Partnerships for sustainable development goals (SDGs): integrating sustainability into business strategy

We live in a world of unprecedented wellbeing, in terms of health conditions, a wealthier world population and the increase of years of life expectancy, to cite a few. But this has come with a cost in terms of environmental damage. Countless negative impacts to environmental, social and economic systems can be identified in different world locations. Some of these impacts are climate change, surface–water degradation, ozone depletion, existence of toxicity in groundwater, and air pollution. At this moment, we need to consider what world do we want to leave for our offspring. Supranational institutions, the main ones considered for the purpose of this thesis, United Nations and European Union, have taken the lead in signaling the problems, and pointing the direction towards a world that is going to be more sustainable. The definition of the Sustainable Development Goals (SDGs) are the first steps of this long track that needs to be walked. But accomplishing the SDGs is not in the hand of supranational institutions, but rather on the behaviors of the private actors (companies, consumers) that ultimately form the market. Climate change is an externality attributed to the action of private actors, and therefore, private actors should ultimately take care of the changes that are needed in our society. In the words of the 2015 United Nations founding document – Transforming our World: The 2030 Agenda for Sustainable Development – “we acknowledge the diversity of the private sector, ranging from micro-enterprises to multinationals and we call upon all business to apply their creativity and innovation to solving sustainable development challenges”. Somehow, the rationale behind this assertion can be traced back to the definition of human action by Ludwig von Mises, for whom an economic agent can only succeed on his actions when he understands the existing relations amongst the ambitioned goals and the available necessity to deliver them. The sustainable Development Goals (SDGs) will not be delivered without the contribution of multinational corporations (MNEs). The intricate inter- between the environmental, economic and social dimension of sustainable development demonstrate that most actions to tackle the interconnected goals must be pursued and addressed with a systemic and integrated approach. Many SDGs are so related one another that they must be achieved through global action in which companies work in partnerships. The private sector, representing 75% of global GDP was given the leading role in delivering results when it comes to the SDGs. 8 The commitment of the private sector in this regard is out of any doubt. In 2016, a year after the introduction of the 2030 Agenda, as many as 87% of CEOs of MNEs believed in the sustainable development value creation opportunities. Nowadays, over 15,000 companies have signed the United Nations Global Compact, an initiative on a voluntary basis and effective due to CEO’s active engagement to implement the principals of sustainable development. But when it comes to concrete and specific measures, companies need to reach their goals with limited resources. But while the resources of one company may be scarce, the resources of all companies in the market are enormous. For this reason, the SDG 17 “Partnerships for the goals”, has been defined as a non-hierarchical process by which two or more actors of society engage between them, as the best way to organize efforts to achieve the goals of the 2030 Agenda. A systematic, integrated and strategic approach to sustainable development can then be the response, by making all actors who concur to the progress of society to generate opportunities, innovation and competitive advantage while protecting the environment and solving more pressing social problems. In this thesis I look into this issue, trying to understand how the private sector delivers when it comes to achieving the Sustainable Development Goals (SDGs) by means of partnerships: I look at how Multinational Companies (MNCs) can partner up with their suppliers, to form a more sustainable supply chain. MNCs innovate their business model with an economic and financial motivation. Whenever the business model innovation is developed bearing in mind the SDGs they can be accounted for, the resulting outcome happens to be not only economically more sustainable, but also socially and environmentally. With my research I answer the following RQ: 1) How can MNCs use technology as a lever for strategic alliances with their suppliers, and what challenges appear in term of commercial relations, supply chain and environmental issues? 2) How do MNCs collaborate leveraging infrastructure and technology to account for better economic results and a leaner impact on society? 3) Which are the benefits and disadvantages of Partnerships for SDGs in terms of governance, asymmetries, trust and long term stakeholder relations? These three questions are of interrelated nature, and with academic research on the topics being scarce, the research to be conducted is exploratory. To that end, qualitative methodologies are the best fit to analyze both alliances among companies’ and their impact on sustainable supply chain. The case study methodology has been followed in which data was gathered with the use of semi-structured interviews. Amazon and Ericsson have been chosen as the MNC subject of the study, as well as their 9 counterparts on their alliances Vendor Flex and Port of Liguria. A social network analysis was conducted to test consumers attention and reaction in terms of demand to MNE’s sustainable practices. As a conclusion of this study, it can be stated that, in the achievement of SDGs, the role of MNCs such as Ericsson and Amazon is clearly very relevant. They possess the financial and technological means to generate a relevant impact regarding sustainability of their suppliers. This leads to commercial evolution and supply chain challenges. In terms of commercial evolutions, it can be noted that the alliance with Amazon has shown its supplier a possible track to succeed in a changing environment, in which on-line sales to individuals are gaining importance, while bulk sales to other retailers are diminishing. This comes, of course, with reduced margins when operating through Vendor Flex, when compared with being an Amazon’s supplier. That is, supplier sacrifices margin per volume. But regarding supply chain issues, getting into the Vendor Flex system revolutionizes the complete supply chain of the supplier, which was not originally designed for fulfilling a high number of small orders, that concentrate on short periods of time. The supplier states that the methods in use by Amazon allow to better respond under high sales. However, as any other strategic alliance, Vendor Flex has several issues in terms of governance, that are dealt with in this research. For instance, some of the governance issues found on this research is that the distribution of power within the alliance is clearly uneven due to its much bigger size. Lastly, in terms of the environmental efficacy of the Vendor Flex alliance, it is beyond of any doubt. In fact, the implementation of superior technology developed by Amazon, together with labour specialized on the particular proceedings of on-line sale allows for a smart allocation of orders that reduce the mileage of the goods sold, and with it, CO2 emissions.