The United Nations Sustainable Development Goals are the common horizon that economy-transforming strategies should aim for in the pursuit of sustainable growth. This international roadmap receives crucial support from entrepreneurship and investment, which we explored in depth at the recent Open Talks organised by BBVA Open Innovation.
It was 2015 and the increasingly undeniable reality of climate change and inequalities led the international community to define an effective roadmap towards a better future. The United Nations General Assembly approved the so-called 2030 Agenda, defining 17 Sustainable Development Goals (SDGs) to help guide us as well as the deadline for achieving them.
More than seven years have passed since then, which means that we are reaching the halfway point of this countdown. The pandemic dealt a severe blow to progress where several SDGs were concerned, but it’s not all bad news: innovation, key to solving economic, social and environmental challenges, has enabled high-tech industries to enjoy greater resilience in the face of the crisis. International investment has also recovered to pre-pandemic levels, reaching US$1.58 trillion, and that which is earmarked for sectors relevant to meeting the SDGs in developing countries (such as renewable energy) has increased by 70% over 2021. International project finance deals in this area totalled 1,262 projects last year, and their value reached US$656 billion.
Achieving the 2030 Agenda is a goal that fundamentally involves the participants of the entrepreneurial ecosystem, both project creators and investors. After the last edition on the economic and social impact of the 2030 horizon, the recent BBVA Open Innovation Open Talks, Economies in transformation to secure the future, brought together experts and leaders of startups and investment to reflect on how to promote sustainable development.
Thousands of start-ups around the world are doing their bit to help achieve the SDGs, making small-scale but significant changes. For example, more than 120,000 people in remote communities now have electricity in their homes thanks to the work of the Mexican startup IluMéxico, which offers solar energy solutions for rural homes without access to electricity. A clear example of how entrepreneurship can combine inclusion and sustainability to achieve real transformation: “We need to change the way we consume and generate energy, as we are creating an extremely negative impact on the planet,” says Manuel Wiechers, CEO of the company. “We are looking to promote renewable energies, and also to do it from the communities. One of the greatest injustices of climate change is inequality, and for us it is great to be able to work from these most vulnerable populations to set an example and have a multiplying effect.
In addition to developing sustainable solutions, entrepreneurship can play an important role in promoting the adoption of ESG criteria in other companies: “Startups accelerate and change industry standards, and when they operate with a social objective, these changes can be drastic,” reflects Juan Pablo Larenas, director of Impact and Community at Betterfly. This Chilean unicorn (a company that has raised US$1 billion or more before going public) promotes healthy habits that are transformed into economic benefits and social donations. “We wanted to provide a solution to the lack of financial protection, mental and physical health issues and the crisis of purpose,” he explains. In addition to contributing to SDG 3 (Health and well-being), they work with foundations that fight deforestation, zero hunger and poverty. “But the most important contribution we want to make is to inspire other companies to change their vision and put social purpose and people at the centre,” says Larenas.
The United Nations estimates that an annual investment of between 5 to 7 trillion dollars will be necessary to achieve the SDGs by 2030, especially in developing countries, where financing should reach 4 trillion per year according to the latest estimates. And although both official Development Assistance and foreign direct investment (especially in developed countries) increased in 2021, the financing gap for achieving the 2030 Agenda is estimated at US$2.5 trillion per year.
On the other hand, achieving the SDGs would bring interesting economic benefits for the private sector: estimates suggest that it could open up market opportunities worth 12 trillion dollars by 2030. And investing in sustainable development offers even more advantages: boosting start-ups with solutions aligned with the SDGs “is a combination of learning and business,” explains Victoria Mozos, from BBVA’s sustainability private equity investment area. Its objective is to “bring innovations to our business and risk areas so that they know what their unit economics are and can begin to finance and support these new technologies as soon as possible”.
The bank contributes to the decarbonisation of its client portfolio in several CO2-intensive industries and has committed to stop financing coal companies. BBVA has also earmarked €550 million to support inclusive growth initiatives between 2021 and 2025, another key aspect of the 2030 Agenda embodied in SDG 8 (Decent Work and Economic Growth). In addition, it has recently increased its sustainable financing target to €300 billion by 2025.
BBVA also has a powerful venture capital investment initiative to contribute to the development of startups in earlier stages, which, once they reach maturity, also receive support from initiatives such as BBVA Spark (a unit designed to help high-growth companies scale). “We are aware that more innovation and investment in technologies is needed to decarbonise the planet,” says Victoria Mozos. This support, which is channelled through specialised investment funds, has already taken shape in partnerships with Hy24, the world’s largest green hydrogen infrastructure fund; Fifth Wall, focused on decarbonisation of the real estate sector; and Lowercarbon, a driver of climate change initiatives. Mozos states: “We prefer to work with experts and specialised funds. This gives us much more knowledge and access to new technologies and to be able to generate business”.
The commitment to the SDGs from entrepreneurship and investment has great potential, but also significant hurdles to overcome. “Our challenge is to be more aware of the obstacles we face, and to foster collaboration between the private and public sectors and society,” reflects Victoria Mozos. Manuel Wiechers, from IluMéxico, agrees on the importance of this collaboration, although he states: “Those in decision-making positions and positions of greater influence must also do something more radical.” Along the same lines, Juan Pablo Larenas, from Betterfly, recalls that “the entrepreneurial ecosystem is not only the entrepreneurs, but also the other participants, such as the financial sector, the State, consumers or academia who play an equally important role. Without them, it is impossible for social innovation to grow”.
To achieve the goals defined in the 2030 Agenda, the economy and society must undergo a profound transformation. Joining the transition is not only a matter of responsible conscience, but also of survival. The entrepreneurial ecosystem is set to play a determining role in this aspirational future, with CEOs and investors working every day to integrate sustainability into the DNA of their business.