I recently came back to London from New York, where I took part in the host of events at the United Nations surrounding the launch of the Global Goals for sustainable development. That included addressing the U.N. General Assembly, where my message was simple and direct: that we are only going to deliver the high aspirations of the goals — ending poverty, fighting inequality and injustice and fixing climate change — if business and finance are on the same team.
In my speech I was clear about what I am in business to achieve: a greater positive impact, year-on-year, on the lives of our customers and society as a whole. Making a profit is essential, but we will only create value for our shareholders if we create wider social value now and in the future. I also said that it’s in the interests of business to deliver for the long-term good of society. Society is our marketplace. If society doesn’t function well, then business is at risk. This means that achieving the goals isn’t just a moral project — it’s a business necessity.
Take climate risk. We look at weather events costing us money — and the trend is pretty clear. If we don’t tackle climate change, environmental shocks are going to get more frequent and more intense. In a recent speech Bank of England governor Mark Carney cited data that shows that insurance losses from weather-related events have increased from an annual average of $10 billion in the 1980s to around $50 billion over the past decade. Our own data at Aviva bears out this trend. Once-a-century natural disasters cost us around £100 million ($153 million) per event — and we had two such events in Canada in a single year — 2013. If temperatures rise by 6 degrees centigrade, we estimate the value at risk to be $13.8 trillion for investors and $43 trillion for governments. As a global insurer and asset manager, these are risks we just can’t take.
Along these lines I set out some practical ways to align business and the Global Goals:
1. Capital markets: The goals are fine aspirations for the $150 billion of overseas development assistance. But we’ve got to mobilize the $300 trillion of capital in the financial markets. I liken this to trying to illuminate a sports stadium with a candle as a giant set of floodlights tower overhead. With the right incentives we can access the funds to invest in the high-performing, cost-effective, resource-efficient and environmentally friendly sustainable technology and infrastructure we badly need.
2. Benchmarking: Lynn Forester de Rothschild, co-founder of the nonprofit Coalition for Inclusive Capitalism, uses a delightful aphorism: “Treasure what we measure.” We need to agree on simple, authoritative, publicly available benchmarks on sustainability, so we know the impact of our investments — and where, as investors, we want to apply pressure for change.
3. Financial inclusion: Business can make commercial decisions to enter markets with particular social goals in mind. For example, life microinsurance on the Indian subcontinent helps people live more secure, stable lives and creates a market into the bargain. It’s financial inclusion in action.
4. Engagement: U.N.-led investor network Principles for Responsible Investment has written to the heads of the 1,000 biggest publicly listed companies to ask them to look at how their business model will help deliver the goals and to engage their people.
5. Resolution: Perhaps most important, I’m calling for the U.N. to agree on a resolution on sustainable finance that would set out the organization’s own road map for sustainable capital markets. This can crystallize the coalition we need to build from government, NGOs and society and help catalyze the huge impact business and finance can make.
The Global Goals present us with an opportunity to be good ancestors for future generations and create a truly global legacy. Now we’ve got to deliver. Not achieving the goals would be the largest contemporary market failure. Achieving them could be nothing less than a vindication of markets themselves.
Mark Wilson is group CEO of Aviva, a multinational insurance company based in London.
