Investing in Sustainable Development Goals: Opportunities for Private and Public Institutions to Solve Wicked Problems that Characterize a VUCA World

Abstract

We live in a world full of global challenges, such as global warming, the COVID-19 pandemic, and only recently the Russia-Ukraine crisis, all of which confirm that we live in a volatile, uncertain, complex, and ambiguous (VUCA) world. Most of these challenges are considered to be wicked problems. For many decades, wicked problems have been viewed as difficult, even impossible to solve. This chapter examines how institutions can navigate the VUCA world through investing in SDG so as to solve wicked problems. The chapter argues that adopting socially responsible investment as a strategy allows both private and public organizations to improve economic, social, and environmental performance; and is a fine way of investing in SDG, which could be a long-term solution to wicked problems. Using a multivariate analysis of variance (MANOVA), the chapter examines the relationship between SDG investment and climate change solutions at the local level. Results show a significant effect of investment in SDGs on a solution to wicked problems like climate change. The chapter concludes that the difficulty or impossibility of solving global challenges is likely to be caused by a lack of investment in the SDGs.

1. Introduction

In the past few decades, the world has witnessed global challenges, such as global warming, economic crisis, the COVID-19 pandemic, and only recently the Russia-Ukraine crisis, all of which confirm that we live in a volatile, uncertain, complex, and ambiguous (VUCA) world. A great body of literature calls most of these problems wicked problems in the sense that it is difficult, even impossible, to find a lasting solution to them [1, 2, 3]. The least governments can do is to find a partial solution. In some instances, they have to just buy themselves some time while in the meantime the wicked problems become more serious. Prime examples of wicked problems that this chapter will refer to our global warming, whose consequences keep getting worse year after year and the COVID-19 pandemic, which has been challenging governments around the world. While global warming proves that the world is witnessing a climate crisis, the COVID-19 pandemic has plunged the world into a global health crisis. These and similar major crises are clear evidence that we live in a VUCA world.

There have been claims that the more we advance in achieving Sustainable Development Goals (SDGs), the better chance we stand to deal with crises, such as COVID-19 and global warming [4]. Despite considerable efforts and some progress during the years that followed the adoption of the SDGs (e.g., reduction of extreme poverty and child mortality rates, fighting against diseases such as hepatitis, and better electricity access in developing nations), the world is unlikely to achieve the SDGs by 2030 [5]. Recent studies show that the shift in development pathways and level of financing and investment is not taking place as it is supposed to. The lack of investment in the SDGs suggests that global challenges will be hard to solve. Consequently, there will be a continued increase in greenhouse gas emissions and hunger; a continued loss of biodiversity at unprecedented rates; and the extreme poverty rate could still be high in 2030 [5]. There is little empirical knowledge on how these challenges can be tackled and to what extent investing in SDGs leads to less wicked problems. We verify whether more investment in SDGs is a solution to the intractability of the wicked problems.

A great body of literature has studied wicked problems and their relationship with SDGs [6, 7]. However, this has never been done in the context of a VUCA world. Recent studies show that investment in the SDGs seems to be the best way to build resilience against shocks and avoid backslides into poverty and other global challenges [8]. Yet, there is still a lack of empirical research. A small body of literature has studied the types of investments that can be made around SDGs [9]. To better invest in the SDGs, governments as well as public and private institutions need to identify SDG investment areas and embrace socially responsible investment (SRI). While some organizations have started doing that many more will need to join the efforts. SRI entails that as well as making their financial interest, private as well as public institutions have to be oriented toward social and environmental issues to provide solutions to the problems we face as human beings [10]. To contribute to the alleviation of problems associated with climate change many different investors and actors are parting ways with a “traditional view” of economic theory, which considers investors as rational and wealth maximizing [11].

Using a multivariate analysis of variance (MANOVA), this chapter seeks to establish the relationship between investing in SDGs and solution to wicked problems like global climate. The chapter argues that adopting SRI is an investment strategy that will improve economic, social, and environmental performance; it is a fine way of investing in SDG, which could be a long-term solution to wicked problems. The main aim of this study is to establish the relationship between investing in SDGs and the solution of wicked problems. At the same time, we hope to contribute to the body of existing knowledge and to inform policymakers in making informed decisions. The study will allow us to understand why wicked problems have been difficult to solve and to propose better ways to navigate them and by so doing give a different image of wicked problems. Finally, the research will guide private and public institutions examining their behaviors in tackling or contributing to challenges the world faces in the VUCA world and possibly how to navigate these challenges.

The remainder of the chapter is organized as follows: Section I explores how we live in a VUCA world with wicked problems, the implications of that, and the theoretical and conceptual framework that surrounds that. This will allow us to understand the nature and gravity of the problems that humanity faces. Section II explains how investing in SDGs matters if we are to tackle the wicked problems that exist in the VUCA world and how three SDG logics can be used to guide SDG investment and their implications. Here, we will also discover how SRI is one of the most effective ways of investing in SDGs. Section III explains how data were collected and analyzes the results. The final section gives concluding remarks and avenues for future research.

