The appeal of the SDGs for companies and financial institutions is that they harmonize the social, environmental and economic aspects of sustainable development—and perhaps most importantly—provide a clear vision of what the international community wants to achieve. It gives meaning and purpose, not just to corporate sustainability programs, but to an organization’s business objectives.
Achieving the goals could create over $12 trillion per year in business value…
There are also pragmatic business reasons for pursuing the SDGs. Achieving the goals could create over $12 trillion per year in business value in clean and efficient energy, affordable housing and access to healthcare, and material efficiency and waste management.
But there are challenges with the SDGs. Although three quarters of companies under the UN Global Compact say they are taking action to meet the SDGs, this is often for a single goal—usually ones pertaining to creating good jobs, economic growth, health and well-being. Moreover, some of these companies only choose to report against goals that correspond to existing environmental or social targets.
A few multi-stakeholder organizations have developed SDG reporting frameworks to help companies and financial institutions including the Cambridge Institute for Sustainable Leadership, the Dutch SDG Investing Agenda, the GRI and UN Global Compact, Earth Security Group with HSBC, and the Sustainable Development Investment framework. Although they are a great first step, some are too generic and lacking in precise metrics while others are more detailed but struggle to address global goals or the need to create business value.
Building on almost 20 years of experience working with companies and financial institutions on measuring ESG performance and integrating it into business and investment decisions, Trucost considers that a successful SDG framework should be based on the following best practice principles:
- Total value creation: incorporate financial, social, and environmental value creation to assess materiality and quantify impacts
- Comparable: allow investors and other stakeholders to compare performance within and across industry sectors as well as assets classes
Trucost considers that an SDG framework based on these principles would strike the right balance between being applicable to a wide range of sectors, yet adaptable to sector-specific issues; holistic to incorporate social, environmental and economic aspects of sustainable development, yet focused to capture the most significant impacts for a business; idealistic to inspire business leaders and employees, yet pragmatic to make good business sense.
Libby Bernick will be speaking about how companies can evaluate progress towards the Sustainable Development Goals at the Sustainable Brands New Metrics conference on November 13th-15th. Trucost will set out its thinking on SDGs in more detail in a forthcoming discussion paper entitled Moving Forward with SDGs: Metrics for Action. Go to www.trucost.com for more information.
This article first appeared on CSRwire