• Lev Mikulitski

Local economies and communities should be the first to benefit from investments in sustainability!

Since the adoption of “the 2030 Agenda for Sustainable Development” in 2015, it has been observed that a lot of initiatives have been taken to meet the goals and achieve targets of sustainable development goals (SDGs). Governments are making policies and introducing legislation, corporations are showing their efforts to meet the needs of the 2030 Agenda through their corporate sustainability reports (CSR). However, a lot needs to be done and nations are lagging in their targets.



Unfortunately, some ritzy-looking schemes and initiatives are mere eyewash and not aiming to achieve sustainability goals. I personally even know venture capital funds that call themselves IMPACT investors and actually only manage migrations for their portfolio companies in the direction of sustainability. If you really want you can present each company as an environmentally friendly company or as less harmful, but that is not enough. This is called “Greenwashing” and it means providing false or misleading information regarding the company’s products and schemes. So how can you do better? The UN asks for society to mobilize for a decade of actions on three-level:


1- Global actions to smarter solutions, greater leadership, and more resources.

2- Local actions to implement policies, budgets, introduce regulations at the city and town level.

3- People's actions include youth, civil society, media, private-sector unions, academia, and other stakeholders.


These levels are defined to facilitate focus areas at different levels. One of the most important aspects of SDGs is the localization of the efforts because without improving the lives of local communities the progress of actions at the global level will suffer. Investing in local economies and serving their needs can help to reduce the inequalities, enhance social cohesion, trust in the government, create jobs, improve living quality, health, and wellbeing, include marginalized communities in the economic and decision-making process.


SDG 8 (Decent work and economic growth) is the right match for such initiatives that the government should take to support the local economies. Effective governance and integration are required between central, provincial, and urban governments to identify the needs and gaps to fulfill the requirements.


China is the world's largest carbon emitter and is embarking on ambitious plans to achieve SDG goals. According to the International Well Building Institute and the US. Green Building Council, China has the highest number of green building projects either already certified or registered for green building certification in the coming years. The government’s support and focus on SDGs attracted investment in many sectors that run in tandem with the construction. For example, solar power companies, sustainable material furniture producers, and other businesses whose products are certified for green building projects are showing significant profits. This exhibits that the government’s policies can play a vital role either directly and indirectly in enhancing the economic resilience at the local and national levels. It is imperative to understand that while defining or making policies governments are riding at a thin line between destiny and demise. Based on the report of The United Nations Research Institute for Social Development (UNRISD) the governments and other organizations should avoid these pitfalls:

  • National policies or initiatives or strategies that neglect the “local context”.

  • Legislation that restricts local participation and empowerment (Serving the interest of big corporations).

According to the research studies of the World Business Council for Sustainable Development following are the initiatives that government, private companies, and public-private partnership consortiums can take to strengthen the local economies:

  • Initiate skill development programs

  • Promote an entrepreneurial culture

  • Support or create apprenticeship opportunities

  • Providing universal access to basic social services

  • International cooperation for poverty eradication

  • Provide better technological infrastructure for local communities (Access to internet and hardware so that local communities that take benefits from the internet)

Government participation and role have evolved a lot. The concept of devolution of power to the lowest levels has transformed the governance models into multilayer and integrated components of a complex system that revolves around the central or state government. This provides a suitable environment for local economic development. China and India are the best examples of those who have pulled a large number of their population out of poverty through investment initiatives at the grass-root level. Some of the notable initiatives are better infrastructure for the rural population which enabled their access to the larger supply chains with less cost, technological support to local farmers so that they can reduce their loss and take advantage of modern farming techniques, and so on.


In conclusion, I would like to say that local communities and stakeholders are the best to comprehend and measure the needs, hurdles, and impact of any initiative. Hence, they are key partners to bolster the local economic situation anywhere in the world. The innate diversity and synergies between the SDGs will further compound the positive impact of economic initiatives for local communities. A simple framework of characteristics that any entity should possess for economic growth at the local level or as a state policy.


#vc #investmentstrategy #toolsforinvestors #impactinvesting

© 2016 by Mikulitski Critical Consulting. All rights reserved.

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