2. Living in a VUCA world with wicked problems

2.1 Conceptualization of the “vucability” of the world

The world faces problems that are more and more intractable. The intractability of these challenges that humanity deals with on a daily basis makes the world look more complex, uncertain, ambiguous, and volatile. These are all characteristics of a VUCA situation. The VUCA concept was introduced after the end of the Cold War to refer to a world ever more difficult to predict and rely on [12]. Following the financial crisis in 2008–2009, which led many organizations and countries to be confronted by volatile, complex, and ambiguous conditions in their social and economic environments and models, the VUCA concept was adopted in other domains like business and management science [13, 14]. After the financial crisis, across many industries, a rising tide of volatility, uncertainty, and business complexity roiled markets and changed the nature of competition [13]. A more or less similar situation took place when organizations and governments were confronted with the COVID-19 pandemic and the challenges brought about by the Russia-Ukraine conflict. To meet the challenges of a VUCA world, policymakers and strategic planners in private and public organizations will have to comprehend the differences and the implications of the main conditions of a VUCA world—volatility, uncertainty, complexity, and ambiguity [15].

Volatility refers to the unpredictability of the nature, speed, volume, and magnitude of change [16]. Dynamic and frequent instability brought about by drastic, violent, and rapid shifts witnessed in the past years is the main characteristics of volatility [17]. Global warming is as much an example of volatility as it brings with it constant changes and poses a great threat to the planet. We have witnessed temperatures breaking records in Europe and elsewhere in recent years and this trend is set to continue. Millions of people from different parts of the world have been victims of tsunamis, hurricanes, floods, and landslides. In a volatile world, global warming effects may keep increasing. Although not every scientist agrees that there is a causal connection between these outcomes and climate change, there is ample evidence that natural disasters are linked to climate change [18]. Similarly, the manner in which the COVID-19 pandemic spread to every part of the world bringing with it disruptions and changes and how it was difficult to contain makes us not only vulnerable to COVID-19 itself but to other unpredictable pandemics that may arise as result of different shifts and changes.

Uncertainty describes a situation characterized by a lack of knowledge. Such a lack pertains to whether a certain event is significant enough to constitute a meaningful cause [14]. The lack of knowledge also entails that forecasting is very hard and decision-making becomes extremely challenging simply because issues and events are difficult to predict [19]. While science can make some predictions of how much temperatures could increase in the climate change process and what consequences may arise thereof, there are still many factors that are involved in the process that we may not be certain about. The fact that we are vulnerable to different sorts of natural disasters and pandemics and do not know which ones and when exactly they would strike and to what extent they will affect us and how much we can protect ourselves makes us live in an uncertain world. While science can predict a number of disasters, other challenges, such as pandemics, earthquakes, and wars, are hard to predict.

Complexity is due to the presence of numerous difficult-to-understand causes and mitigating factors involved in a problem. The difficulty in grasping causes and mitigating factors leads to ambiguity and confusion [14]. The COVID-19 pandemic has proved to be an extraordinarily complex issue as it resulted from interconnected and sometimes difficult-to-comprehend causes. Its solution has required strategies that consider and integrate multiple and competing parameters, including the health and well-being of individuals, communities, and societies versus the strength of the economy at local, regional, and international levels. The climate crisis is even more complex as it impacts almost every aspect of our life. It is unprecedented and there is no prior experience to draw on [1].

Finally, ambiguity is the absence of clarity about the meaning of an event. In this case, real issues of threats and opportunities are not properly understood and the causal relationships are hard to establish. Here, also the situation is unprecedented, and individuals as well as organizations deal with the unknown [15]. For instance, climate change has likely highlighted gaps in knowledge, diverse perspectives, and a wide range of interests among stakeholders. Differences in perspectives and interests probably lead to even higher levels of ambiguity and uncertainty, which shows that the characteristics of a VUCA world (i.e., ambiguity and uncertainty) are sometimes interconnected and affect each other. Unfortunately, this interconnection not only poses analytical, political and managerial challenges for understanding but more importantly makes responding to different challenges very complicated [20]. The “vucability” of the world and the issues that we face daily can be better explained by the wicked problem theory. The difficulty in finding the solution or their insolvability has led researchers to refer to these problems as wicked problems.

2.2 Wicked problem theory

The climate change and the COVID-19 pandemic mentioned above are arguably prime examples of wicked problems that we have recently been confronted with in the VUCA world. According to wicked problems theory, it is literally impossible to find a linear and lasting solution to wicked problems and as a consequence, it is futile to set up a planning approach geared to solve them. The wicked problems theory has its origin in Rittel and Webber [3] who challenged the efficacy of scientific social planning. These authors claimed that contested and complex social problems cannot be “tamed” using standard managerial approaches that rely on rational-analytic models of planning and decision-making [20]. There exists no single mind capable of encompassing the full array of information necessary to provide a solution to a wicked problem. Not only wicked problems do not have a straightforward solution that can be carried out confidently but they have a multitude number of contributing factors and are often root causes of other issues and are very difficult to describe [3].

A lack of consensus on problem definition, combined with a lack of consensus on solutions make the fundamental characteristics of wicked problems [21]. Such problems are seen as more enduring and intractable, and thus more likely to defy resolution. At an international level, sustainable development, climate change policy response, international business regulation, and illicit migration are some examples of enduring complex problems. At a national and local level, wicked problems examples include family violence, environmental pollution, poverty, and drug control. Over the years and in many societies, these systemic and complex problems have provoked divergent views about the appropriate policy responses and approaches to adopt while dealing with them. Politicians find it hard to agree on the very nature of these issues and their relative importance [20]. Disagreements arise because key stakeholders’ viewpoints are anchored in different assumptions, values, interests, and capacities. People with different perspectives and experiences view wicked problems through a variety of lenses [1]. These differences in perspective have major consequences since the way in which a problem is defined or scoped is closely linked to preferred remedial actions to address the identified problem [20]. Faced with the intractable and contentious aspects of wicked problems public policy responses are often partial or even counterproductive [22]. Even the best available policy responses are highly provisional rather than enduring [20]. The intractability and quasi-insolvability of these wicked problems strengthens further the idea that we live in a VUCA world. Conventional techniques are not sufficient to solve wicked problems [1].

