Unleashing action on the Sustainable Development Goals
The potential: $12 trillion per year in market opportunities and 380 million jobs by 2030.
We are seeing tremendous private-sector momentum behind the adoption of the United Nations' Sustainable Development Goals (SDGs). With the current political and economic uncertainty, corporate leaders are stepping up to drive the sustainable development agenda that the SDGs represent.
Tim Mohin, chief executive of the Global Reporting Initiative (GRI), an independent standards organization, addressed the growing expectation on the business community: "When the revenues of large companies exceed the GDP of many countries, and supply chains stretch around the world, the private sector plays a vital role in achieving the Sustainable Development Goals."
The SDGs point to future growth opportunities and likely upcoming regulation. Incorporating the SDGs into a company’s long-term business strategy mitigates potential risks and positions the company well to address trends in sustainable development. Leaders who forge ahead of others in addressing the SDGs will reshape markets.
According to the Better Business, Better World Business & Sustainable Development Commission, using the SDGs to unleash innovation and economic growth could be worth at least $12 trillion each year in market opportunities and generate up to 380 million new jobs by 2030.
To achieve the U.N.’s 2030 Agenda, business leaders must weave the SDGs into their long-term business strategies and collaborate — with governments, sector peers, policymakers, NGOs and more.
Outlined in the United Nations Global Compact’s (UNGC) Blueprint for Business Leadership on the SDGs (PDF), and reinforced by the perspectives of the World Business Council for Sustainable Development (WBCSD) and the Global Reporting Initiative (GRI), the key steps to advancing the SDGs are to prioritize, act and learn.
On a company level, this begins by understanding the current state. Map existing material topics and business priorities and commitments to the SDGs, down to the target, or even indicator, level.
Most companies’ disclosures on the SDGs to date cover what the company is doing and how it aligns with the SDGs. Often, the discussions stop there. However, if we are to achieve the 2030 Agenda, companies need ambitions that exceed current commitments.
Where are the company’s greatest opportunities to mitigate negative impacts and maximize positive impacts? Where can the company use its expertise to drive innovation against the SDGs? Previous risk and materiality assessments can aid in this process. These become the priority SDGs for the company, its entry point to the 2030 Agenda.
For top priority SDGs, gather your leadership team and various experts from inside and even outside the organization to discuss potential future ambitions. Involving representatives from your executive leadership team grounds this conversation in support of business objectives and garners buy-in.
Leaders who forge ahead of others in addressing the SDGs will reshape markets.
Organizations’ contributions to the 17 goals will come in different forms — from product and process innovation to governance, investment, partnerships, advocacy and requiring new supplier solutions. Each option should be considered, and the meeting organizer should arrive prepared with ideas for collaborations that could help scale and drive the agenda.
To identify what to move forward, determine the benefits for the various stakeholders — the potential impact on society, the planet, your partners and your company. Keep in mind that advancing the SDGs can and should lead to new market opportunities and economic growth. These goals can be a win-win for business and society.
For an example of a leading practice on aligning and prioritizing the SDGs, look to the strategy being executed by Kohler. Kohler conducts annual Innovation for Good retreats, where associates from around the world come together to discuss ways to use their knowledge and expertise to craft solutions that address significant sustainability issues. These ideas move on for development, testing and ultimately implementation, if viable.
Ideas such as the Kohler Clarity water filters are being designed to address water and sanitation challenges in developing countries. While Kohler’s stewardship program could be tied to several of the 17 SDGs, it narrowed in on the three that most directly relate to its products: SDGs 6, 7 and 12 — Clean Water and Sanitation; Affordable and Clean Energy; and Responsible Consumption and Production.
With the increased ambition to advance a win-win solution, companies should embed their action plan into their long-term business goals — this will ensure consistency in messaging and implementation across business units, functions and regions. The implementation of these actions and goals will be accompanied by identification of clear systems and metrics by which to measure impacts and progress.
The SDG Indicators originally were developed for member states. To make the SDGs and associated targets and indicators relevant for the business community, the U.N. Global Compact turned to GRI for its expertise. In September, the U.N. Global Compact and GRI published "Business Reporting on the SDGs — An Analysis of the Goals and Targets (PDF)," which identifies KPIs within existing frameworks that may be used to track progress on the SDGs.
Business leaders must weave the SDGs into their long-term business strategies and collaborate — with governments, sector peers, policymakers, NGOs and more.
This analysis takes each SDG and the associated 169 targets and provides an inventory of possible disclosures. These disclosures — both qualitative and quantitative — are based on globally accepted disclosure frameworks for business. For example, you’ll find disclosures from GRI, CDP, U.N. Global Compact, the Women’s Empowerment Principles, International Labour Organization and several other frameworks. Any business can use these disclosures to report on its efforts towards achieving the SDGs.
The UNGC released SDG Industry Matrices in 2015, with "industry-specific examples and ideas for corporate action related to the SDGs." The matrices go in-depth on corporate actions by goal and provide many good examples of initiatives.
Learn and report
In the early stages of addressing these challenges, evaluation and adjustment will be critical to continue to advance progress. Companies committed to working on the SDGs should report their progress and learnings regularly. Mohin said, "By reporting on their progress, companies will improve their performance which will enable meaningful progress towards achieving the SDGs." The team managing the actions, goals and progress should meet on a regular basis (for example, quarterly) to evaluate, course correct and determine next steps.
When it comes to reporting, companies often ask, "What is the right way to report on the SDGs?" Although it can seem challenging to determine how to address and report on the SDGs, a positive sign is that companies quickly have adopted methodologies that work for their organizations. By 2017, just two years after the release of the SDGs, 47 percent of global GRI reports mentioned a connection to the SDGs. According to Alyson Genovese, head of corporate and stakeholder relations at GRI for the U.S. and Canada, "There is no established best practice for reporting on the SDGs." Companies may choose to report their progress through existing reports such as their annual GRI report or the annual UNGC Communication on Progress.
Concrete examples of reporting styles include:
- Novozymes reports on the connection between its material topics and the SDGs, as well as its contributions to the SDGs, in its Communication on Progress.
- 3M chose to call out alignment to the SDGs in its GRI Content Index (PDF), even though GRI does not require that the SDGs be referenced.
- Microsoft published a white paper (automatic PDF download), detailing its priorities, actions and progress. The page and standalone report can be updated as necessary, without updating the rest of its sustainability disclosures.
- Samsung dedicates a page in its 2017 Sustainability Report (PDF) showing its SDG alignment, associated impacts, current status and future plans.
- GM developed an SDG-specific index (PDF), directing stakeholders to the relevant areas of its report according to goals and its associated material topics.
When reporting, apply the same principle of materiality that applies in other ESG reporting frameworks. Companies should keep in mind what really matters — their priorities, how they were determined, their actions and their impacts. A tool to support this process is the SDG Compass, developed by GRI, the U.N. Global Compact and the World Business Council for Sustainable Development (WBCSD). The compass is a step-by-step guide for companies to align their strategies with the SDGs and measure and manage their impacts.
In whatever way businesses decide to report their progress, stakeholders are very interested in leadership on the SDGs from the private sector. Increasingly, institutional investors are looking to direct capital toward supporting the SDGs. RobecoSAM added criteria around the SDGs in 2017, and Corporate Knights spoke about adding an SDGs-impact criterion in the near future.
The emerging focus from standards bodies and increasing investor interest will continue to boost expectations from stakeholders. All of this activity will drive private sector organizations to learn from one another and adjust to enhance their positive impact.