and fair society (Boddewyn & Doh, 2011; Hadjikhani, Elg, & Ghauri, 2012; Kolk & Tulder, 2009).
What Role Can MNEs Play?
The quest for sustainable development and a fair society are not new; however, it was never considered a responsibility of MNEs. The SDGs have put things in context and are obligating MNEs and states to rethink their policies and strategies. Researchers in IB are still pondering whether it is the responsibility of MNEs to contribute towards these goals. Many IB scholars are not sure how they can do research in poverty alleviation or inclusive development, as these are not the areas they are used to researching within IB (Shapiro et al., 2018).
IB research has mostly focused on issues around MNE activities in foreign markets and global competitiveness (Buckley & Ghauri, 2004). However, we need to ask: Is it the domain of IB research to uncover the impact of MNE activities on consumers and society or not? What are the externalities MNEs are creating due to their profit maximization activities around the globe? It is only recently that some studies have appeared that relate the SDGs to IB research (Lashitew, 2021; Montiel, Cuervo-Cazurra, Park, Antolín-López, & Husted, 2021).
MNEs need to take responsibility for their full value chain, even if they do not own their suppliers in the developing countries. For at least half of the SDGs, MNEs can play a direct role and for others they can play indirect role (Ghauri et al., 2021). Table 1 lists the SDGs that require the direct involvement of MNEs. The table is not totally inclusive, and it does not imply that MNEs need not to play any role in other SDGs.
It is thus our responsibility as IB researchers to investigate how MNEs can play a positive role in this quest. It is equally important to investigate whether MNEs, in their respective industries, are actively involved in the SDGs, and if not, then why not? It will be useful to unearth the factors that are constraining these firms to get involved and the challenges they face when they want to get involved and how these challenges can be addressed.
Collaboration among Policymakers and MNEs
It is imperative that policymakers also recognize their responsibility in this respect. For example, in the European Union (EU), where policymakers have been proactive and have pressured MNEs to address their pollution, value chain responsibilities, and recycling mechanisms, positive results have emerged. Not only has the overall impact on society been positive, but the competitiveness of the MNEs involved has also increased (Ghauri, Tasavori, & Zaefarian, 2014; Patnaik, 2020; Wood et al., 2021). A combination of MNE actions and regulatory pressures and incentives have thus brought amazingly positive results (Hsueh, 2019). Policy initiatives, such as Net Zero 2030, are having a huge impact. For example, in the automotive industry all major car companies are now switching their production to electric vehicles. So much so that many scholars and industry experts are issuing warnings that when more than 80% of energy generation is still dependent on fossil fuels, would transition to electric vehicles at such a speed have any positive impact or not (BP, 2021; Ghauri et al., 2021).
Clearly a collaboration between state, society, and MNEs is essential. This means that interdisciplinary research is needed to comprehend the interdependence between political, economic, and social systems, especially the role of state, company strategies and social needs to achieve the SDGs (Ghauri, Fu, & Vaatanen, 2018; Wood, 2019).
The Impact of COVID-19 on the SDGs
The outlook for achieving the SDGs by 2030 was looking reasonably good till 2019, particularly in developing countries. This was visible from new investments coming from public and private sectors into the SDG-relevant sectors. This momentum was however disturbed in 2020, due to the COVID-19 pandemic. As a result, the new investments by MNEs and the private sector fell by 33%. Infrastructure projects financed by international organizations fell by 36% (UNCTAD, 2021). Overall, since 2015, new investments in developing countries have shrunk by 20% as compared to pre-2015 levels. Infrastructure projects financed by international organizations are down by 60%; food and agricultural projects are down by up to 50%. Table 2 shows examples from some of these sectors.
This impact is however different in developed versus developing countries. Table 3 shows the decline in investments that are directly relevant to the SDGs in developed versus developing countries. The table shows the investments prior to the SDGs, the progress immediately after (2015–2019) and the impact of COVID-19 (post 2019).
In fact, this is opposite to the developed world, where several large publicly financed infrastructure projects have been announced to stimulate the recovery after the pandemic. Many of these projects are directly related to the SDGs. This means that developing countries are more exposed to post-pandemic glooms as local governments are not able to finance large publicly financed projects. These countries have in fact drowned further in debts due to the pandemic and vaccination costs. Generally, there is an increase in poverty and inequalities due to job losses and illness in families (UN-DESA, 2020).
Governments of advanced economies must think beyond their national borders and play a constructive role, as we have seen in case of vaccination policies, where millions of doses were destroyed due to expiry date instead of being sent to developing countries. Nobody is safe until everybody is safe, as shown by the latest variants coming from developing countries and spreading like forest fire in the developed world.
For MNEs, there are greater opportunities to play a role in developing countries by financing SDG-related projects that will in the long run help them to improve their competitive position and global image. Several Western firms are already availing these opportunities and are financing infrastructure projects in these markets. Unilever has taken several actions towards this direction. It came up with first paper-based laundry detergent bottles and is creating refillable and reusable bottles for several other products. Unilever aims to achieve zero emission from its operations by 2030 (Cavusgil, Ghauri, & Liu, 2021; Unilever, 2021).
BP has incorporated the SDGs into its mission statements in each of its focus areas: net zero, people, and planet. It is aiming to achieve net zero by 2050. It is creating safe and secure workplace for workers, and it is collaborating with Microsoft to create digital efficiencies in energy systems. Moreover, it is aiming to replenish more fresh water than it consumes by 2035 (BP, 2021). This means that MNEs can contribute by collaborating with other companies.
IB research needs to keep up with more research on these issues to confirm that whether it is really happening and to separate greenwashing rhetoric from reality. This will induce more research and would also provide guidelines for companies and governments regarding what works and what does not.
In addition, there is an acute need for international organizations and developed economies to look at possibilities of writing off the debts of developing countries. A major part of the budget in many developing countries is spent on serving the debts instead of education, health, and infrastructure, the main concerns of the SDGs.
About the Author
Pervez Ghauri (email@example.com) completed his PhD from Uppsala University where he also taught for several years. At present he is Professor of International Business at the University of Birmingham in United Kingdom. At present, his research deals with sustainability, poverty reduction and reducing inequalities. Pervez is fellow of European International Business Academy (EIBA) and Academy of International business (AIB), where he also served as Vice President. He has published more than 30 books and 150 articles in top level journals.