What the wicked problem theory implies in our context is that it will be difficult to find a last solution to the grand challenges that the world has been facing. There are two main implications: (1) wicked problem theory challenges strategy-making, and (2) performance measurement. First of all, the wicked problem theory challenges the establishment of full-scale strategy like the Agenda 2030, which set terms, conditions, means, and ways to solve global challenges. By the time we get to 2030 and as we try to implement these terms and solutions, problems will have evolved and taken up other meanings and definitions. It is futile to contemplate the end of poverty, for example, the reduction of CO₂ gas emissions. Policymakers and their theories are doomed to fail simply because wicked problems are not only impossible to solve but lead to other challenges. Secondly, wicked problem theory entails that it is difficult to measure performance because problems are ever evolving and their solution are challenged by identifying the real causal issue. Making reports of what has been achieved in terms of SDGs hardly makes sense since by the time reports are finished the problems may have worsened. Humanity seems to be caught in a vicious cycle of problems. The existence of wicked problems is a sheer confirmation that the world is volatile, ambiguous, uncertain, and complex. At the same time, the “vucability” of the world explains the wickedness of the problems that we face. Ironically, it is because people live in a VUCA world with wicked problems that they are compelled to seek solutions to this situation even if they are uncertain that they may find solutions to the problems. While early scholars thought it was practically impossible to solve wicked problems, recent scholarship has moved to suggest ways of finding solutions.

3. Toward solving wicked problems

It is worthwhile asking oneself why wicked problems are difficult or impossible to solve. Of course, there may be many reasons explaining the impossibility to solve wicked problems. One of the reasons would be the fact that wicked problems in themselves are so complex and sometimes ambiguous that they require different approaches and methods to be solved and yet those approaches and methods are unachievable. If for example, solving climate change requires collaboration and cooperation of everyone, at every level of government and necessitates intergovernmental negotiation like those usually seen during COP meetings (e.g., 26 and 27), it is hard to imagine that a consensus can be reached on key issues like reducing CO₂ gas emissions and when achieved it is hard to believe that everyone will fully cooperate or have the means to perform what it takes to reach a solution. This is due to the fact that besides the fact that people have different perspectives on issues and understand things differently countries are at different levels of development and economic growth, have different needs, and above all else have different and competitive interests. However, despite the fact that people have different interests and perspectives and that problems may be hard to solve, people naturally never give up on finding solutions to problems that they face. With time scholars have tried to move away from the pessimistic view of Rittel and Webber [3] and have argued that it is possible to “find” solutions to wicked problems.

3.1 Tackling wicked problems and turning them into opportunities

Noordergraaf et al. contend that there is a paradox embedded in wickedness theory [22]. To frame global challenges as wicked generates obstacles for addressing wicked issues. Framing problems as such is, in itself and of itself, to make them so grand and remove them from daily practice so much that actors become scared and get compelled to retreat in front of the problems instead of addressing them. Addressing wicked problems calls for fundamental change starting from the vocabulary used vis-à-vis problems. Recently, scholars have replaced claims of “solving” or “fixing” a wicked problem with the language of tackling, managing, coping, and addressing wicked problems [20, 23]. Moreover, since there is no one best solution, wicked problems could be addressed using a range of instruments and approached from different levels of analysis [23]. During the past years, different governance approaches, such as collaborative governance, adaptive governance, interactive governance, or network governance, have been adopted to tackle wicked problems [24]. Others propose to convert wicked problems into micro problems to be able to solve them. However, each approach would find detractors. Some scholars suggest that the political attempt to convert messy unstructured problems into “well-structured” micro problems begs the question of whether it is possible to resolve messy issues by converting them into “technically controllable” issues. They conclude that wicked problems cannot be properly “tamed” or “fixed” by dissolving them into multiple elements, which are then reassembled in a manner suited to a series of small projects [25, 23].

Despite the fact that we live in a VUCA world, some scholars believe that we can still turn challenges into opportunities. Human beings have naturally evolved from owning challenges and seeing them as opportunities and this natural attitude has allowed them to survive in harsh environments and conditions. Earlier research shows that the VUCA world itself is an opportunity in the sense that “volatility provides profit opportunity” [26]; “Uncertainty is opportunity” [27] and “Ambiguity equals opportunity” [28]. Nevertheless, the opportunity is only as such when it is ceased especially at a time when Antonio Guterres warned that “A window of opportunity remains open, but only a narrow shaft of light remains. The global climate fight will be won or lost in this crucial decade” [29]. He urges people to win this fight together for the 8 billion citizens and for future generation. But to win this battle, to solve the global wicked problems, more investment in SDGs is the key so as to increase trust, which in turn could lead to better performance and with its solution to these problems [30]. Wicked problems we face in this VUCA world can still be turned into opportunities. If COVID-19 did not teach us tough lessons it also presented us with the opportunity and taught us that it was possible to reduce gas emissions [31].

