GROWTH OPPORTUNITY

Sustainable Development Goals – the business case

BY Kiran Dhanapala

The Sustainable Development Goals (SDGs) developed by stakeholders including the private sector present an unprecedented opportunity to eliminate global poverty and put the world back on a sustainable path.

They also represent business prospects – the SDGs are expected to generate at least US$ 12 trillion in market opportunities by 2030, the Business & Sustainable Development Commission reveals. To do so, the private sector needs to position itself.

A 2019 UN report indicates that we must do more to achieve meaningful progress on the SDGs. While businesses recognise the need for stability and consistency, their uptake of the SDGs has been limited.

Companies tend to use SDGs at the broad goal level but don’t go into the specifics. Often, SDGs are used in reporting but aren’t comprehensively embedded in corporate strategy and activities. This keeps engagement general, fuzzy and not very useful.

A recent Pricewaterhouse Coopers (PwC) report identifies this trend. It highlights a gap between corporate intentions and the ability to embed SDGs into business strategy compared to a sustainability silo alone. Companies don’t embed SDGs into strategies and actions.

The PwC report is based on findings from 729 companies in 21 countries and territories across six broad industry sectors. It finds that 72 percent of firms mention the SDGs in annual or sustainability reports.

The goals are mentioned in a sustainability report (60%), elsewhere in an annual report (40%), CEO or chair statement (19%), other (18%) and separate integrated report (16%). Sectoral trends referencing SDGs in company reporting is highest in energy, utilities and mining (78%), and lowest in transport and logistics (63%).

Companies need to prioritise business relevant SDGs but only 50 percent identify priority SDGs. On average a company prioritises about 7.3 of the 17 goals, indicating spread rather than focus.

Popular but obvious goals dominate with many businesses focussing on decent work and economic growth (SDG 8), climate action (SDG 13), and responsible consumption and production (SDG 12). Goals such as life below water (SDG 14) merit less attention as does zero hunger (SDG 2).

Of the firms that prioritise the goals, only 54 percent mention them in their business strategy and 19 percent of CEO or chair statements in annual reports mention SDGs. A mere 27 percent of companies mention SDGs as part of their business strategy. Only 23 percent of firms disclose SDG related key performance indicators (KPIs) and targets.

A lack of detailed focus to measure corporate performance in relation to the goals can have several reasons.

Companies require more guidance on measuring the positive and negative impacts related to SDG targets. They need more clarity in linking SDGs to reporting frameworks and standards. Sector collaboration is slow despite some evidence of sectoral best practices. And varied and uneven government respon-ses and leadership mean that businesses wait for signals before investing.

Slow action by business implies increased environmental and social risks and burdens, dampening future growth prospects and increasing business costs. Not integrating SDGs strategically also implies long-term regulatory and reputational risks.

Business can better use the SDGs, and contribute to a resilient world and business, through several initiatives. First, prioritise SDGs in relation to where they can have the most impact. Do so by considering the target level. Act positively to meet a goal, identify the negative impacts of business activities in relation to it and find ways to stop or reduce the impact.

Second, use SDGs as part of a sustainability strategy and embed it throughout the company. And use indicators to measure own contribution and progress.

The UN report on SDG progress also emphasises the need for better data and contributions from the private sector, which refers to clearly stating what you’re doing to be counted.

Finally, broader engagement is needed urgently. Humanising the SDGs helps create engagement and makes them achievable. The Good Life Goals (GLGs) – 85 daily actions individuals and businesses can take – achieve this. They include five tasks for each of the 17 SDGs covering learnings, increasing behaviour challenges, fun, positivity, challenging overconsumption, and demanding change from leaders including business.

For business, they link company products or services with actions to improve their sustainability and how brands relate to consumers’ lives.

GLGs help businesses improve customer engagement, understanding how their actions and lifestyles link with SDGs. They also offer firms a tool for staff engagement across internal activities, promoting SDGs and a supportive behaviour culture. And they can be aligned with sustainable lifestyles through innovative product development and sustainable consumption choices.