Sustainability Goals: we’re off track.

Image by Free-Photos from Pixabay

Fiona Reynolds, CEO of Principles for Responsible Investment (PRI), said on 22 June ‘we’re off track in creating a world that’s aligned with the SDGs.’ She went on to say that this was a ‘critical moment for investors to move towards an SDG-aligned world.’ Sustainable Development Goals (SDGs) simply provides a framework for organisations to plan and implement initiatives, and measure the progress they are making against them. My interpretation of what experts are saying about progress, and it is my interpretation, is that sustainability in the economic, environmental and social spheres is not just about PC posturing. In a commercial sense, it is about truly ensuring the long-term viability of systems. It is about ensuring the longevity of a business, and indeed all its impacted stakeholders as the firm goes about making its much needed profit. 

What are Sustainable Development Goals?

The UN’s Sustainable Development Goals (SDGs) were adopted by Member States in 2015 as part of a wider agreement to The 2030 Agenda on Sustainable Development. There are 17 core goals covering all sectors of society, and the wider environment. The aim is to meet these 17 by 2030. These goals neatly tie in with environmental, social and corporate governance (ESG) strategy, and inform best practice. They were born from the simple fact that humanity cannot continue as we have been doing. The business world, as well as other sectors, has to recognise that change is not just desirable, it is a necessity – especially as we seek to rebuild our economy and society post Covid-19.

For business, these 17 integrated goals formulate with the concept of the triple bottom line. Sustainable business must not be based solely on the financial bottom line, but on the following three pillars, which are now widely accepted across different sectors :

1. The Environmental Pillar (carbon footprint, waste, energy use, water use, and conservation)

2. The Social Pillar (health, welfare of labour, stakeholders, and the wider community)

3. The Economic Pillar (the bottom line, but also broader economic value).

Assessing business initiatives, firms must analyse how they can meet the needs of the present (mainly profit), without compromising the ability of future generations to meet their needs. The SDGs help facilitate deeper thought about how this can be achieved and what exactly that means for a firm’s actions – now and in the years to come.

What the Corporate Sector Has to Do, and Why

In 2012, the UK became the first nation to establish mandatory inclusion of emissions data in their annual reports. In 2014, the European Parliament passed a vote requiring mandatory disclosure of non-financial and diversity information by certain large companies and groups, on a ‘comply or explain’ basis.

Beyond the somewhat narrow compulsory disclosure requirements, firms have been increasingly forced to consider the importance of voluntary disclosure. Many choose to collate and disseminate more data relating to sustainability. Business is recognising, and to an extent being driven by, the demands of shareholders and a general public who are increasingly more aware of our climate crisis, and indeed social injustices. Full transparency can help firms analyse systems and processes, and hone and optimise these for best practice. 

It is only when there is full transparency of business practice and disclosure, that true sustainability can at least start to be achieved. Disclosure in itself can promote transparency, reduce greenwashing, and encourage competition, which in turn inspires greater sustainability and ethical practice. Awareness of control systems and power dynamics is crucial to generating sustainable change.

Measurement and Reporting Frameworks

One of the major challenges in sustainable business and sustainable development lies in determining how we can measure value and progress within the three pillars of sustainability. Adequate internal measurement and monitoring, sustainability audits and sustainable reporting are key to gathering the data required to provide an accurate disclosure. Larry Fink, CEO of BlackRock wrote in his CEO letter of 2018 ‘every company must not only deliver financial performance, but also show how it makes a positive contribution to society.’ 

Along with important frameworks for reporting, the UN’s SDGs can help Boards (influenced by shareholders) analyse, measure, and report on sustainability. Having a common set of goals allows for consistency in measurement and the ability to benchmark against peers. 

UN’s 17 SDGs