3.2 SDG investment as a better solution to wicked problems

The natural conviction that challenges are meant to be dealt with is what makes leaders and policymakers engage in strategy-making. World leaders who gathered in New York in 2015 unanimously agreed to adopt SDGs. These goals which are the building blocks of the 2030 Agenda are an attempt to find a lasting solution to the problems that the world has been facing. SDGs are a continuity to the Millennium Development Goals (MDGs) that were concluded in 2015. However, despite some success, MDGs had weaknesses in the sense that they were designed for the developing world. After many years of consultation and negotiation at different and between levels, SDGs were adopted to solve this weakness, knowing that development is not just sustainable but it concerns every human being and every nation. Just like problems do not affect selected individuals from one part of the planet solutions or efforts to solve the problems are more efficient when they come from all levels and different parts of the globe, especially for challenges that affect everyone and everywhere. Sustainable development should not leave anyone behind and can only be achieved if every nation and person cooperates. SDGs are comprised of 17 goals (Figure 1) and 169 targets and 232 indicators. Essentially, the SDGs constitute a universal call to end poverty, protect the planet, and improve the lives and livelihoods of everyone, everywhere [32]. The problems that SDGs are trying to address fall into the category of wicked problems in the sense that these types of problems transcend the borders of traditional policy domains, involve a wide variety of actors across different scale levels, and resist our attempts to solve them [33].

Figure 1.

Sustainable development goals.

Leaders adopted SDGs mainly because they had become more aware that in a globalized world, most problems are interconnected, and are likely to affect every human being and an attempt at finding a lasting solution requires involving everyone and every nation. Breuer et al. [34] put it well when they say that the achievement of some goals is heavily dependent on the international order and patterns of global cooperation, and action on these goals will have repercussions beyond national borders. For instance, if a country reduces its emissions and meets its national emission goals, the same country will still suffer from the effects of climate change if other countries increase (or fail to decrease) their own emissions. As CO2 emissions keep accumulating in the atmosphere, the contribution toward reducing emissions (e.g., SDG 7, SDG 12, and SDG 13) in one country goes beyond the actions taken by that country simply because we globally share one atmosphere. Investing in SDGs by every government and from every level starting from the grassroots is the way forward for humanity to stand a chance to handle intractable wicked problems that hinder sustainable development.

Since their adoption in 2015 private organizations and public organizations alike have invested in SDGs. As a result, there has been some progress in realizing SDGs. Nevertheless, the COVID-19 pandemic has slowed down the little progress made on implementing and achieving SDGs [35]. It has exacerbated existing constraints for the SDGs. While the COVID-19 pandemic has affected people differently, it has widened existing inequalities across population groups and created a sense of vulnerability and uncertainty. People in low-paying occupations, the young, people on fixed-term contracts, and those with lower levels of education have been particularly hit hard [36]. Ironically, COVID-19 justifies further why private and public institutions should invest in SDGs more than before. The COVID-19 pandemic has brought to the fore how central the SDGs are. A few SDG practitioners argue that the world would have better dealt with the COVID-19 pandemic and ensuing economic challenge if the world was better advanced in meeting the SDGs with stronger health systems, a healthier natural environment, less gender inequality, fewer people living in extreme poverty, and more resilient societies [4].

Investment in and progress on the SDGs is the best way to build resilience against shocks and avoid backslides into poverty [8]. SDGs provide a realistic approach to navigate societies through and beyond the COVID-19 pandemic [6]. Just before COVID-19, the UN announced the current decade as a decade of action to accelerate investing in SDGs to be able to achieve Agenda 2030. Even though a decade of action that the UN had announced was put in jeopardy by COVID-19, there is still some hope if the robust investment is made on SDGs. To solve wicked problems, private, nonprofit, and public organizations have to invest money, time, and energy toward the achievement of the SDGs. Prior research maintains that the SDG framework has a transformative potential, which can be realized only through appropriate implementation [32, 37]. Across world regions, however, the extent to which SDGs are addressed, and the means used to do so and the efforts committed vary enormously. While some governments are putting a lot of effort into SDG implementation and are involving their citizens, others are still lagging behind. The concrete realization of SDGs will depend on how they are implemented by a diverse set of competent agents [32], including governmental and nongovernmental institutions, companies, and individual citizens.

To advance the SDGs, there is a need to create investment policies and measures. Investment is a necessary input to help achieve SDGs 1 to 15. In addition, investment explicitly appears as a target in SDGs 1, 2, 7, and 17 [38]. Investment in SDGs leads institutions to establish actions and attitudes that help in resolving major challenges. A small body of literature has studied what types of investment can be made around SDGs. Schmidt-Traub [9] proposes different SDG investment areas to help public and private institutions achieve SDG. For instance, reducing poverty (SDG 1) is achieved through the adoption of many policies and a broad range of investments. Such a range interconnects with other SDGs and include inter alia investment in social capital (health and education), business capital (smallholder farms, artisanal fishing, small enterprises, manufacturing), and physical capital (infrastructure). Furthermore, private institutions are encouraged to regularly report on their progress. Reporting allows a thorough investigation and likely lead to a better outcome in the future and robust investment. The more organizations invest the more successful SDGs will be and the more likely wicked problems are tamed [9].

