Managing Director & Senior Partner
As institutions around the world gauge their progress toward achieving the goals outlined in the UN’s 2030 Agenda for Sustainable Development, one thing is clear: We are moving too slowly to keep pace with growing societal needs and are in danger of coming up woefully short of those targets.
It has been clear from the start that considerable new investment is needed to close the nearly $2.5 trillion annual gap between what is being spent today and what would suffice to meet the UN’s 17 ambitious Sustainable Development Goals (SDGs). It is also clear that filling the gap requires the public sector to work effectively with the social sector and to enlist the enormous capacity of the private sector. In response, BCG and other SDG proponents have worked to create new models designed to bring the public, private, and social sectors together in support of the SDGs—including encouraging companies to use their formidable resources and scale to address societal issues and mobilizing new sources of capital.
These moves are critical, but they are not enough. In addition to looking for ways to close the investment gap, we need to rewrite the equation, focusing on how to reduce both the amount of investment necessary and the time needed to achieve results. We can improve in both areas today, but only if we leverage innovation. There are examples of proven technologies and approaches from around the world that, if adapted and deployed at scale, could meaningfully narrow the SDG investment gap. It’s time to get serious about accelerating innovation on our way to meeting the SDGs.
Proponents of sustainable development have met in dozens of venues around the world to develop a game plan for achieving the SDGs. Unfortunately, all the effort and good intentions have not as yet sufficiently sped progress toward filling the SDG investment gap to meet the 2030 targets. And while the organizations that should be leading the field—multilateral and bilateral development finance institutions and national development agencies—may have the appropriate vision and rhetoric, most of them are not moving quickly enough. They continue to struggle on various fronts: in changing the way they work and organize, in developing the necessary capabilities, and in crafting suitably large development projects quickly enough to absorb the capital that investors are ready to put to work.
Our assessment is that most of the effort to bring more energy and resources to the SDGs today focuses on three important and reinforcing strategies:
As important as these three strategies are for driving SDG progress, they can too easily focus on filling the SDG investment gap rather than fundamentally altering it. This is not terribly surprising. After all, most of the thinking about and discussion of the SDGs comes from a development mindset. But such conversations are trapped in a cycle of appealing for budgets and delivering on proven programs. This leads planners and decision makers to look at the same interventions and run the same math to estimate what it will take to achieve development outcomes, thus reinforcing those models and programs. It does not stimulate radical and transformative innovation.
As in business, innovation can significantly shift the economics of potential solutions and the timeline for delivering them. New technologies and approaches have the potential to fundamentally alter the cost of achieving progress. That’s why innovation is critical to advancing the SDGs. It can support and advance both company strategies related to societal impact and initiatives undertaken by new cross-sector partnerships. At the same time, the increased mobilization of capital helps fuel efforts in both areas. (See the exhibit.)
Certainly, effective innovation efforts are underway today in many quarters. Most development institutions now have innovation units tasked with boosting their own capacity for innovation and funding new approaches to programming. Multiple crowdsourcing innovation efforts, such as country Innovation Labs, MIT SOLVE, and UNLEASH, are in operation as well. And there are efforts to systematically raise the innovation capacity of countries through processes such as science, technology, and innovation (STI) roadmapping.
Most of these efforts, however, fall short of driving large-scale innovation. Of all the forces that the private sector can bring to bear in attempting to advance the 2030 SDGs, by far the most powerful is its unique capacity to innovate quickly, attract capital to innovative solutions, and drive innovations at scale. That combination is hard to find in the public sector or the social sector, but it’s the private sector’s lifeblood.
Each year, BCG publishes its report on the world’s most innovative companies. Our research identifies what successful innovation models look like and what transformations are necessary to get there. One crucial attribute at the core of such success is a commitment to nurturing a culture that allows new thinking and approaches to emerge and flourish, coupled with an organizational capacity to rapidly scale and deploy innovation.
Numerous examples of innovations highlight the potential impact that advances in innovation could have if they were accelerated and scaled with the help of the private sector:
We need many more such efforts and at much larger scale. Public sector and social-sector groups must develop strategies to rapidly incentivize and partner with the most innovative private companies and investors in order to draw on their formidable skills and resources to advance the SDGs. In that way, such groups can create and scale up innovations and support the rapid, broad deployment of new technologies to the places where they are needed most.
At the outset, however, senior management in the public, social, and private sectors should ask some critical questions to test an organization’s innovation efforts on behalf of the SDGs. If the answers are unsatisfactory, it’s time to rework the innovation strategy.
For government development institutions, social-mission organizations, and foundations, the following questions are worth asking:
Answering a different set of questions can help companies figure out how to step up innovation efforts for the SDGs:
It’s time for SDG champions in the public, social, and private sectors to assess how well they are running the race to 2030. Although we have some good runners among us, we are at risk of finding ourselves far from the finish line in 2030. If, however, we unleash private-sector innovation in the SDGs’ cause, we may finish strong.