Impact-Driven Entrepreneurship: A process for aligning your start-up with the SDGs
By Matthew Grimes, Professor of Organisational Theory & Information Systems, Co-Director of the Entrepreneurship Centre.
05 July 2022 • 7 minute read

Entrepreneurs and the SDGs
When the United Nations (UN) announced the 17 Sustainable Development Goals (SDGs) focused on creating a “a shared blueprint for peace and prosperity for people and the planet,” they asked countries and companies around the world to join them in a massive effort to tackle the world’s largest problems by the year 2030. Although the UN has increasingly recognized the importance of involving the private sector in such calls to action, entrepreneurs and their startups are more frequently ignored due to their smaller size.
And yet, if the last decade of start-up activity has taught us anything, it is that seemingly small and initially overlooked companies can scale rapidly to have an outsized impact on not only markets but also on our societies and the natural environment. These impacts in many cases have been extremely positive, yet most will recognize the potential as well for entrepreneurs to increase their positive impacts on the world around us while doing more to avoid social and environmental costs. Such costs are often referred to as “externalities,” because of the manner in which these costs are frequently pushed externally and require governments or non-profits to intervene and address.
This potential for start-ups to contribute greatly—in both remarkably positive yet occasionally negative ways—to our world, suggests the need for founders to give increasing thought to their impact. But where to start? The size of the problems which underpin the 17 SDGs can be intimidating, while the scope of these goals span issues as far ranging as poverty, education, gender equality, clean energy, and peace. As such, determining where to focus can be daunting to the point that many entrepreneurs will feel paralyzed.
In this article for Barclays Eagle Labs, I will describe methodologies for, first, identifying where your start-up can create the most SDG impact and then, second, measuring that impact. To address the former, I will introduce a series of tools that I and my co-authors (Dr. Kendall Park from Vanderbilt University and Professor Joel Gehman from George Washington University) designed to help businesses strategically align their policies and practices with the SDGs (Park, Grimes, and Gehman, 2022). And then subsequently I will highlight a highly accessible and free cloud-based digital tool for beginning your journey of measuring your start-up’s impact on the SDGs.
A 4-step Process for Identifying Opportunities for Impact
1. Consider the existing overlaps between your business and the SDGs
As you begin thinking about your start-ups’ role in tackling the SDGs, you should start by considering the ways in which your current business model overlaps with the SDGs, and there are three different overlaps worth considering, as shown in Figure 1. For instance, it is useful to consider where your organization is already excellent at creating value and whether the associated activities are already generating or might easily generate social and environmental impacts (Exercise 1.1). In addition, it is important to recognize that responding to the SDGs is not just about “doing good.” Such responses are also needed to ensure that you are responding to the long-term opportunities and risks for your business that are created by the social problems which underpin the SDGs (Exercises 1.2).
2. Consider the reputational gains from creating particular types of SDG impact and the reputational costs from failing to do so
For decades now, large companies have recognized that although they may have legal obligations to maximize remunerations to shareholders, such obligations can be importantly affected by the reputational benefits associated with acting more responsibly and the reputational costs associated with acting irresponsibly. As frequent targets of media criticism and social activism, large companies have often developed entire corporate social responsibility and sustainability groups to manage these reputational opportunities and threats. And yet, with growing accessibility of social media and the increasingly recognized importance of the SDGs, all companies—even startups—are subject to these reputational dynamics. As such, in this next step you need to consider each SDG and the symbolic gains associated with responding and the costs of failing to do so (Exercise 1.3).
Competency analysis
Which SDGs could benefit most from our existing focus and areas of expertise?
Exercise 1.1 Determine the symbolic gains from addressing each SDG as well as the symbolic liabilities from ignoring them. |
Materiality analysis
To what extent is the long-term viabilitv of the business model contingent upon each SDG?
Exercise 1.2 Identify SDGs that matter most to your business and your stakeholders. |
Legitimacy analysis
What will your company gain from engaging with an SDG? Will your actions be seen as desirable and appropriate? Could they improve your brand image? Conversely, could you be punished for not engaging with a particular issue?
Exercise 1.3 Determine the symbolic gains from addressing each SDG as well as the symbolic liabilities from ignoring them. |
Tip: Leaders should also consider the potential backlash over engaging superficially with a social issue. Organizations have increasingly been scrutinized for "greenwashing." or marketing their social impact without creating any substantial social change. |
3. Consider the strengths and problems of your context
Different regions and industries tend to be stronger or weaker at addressing the various SDGs. For instance, when you consider your particular region, how strong has the public, private, and civil sector been at addressing climate action (Exercise 2.1 & Exercise 2.2)? On the one hand, if this is a relative strength for your region, it may be that you can build on that strength, forging connections with cross-sector partnerships to achieve significant further impact. But on the other hand, if this is a relative weakness of your region, this may be an opportunity for your company to fill an important gap, thus offering you the chance to become a regional leader and stand out. Both strategies—building on contextual strengths and filling contextual gaps—are valid strategies but come with trade-offs for which you should be aware.
Institutional void analysis
In your industry or region which SDGs are most pressing or most overlooked?
Exercise 2.1 Compare your industry's or region's performance on each SDG relative to other industries' and regions' performance. Circle the lowest performing SDGs. If your sector is weak on a particular SDG, it might create an opportunity for your company to make a meaningful difference on a neglected issue. |
Institutional strengths analysis
On which SDGs has your industry or region made significant progress?
Exercise 2.2 Using the same comparisons, circle the highest performing SDGs. Such strengths might create an opportunity to leverage existing infrastructure and facilitate collaborations to extend current momentum. |
4. Use the SDG Impact Canvas to consider the depth/breadth trade-off
Finally, any discussion of your start-up’s impact on the SDGs needs to start and conclude with a recognition that you cannot “do it all.” As a start-up, it is likely that you are subject to ongoing issues of resource scarcity, and thus it is critical for you consider how many SDGs your business might impact (SDG Breadth), and on which of those SDGs you wish to “double down” (SDG Depth). For instance, one possibility is to use the SDG Impact Canvas (Exercise 3) to apply what we have called a T-Shaped Strategy, in which you focus on one or two SDGs that are most material to your business, while subsequently applying a small number of resources toward the other 15-16 goals.
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Exercise 3
A Tool for Measuring Your SDG Impact
Now that you have identified the SDGs that your business will prioritise, it is now time to take action and begin to monitor and evaluate your progress. To facilitate this process, the UN Global Impact has partnered with B Lab to introduce a tool known as the SDG Action Manager. The tool was specifically created for companies of all sizes to begin their impact journey of meaningful self-assessment, benchmarking, learning, and improvement. The tool is free and simple to use. The real effort, of course, will be in the policies you design and the actions your start-up takes to create positive impacts. And for those of you who might wish to further embed these SDG-related commitments inside your start-up, the SDG Action Manager is also designed to work in tandem with the broader B Impact Assessment framework, which can be used to help your start-up obtain the increasingly popular B Corp Certification.
As the Chinese proverb goes, “The best time to plant a tree was 20 years ago. The second-best time is today” It should be clear that many of the problems of today were made worse by the inaction of the past. Seize this opportunity to infuse your start-up with purpose, as you orient toward creating lasting positive impacts on the world around us.
References:
Park, K., Grimes, M.G., Gehman, J., 2022. Becoming a Generalized Specialist: A Strategic Model for Increasing Your Organization’s SDG Impact While Minimizing Externalities, in: George, G., Haas, M.R., Joshi, H., McGahan, A., Tracey, P. (Eds.), Handbook on the Business of Sustainability. Edward Elgar, Cheltenham, UK; Northampton, MA, pp. 439–458.
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