Private and public institutions that invest in SDGs have to establish SDG investment needs to be addressed. In some organizations, the analysis currently focuses on mapping investors’ corporate holdings to a selection of the SDG. Several investors (e.g., the Dutch APG and PGGM, or the Swedish AP2) are trying to work out investment possibilities associated with SDGs [39]. For instance, the bulk of investment needs for achieving gender equality must be included in gender-sensitive sector investments, including education, health, and access to basic infrastructure services. This has to be done at the local level, as well as national and other levels and sectors through a reduction of gender equality in employment, an increase in women’s political participation, and combatting violence against women [9]. Establishing investment needs will determine whether organizations put massive or modest investments. For instance, achieving SDG 11 on cities and human settlements will require vast investments in urban infrastructure, social services, resilience and environmental protection, and economic development. These are a series of solutions that in one way or the other, separately or concurrently contribute to solving wicked problems. As we will see, investment in one area is connected and affects investment in other areas. Urban investment needs in social services and infrastructure are connected with investments in climate change adaptation or resilience as well as mitigation. A substantial share of urban environmental investment needs is also covered under water supply and sanitation as well as energy systems [9]. Most of these investments, however, face different challenges that may hinder their putting into practice or materializing.

3.3 Three logics to guide SDG investment in a VUCA world

It may be hard to resolve many problems in a VUCA world, but it is possible to navigate them as we invest in SDGs. According to van Zanten and van Tulder [6], this navigation can be done by finding a solution to the main three challenges we face [6]. The three challenges are governance challenge, systems challenge, and strategic challenge. To these three challenges correspond three logics (Table 1). Such logic can facilitate a sustainable transformation and respond to the three challenges [6].

Challenges	SDG logics
a governance challenge	governance logic
a systems challenge	systems (nexus) logic
strategic challenge	a strategic logic

Table 1.

Challenges and associated SDG logics.

First of all, there is a governance challenge that any SDG investment is faced with. Some of the problems we face (i.e., climate change) affect the whole world. In a such situation, the challenge is how to respond to such a global threat and how to fill a multitude of global governance gaps brought about by climate change, all this in an increasingly volatile and uncertain (VUCA) world. Finding a solution to that global challenge is one way to increase the speed with which global problems (e.g., climate change, pandemics) can be addressed. SDGs provide a solution to the global challenge through the “hybrid” governance that they entail, since they involve different actors at different levels. Such a governance logic sets goals, adopts policies, and tracks progress to steer impacts. By involving multilevel actors and stakeholders, the hybrid governance specifies “pathways” to leverage innovation and partnering as ways to achieve the SDGs, rather than by generically prescribing “one-size-fits-all” measures into hard laws [6]. Hybrid governance is likely to present the best and most realistic approach to global (“wicked”) sustainable development challenges, which feature complex governance problems. The COVID-19 pandemic and global warming are some of the challenges that need hybrid governance to be solved [6].

Secondly, SDG investment needs to consider a systems challenge in which global challenges are embedded. A systems logic is attached to this challenge. A systems logic manages SDG interactions. At first sight, it is easy to view SDGs as 17 distinct goals, with each of them trying to solve an individual sustainability problem, such as hunger, biodiversity, or poverty. However, nearly all sustainability challenges facing the world are deeply entwined, and therefore systemic in their nature [40]. Consequently, tackling sustainability challenges requires systemic solutions that manage interactions between different SDGs, rather than cherry-picking individual SDGs that align with an organization’s interests [6]. The SDGs suffer from a lack of a systems approach to their successful implementation. Arguably the biggest challenge plaguing the SDG agenda is the priority given, in theory and practice, to SDGs that drive economic growth compared to SDGs that promote social development and ecological sustainability [41]. COVID-19 underscores how important a systems logic is to solving sustainability challenges especially in terms of social justice and equity. While COVID-19 is mainly about SDG 3 (good health and well-being), it is closely related to SDG 10 (reduced inequality). This is because the spread of the virus across populations has been regarded as being closely linked to inequality (i.e. people living in poverty and those having underlying health conditions —which are correlated— were the most vulnerable during COVID-19. The fact that SDGs are interconnected justifies further the idea that public and private organizations need to respond to SDGs in a systemic way rather than picking one that is at their advantage [42].

Finally, there is a strategic challenge that those who invest in SDGs have to deal with: how to align countries and companies’ strategies to advance resilient and sustainable societies. Van Zanten and van Tulder [6] argue that in order to align countries and companies’ strategies SDGs need to be revamped as a navigating platform that will help navigate a VUCA world endangered by wicked problems [6]. A strategic logic is key for it enables (micro-level) companies to develop strategies that impact (macro-level) policy goals. The strategic logic allows private organizations to promote and invest in SDGs as they complement the investment of public institutions. The advent of the SDGs in 2015 provided businesses with a clear logic for aligning their corporate sustainability strategies with the world’s most pressing sustainable development challenges. SDG framework provides private organizations with massive business and investment opportunities. For instance, achieving the SDGs is argued to present an annual US$12 trillion investment opportunity [43]. Achieving the SDGs requires investments, as well as technological and managerial innovation, that can deliver on the goals. Businesses are well positioned to provide these inputs and consequently seize these opportunities and reap long-term rewards. In this sense, SDGs reflect business opportunities that are waiting to be seized [6]. Companies lack a thorough understanding of the business case that the SDGs represent. This is the main barrier to aligning core operations with the SDGs. Companies “are struggling to articulate the business case within their own operations” [44].

