Engaging in more sustainable solutions is a necessity — not just a corporate responsibility — if businesses want to continue operating in the future, says United Nations Development Program's administrator Achim Steiner.
"Businesses will like the view that 'once I pay my taxes I'm done with my duty.' That simply does not work anymore in our age," United Nations Development Programme's (UNDP) administrator Achim Steiner told CNBC at the Responsible Business Forum in Singapore Thursday.
Private companies are not just "spectators" but a "central player" for paving the way for more sustainable development — with three quarters of the economy in most countries driven by the private sector, he added.
Companies have "a very clear vested interest" to embrace sustainable development as a functioning economy and stable political system are important for the businesses, Steiner said.
In addition, "inequality as we are observing right now across the world is becoming a major destabilizer," he added.
Rapid climate changes could also disrupt existing market conditions often taken for granted by corporate leaders, he said.
A recent UN climate change report predicted that world temperatures are on track to rise by around 3 degrees Celsius — a number that is substantially above the target to limit the increase to 1.5 degrees Celsius.
"In the world of business you often have to rely on 'givens'. You can virtually throw away every scenario about your business and your future markets, your supply chains out of the window. Because by 2050, we will have a world in which many of the fundamental assumptions" may not hold, Steiner warned.
Sustainable Development Goals can provide a framework for businesses to better handle unpredictable market changes in the future, he said. SDGs refer to targets set by the UN to address global challenges such as climate change, poverty and environmental degradation by 2030.
By addressing some of the 17 goals, firms will have a framework to better understand the different business environments and markets they would have to adjust to in the future, Steiner said.
Companies are pushed toward becoming more conscious of their business practices and social impact as consumers have more access to such information, Steiner said.
"We today live in a market that is rapidly becoming so transparent that virtually every decision in your supply chain, in your production processes and your marketing becomes public knowledge," he said.
A company's business decisions would therefore affect the purchasing choices consumers make, he added.
"Companies by conviction or necessity are increasingly looking at their environmental footprint, their social impact and how their product can be an illustration of a social good," Steiner noted. "Simply put, people want companies to do the right thing."