How the SDGs will change sustainability reporting

 

Let me begin this short article by pointing out there is an excellent document called the SDG Compass: the guide for business action on the SDGs jointly written by the Global Reporting Initiative (GRI), the UN Global Compact and the World Business Council for Sustainable Development (WBCSD). I strongly encourage you to refer to it for more details on sustainability reporting and the SDGs.

If a sustainability issue was considered material from a GRI standpoint, it should also be material from an SDG standpoint. 

Sustainability reporting is not a new thing. Various companies issued social accountability reports as far back as the 1970s. Occasionally they were valiant attempts to describe a company’s impact on the environment and society, but often they were glossy public relations one-offs that, under closer scrutiny, generated more heat than light about the issuer’s performance.

It wasn’t until the late 1990s and early 2000s when the Global Reporting Initiative (GRI) began issuing its series of Reporting Guidelines that corporate sustainability reports started to become coherent, consistent, and comparable. The GRI Guidelines, while not an official standard, became the de facto standard for sustainability reports. The GRI provided guidance on what to report and how to report it. All in all it was a significant advancement in the evolution of sustainability reporting.

It can be argued the next stage of evolution began in September 2015 when the United Nations released its final ratified version of the Sustainable Development Goals (SDGs). Companies (and other organizations) have been asked to not only support the goals and associated targets but to report on their progress against them in their sustainability reports.

At first blush, this may seem like an impossible task: “you mean we have to take action on all 17 goals and 169 targets and report on our annual progress?”

Well, no.

As I mentioned in my LinkedIn post “How can we possibly achieve the 17 SDGs by 2030“, no organization is expected to take on all 17 goals and all 169 targets. Instead, organizations should go through a process of evaluating the materiality of the each SDG to its activities, similar to what is recommended by the GRI when selecting which key performance indicators (KPIs).

For the first time, the SDGs provide an opportunity for all companies in all sectors to drive performance in the same direction to achieve shared goals and targets.

In other words, if you already use the GRI guidelines, then chances are you already conduct periodic materiality assessments. You use the same assessments to select the SDGs that are most material to your company (I am simplifying for brevity; check the SDG Compass document for more details).

In terms of measuring your performance against the high priority SDGs, you should find that you already have (most of) the necessary performance information. If a sustainability issue was considered material from a GRI standpoint, it should also be material from an SDG standpoint. This means your existing KPIs should already be generally aligned with your key SDGs.

What will be new are:

  • you need to establish a baseline for each SDG / target; most companies will pick 2015, the year the SDGs were released
  • identify your company’s target for the year 2030, and a high level description of how you intend to achieve it. You may pick the targets issued by the UN, or you may choose something different.
  • report on your progress annually against your goals and targets using the KPIs and data you would already normally report.

So what is the big difference? Well now your KPIs are reported in the context of specific goals and targets. And not just any goals and targets, but globally shared goals and targets. For the first time, the SDGs provide an opportunity for all companies in all sectors to drive performance in the same direction to achieve shared goals and targets.

For example, instead of simply reporting

“last year we reduced our total water consumption by 2.3%”

you could report something along the lines of:

“Our overall goal, in line with our commitments to the SDGs, is to reduce our overall water consumption by 10% by 2030. Last year we were able to achieve a 2.3% reduction. We remain confident we are on track to meet our 2030 goal.”

For the past 15 years sustainability reporting has, on the whole, improved because growing adherence to the GRI Guidelines made the reports more consistent and comparable. The introduction of the SDGs represents the next phase of evolution: the addition of direction and context to the reports. “Here’s what we are trying to achieve in the long run, and here’s how we actually performed last year.”

KPIs will no longer reported in a contextual vacuum. They will be reported in the context of the SDGs.  And as the saying goes: “context is everything”.

This article first appeared on LinkedIn
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Mel Wilson
is a Partner and National Leader, Sustainable Business Solutions at PwC Canada. You can reach him here or follow him on twitter at @mjwcalgary