There are different implications associated with the three logics. Hybrid governance challenges and complement wicked problems theory. We saw that wicked problem theory, at least in its early formulation, seems to discourage strategy-making approaches like the one that brought up in the Agenda 2030. Hybrid governance shows that it is relevant to set goals and measure outcomes for a better solution to challenges. In other words, policymakers and leaders are right to set goals, measure performance to steer impacts, and find solutions to grand challenges. It is only when one is able to measure the progress that one can be able to know how much effort are needed and to what extent the challenges have reduced. Without measurement, there is no improvement and without strategy-making, there is no taming of problems. The second implication concerns the interaction between solutions. Whereas wicked problem theory tells us that one problem may be the root cause of another problem, the systems logic shows not just that but more importantly that solutions are interlinked. One solution to a wicked problem may lead to another wicked problem solution. For instance, by investing in education (SDG 4), there are chances that those who are educated will adopt attitudes and receive knowledge that will allow them to protect the environment and prevent more global warming (SDG 13). This systemic approach gives more power to solve challenges simply because one does not solve one problem at a time but more problems in a more or less synchronized way and from different angles. If problems are interconnected, their solution should interact and require coordination. Finally, the strategic logic implies not only that it is important to make strategy but it provides better ways to adopt those strategies, through for instance mutual collaboration between companies and government institutions. On their own, governments are unable to solve wicked problems without relying on the know-how of companies. But companies need to adopt strategies that allow them to invest in SDGs. To truly cease the investment opportunity that SDGs present and at the same time work toward achieving the Agenda 2030, companies will have to adopt Socially Responsible Investment.

3.4 Sustainable investment: adopting socially responsible investment

One of the most efficient ways to invest in SDGs that cut across different levels of government and institutions is adopting Socially Responsible Investment (SRI) as a way of being and acting (i.e., new modus vivendi). Adopting SRI is the best way to reduce a negative impact on society as a whole, thereby making change and contributing to solving the ills that have been affecting human lives for many years. Nonetheless, to have a truly lasting impact more institutions need to align their investment strategies with SRI. The challenges are so great and extensive that they cannot be left to the voluntary initiatives of some companies. The characteristics of a VUCA world seem to oblige us all to join the efforts of transforming the world for better. SRIs—also known as ethical or sustainable investments—are gaining momentum among scholars and practitioners. The extant literature defines them not only as “a result of increasing social awareness by institutions but primarily as a result of the increasing public (beneficiary) interest in social responsibility” [45]. SRI can be also defined as an investment process that integrates ethical values, environmental protection, improved social conditions and good governance into traditional investment decision-making [46]. SRI takes into consideration social, environmental, and governance factors in its management strategies and policies [6].

Over the past years, there has been an increase in sustainable investment. Reports show that toward the beginning of 2020, global sustainable investment increased by 15% for the 2018–2020 period totaling USD35.3 trillion in five major markets. The unprecedented growth in global sustainable investment is first of all due to the fact that the financial crisis of 2007–2008 increased the fear that weak corporate governance and risk management practices can have telling consequences on financial markets and world’s economies. Second, the challenges entailed in the climate change process and depletion of natural resources and biodiversity loss have led to people calling public as well as private economic organizations to embrace more responsible behavior and coordination at the global level [47]. Many are becoming aware that if open societies are unable to transform from fragile into more sustainable and resilient economies, repeated systemic crises are inevitable [6]. To encourage more sustainable development, regulators, investors, media, and civil society have been called upon to reward sustainable behavior and condemn unsustainable behavior [38]. Some scholars have predicted that all assets, including fixed income, will increasingly be measured also by social and environmental outcomes and externalities [39]. Proponents of SRI are convinced that a well-developed and ethically oriented financial system can contribute to the achievement of the global goal of sustainable development and build a more sustainable society to live in [48].

To reflect the urgent need of SRI, financial institutions, among others, have parted ways with the exclusive focus on profit maximization and shareholders’ wealth to a growing attentiveness about environmental issues like the green and low-carbon economy and the climate change adaptation and mitigation. Such a shift is becoming fundamental in the transition toward sustainable development [46]. To contribute to the alleviation of problems associated with global warming many different investors are moving from a “traditional view” of economic theory going back to expected utility theory, which argues that investors are there to maximize wealth [11]. In similar moves, companies are making investments that combine the traditional financial perspective with a perspective that is influenced by and oriented toward social and environmental issues [10]. For instance, many asset owners are looking to increase investments that make a positive social and environmental impact on top of their financial objectives. Others are reassessing their investment policies in the light of climate change risks and policies in line with Paris COP21 r and SDGs. We are entering an era where companies are adopting the integration of ethical values, environmental protection, improved social conditions, and good governance into traditional investment decision-making [49]. Such a combination represents one of the major drivers of the transition toward and the contribution to sustainable finance and, consequently, to sustainable development [46]. This shift needs to be accelerated and adopted on a great scale to have a meaningful impact on people’s lives and on future generations.

Embracing SRI means that institutions have to be aware of interactions that may exist between SDGs. SDG investment will bring about synergies, that is, situations in which achievements on one goal contribute toward progress on other goals—as well as trade-offs—, that is, situations in which progress achieved on one goal will produce effects detrimental to other goals (or parts thereof) [34]. For example, investments and interventions in the field of childhood health are regarded as having large returns due to long-term gains. Moreover, childhood health is assumed to have important synergetic effects on education and poverty [34]. Similarly, infrastructure investment impacts not only SDG 9 on infrastructure, but also SDGs 7, 11, and 13, respectively, on energy, cities, and climate. Current energy, transport, building, and water infrastructure make up more than 70% of global greenhouse gas emissions. Therefore, as new investment replaces existing infrastructure, there is an opportunity for such investment to contribute to climate change solutions [38]. In a particular way, infrastructure investment has to abide by SRI principles simply because the decisions today have repercussions for the duration of the infrastructure’s lifespan and have an especially large effect on climate change [38].

4. Methodology and data collection

The analysis above will be supplemented by an empirical quantitative analysis. To do that, we use datasets developed by Gemeente-en-stadsmonitor (GSM) and IDEA Consult for the year 2016, 1 year after the launch of SDGs. This data are gathered for all 300 municipalities and cities of the Flemish Region in Belgium. GSM carries a survey once in 3 years, while IDEA Consult gathers data every year to include in its SDG monitor. In order to come up with the final SDG indexes per municipality and city, GSM and IDEA Consult rely on many indicators that are related to SDGs. Cities and municipalities try to invest in SDGs using the means at hand so as to contribute to the achievement of the UN Agenda 2030.

To analyze these data sets, we use a Multivariate Analysis of Variance (MANOVA). This multivariate statistical method allows us to find out the multivariate effects of investing in SDGs in solving wicked problems, using the example of climate change. To solve the issue of collinearity between independent variables, the collinearity test allowed us to select variables that are not so much related among themselves. We were left with SDG 4, SDG 6, SDG 7, SDG 9, SDG 11, SDG 12, and SDG 13. For dependent variables, we have three variables that are used to protect the environment or reduce the effects of global warming in the Flemish municipalities and cities (i.e., solar panels, wind turbines, and sewerage). Before performing a MANOVA, we conduct descriptive statistics (Table 2).

Variable	Obs	Mean	Std. dev.	Min	Max
Solar panels	294	408.9712	208.7047	37.13	1164.06
Wind turbines	294	0.5774221	1.352458	0	8.35621
Sewerage	294	83.02432	14.74722	3.15	100
sdg4_index	300	56.74667	5.805299	29	74
sdg6_index	300	60.53333	8.707177	24	91
sdg7_index	300	38.67	4.85038	19	51
sdg9_index	300	50.05	7.438544	21	74
sdg11_index	300	52.18667	6.291032	26	69
sdg12_index	300	55.66667	6.760268	38	83
sdg13_index	300	71.15	6.531183	54	88

Table 2.

Descriptive statistics.

5. Result analysis

Table 3 shows that four test statistics are reported for the group effect: Wilks’ lambda (W), Pillai’s trace (P), the Lawely-Hotelling trace (L), and Roy’s largest root (R). All four are used to test the null hypothesis that the means of the dependent variables are equal across all levels of the independent variables. Roy’s largest measures the largest eigenvalue of the between group covariance matrix. This refers to the amount of variability in our dependent variables, which are explained by the independent variables. Although Tabachnik and Fidell (2006) support reporting Wilks’ lambda instead of the other values [50], we will use all four tests. Opposite of the other test statistics, Wilks’ lambda’s values close to 0 indicate large omnibus effects [51]. In our case, the Wilks’ lambda is 0.0069. This means that our independent variables have a strong effect on the dependent variables. The value of Pillai’s trace ranges from 0 to the number of dependent variables (3 in our case), with larger values, indicating a stronger effect of the independent variables on the dependent variables. The Pillai’s value is 2.4060, which again shows a strong relationship between independent and dependent variables despite the variability among variables. As expected, SDG 11 (0.9714) has the weakest effect, while SDG 9 has the strongest effect (1.3724). The same conclusion applies to the Lawely-Hotelling trace test. In addition, the value of the Lawley-Hotelling trace is used to calculate the corresponding p-value, which is then used to assess the statistical significance of the independent variables. In our case, the Prob>F ranges between 0.0000 and 0.0504, which means that the p-value is less that 0.05 (i.e., the level of significance). Again, this proves that there is a significant effect of our independent values and the dependent variables.

Source	Statistic	df	F(df1,	df2) =	F	Prob>F
Model	W	0.0069	225	675.0	199.0	1.26	0.0264 a
	P	2.4060		675.0	204.0	1.22	0.0413 a
	L	13.4663		675.0	194.0	1.29	0.0164 a
	R	6.6187		225.0	68.0	2.00	0.0005 u
Residual			68
sdg4_index	W	0.2315	31	93.0	198.4	1.35	0.0432 a
	P	1.1235		93.0	204.0	1.31	0.0566 a
	L	1.9718		93.0	194.0	1.37	0.0346 a
	R	0.9681		31.0	68.0	2.12	0.0050 u
sdg6_index	W	0.1741	40	120.0	198.6	1.31	0.0459 a
	P	1.3110		120.0	204.0	1.32	0.0415 a
	L	2.4198		120.0	194.0	1.30	0.0504 a
	R	1.1522		40.0	68.0	1.96	0.0072 u
sdg7_index	W	0.1559	26	78.0	198.2	2.19	0.0000 a
	P	1.3003		78.0	204.0	2.00	0.0001 a
	L	2.8734		78.0	194.0	2.38	0.0000 a
	R	1.7846		26.0	68.0	4.67	0.0000 u
sdg9_index	W	0.1447	40	120.0	198.6	1.50	0.0058 a
	P	1.3724		120.0	204.0	1.43	0.0121 a
	L	2.9296		120.0	194.0	1.58	0.0023 a
	R	1.7657		40.0	68.0	3.00	0.0000 u
sdg11_index	W	0.2995	30	90.0	198.4	1.09	0.3005 a
	P	0.9714		90.0	204.0	1.09	0.3146 a
	L	1.5301		90.0	194.0	1.10	0.2913 a
	R	0.7402		30.0	68.0	1.68	0.0401 u
sdg12_index	W	0.2598	28	84.0	198.3	1.34	0.0487 a
	P	1.0275		84.0	204.0	1.27	0.0925 a
	L	1.8593		84.0	194.0	1.43	0.0225 a
	R	1.2205		28.0	68.0	2.96	0.0001 u
sdg13_index	W	0.1900	30	90.0	198.4	1.64	0.0023 a
	P	1.2412		90.0	204.0	1.60	0.0033 a
	L	2.3311		90.0	194.0	1.67	0.0016 a
	R	1.3153		30.0	68.0	2.98	0.0001 u
Residual			68
Total			293

Table 3.

Multivariate tests.

Number of observations = 294.

W = Wilks’ lambda; L = Lawley-Hotelling trace; P = Pillai’s trace; and R = Roy’s largest root.

e = exact, a = approximate, and u = upper bound on F.

We, therefore, reject the null hypothesis that investment in SDGs does not lead to a solution of wicked problems. The same conclusion applies to Roy’s largest root, which shows a significant effect between independent values and dependent values since the p-value 0.005. Prior research shows that multivariate analysis helps in outcome variable selection [52]. This would entail that SDG 9 is the most important aspect to consider for organizations making an effect on climate change.

The advantages associated with using MANOVA include the fact that it allows us to test multiple independent variables at the same time, unlike methods such as ANOVA. In that case, we are able to assess patterns between dependent variables. While MANOVA has the advantage of providing a single, more powerful test of multiple dependent variables, it can be difficult to interpret the results [53].

6. Concluding remarks

The main aim of this chapter was to examine how investing in SDG relates to finding solutions to wicked problems in order to navigate the VUCA world. Practitioners and scholars of public administration and investment strategy have recently begun to recognize that a state capacity to manage a crisis such as global warming is dependent on the cumulative investments that a state has made in its ability to govern, do and manage. While crises and ensuing challenges are serious for all, it is especially a challenge for countries that have ignored those needed investments [54]. We conclude that there is a significant relationship between investing in SDGs if one has to solve wicked problems, such as global warming. All the SDGs we examined as our independent variables (i.e., SDG 4, SDG 6, SDG 7, SDG 9, SDG 11, SDG 12, and SDG 13) have a significant effect on solutions to climate change. These solutions include installing solar panels, wind turbines, and sewerage. It must be acknowledged that each element has an impact that is different from other elements. Secondly, the research was carried out at a local level. Future research needs to carry out the investigation at a macro level.

The chapter contributes to the existing body of knowledge by offering support to the many findings that point out the growing challenges of a VUCA world and the expectations that wicked problems that result thereof need to be solved. The chapter proposed that investing in SDGs by embracing SRIs as modus vivendi for both public and private institutions is a realistic way of tackling wicked problems. Our analysis showed and is in agreement with prior studies that demonstrated that achieving the SDGs would bring about a safer, more stable world with fewer natural and manmade hazards, thus lowering the likelihood of future crises occurring [6]. Backsliding on the progress already made on the SDGs imperils prospects for eradicating basic deprivations and reduces resilience to other shocks in the future [8]. This justifies the argument that there is a need for more investment in SDGs. Results will inform policymakers and politicians in their quest to solve wicked problems.

Theoretically, the chapter showed that wicked problems can be tackled and a VUCA world can still be navigated if more SRI investments are made. The theoretical and conceptual analysis adopted also allowed us to understand why wicked problems have been difficult to solve. We proposed better ways to navigate wicked problems. This gives a different image of wicked problems which were once thought to be insolvable. In line with the implication for practice, the chapter showed that collaboration between private and public sector in tackling wicked problems is paramount. Leaders across sectors now recognize that the challenges are too great and too systemic for any one of them to tackle alone and that mobilizing more resources for the SDGs will require a continued and close collaboration between the public and private sectors. The importance of collaboration and networking among actors is highlighted in SDG 17. Encouraging the joint engagement of a multiplicity of actors, such as governmental and nongovernmental institutions, businesses and individual citizens will be a critical condition for the achievement of Agenda 2030 [32]. Tackling grand challenges requires not just collaboration but revitalizing private and public investment [54]. These symbiotic public–private collaborations will bring more value and meaning to SRI and embracing SRI as an investment strategy will improve economic, social, and environmental performance, thereby providing a lasting solution to global challenges.

There are a number of limitations to the findings in this chapter. There is a need to provide more rigorous empirical research at the macro level to examine the extent to which SDG investments at different levels and in different sectors help tackle wicked problems. Future studies could adopt other quantitative methods of analysis to complement this MANOVA conceptual analysis.