The SDGs and Businesses

The?17 Sustainable Development Goals (“SDGs”)? of the?2030 Agenda for Sustainable Development were adopted by world leaders in September 2015 and went into effect on January 1, 2016.? While it is expected that national governments would take the lead in efforts to pursue and achieve global progress with respect to the SDGs, the SDGs are often incorporated into the sustainability-related mission and objectives of individual businesses and other organizations.? Businesses have been called upon to contribute to certain of the SDGs such as access to basic services, participation in decision making, full and productive employment and decent work, reducing income inequality, ensuring equal opportunity, promoting peaceful and inclusive societies, providing justice for all, and building effective, accountable, and inclusive institutions at all levels.? Delivery of the SDGs should be important to businesses that realize that they will not be able to achieve sustainable success in a world of poverty, inequality, unrest, and environmental stress.? As such, it has been argued that companies should contribute to the SDGs not just by “doing good”, but also by upholding recognized standards and principles on human rights, labor, the environment, and anti-corruption and transparently reporting on their SDG-related priorities and efforts to investors and other stakeholders.[1] ?

The SDGs have become more popular as prompts for identifying and developing appropriate sustainability commitments for businesses, and even goals and targets although adjustments must be made from the SDGs since their targets were established for States.? Sustainable entrepreneurs, as well as leaders of all companies that are embarking on formalizing their sustainability commitments, can begin the process by familiarizing themselves with the SDGs and their targets and then proceeding with a methodical assessment of the risks and opportunities—in financial and non-financial terms—as well as the impacts of operations and business relationships associated with their business model across the issue areas covered by the SDGs.? No business, much less a startup, can reasonably commit to addressing all 17 SDGs, so sustainable entrepreneurs need to prioritize those SDGs as to which they can exert the most influence.? When starting out, patience and restraint is important, even if means deferring action on opportunities that seem to be particularly promising.? Sustainable business means embedding sustainability commitments and processes that will survive and thrive over the long-term, even as immediate risks and opportunities evolve, change, and disappear.? Sustainable entrepreneurs need to define the commitments, and related goals and performance metrics (using commonly used indicators to facilitate comparability with other organizations and third-party verification), that make sense for their business at their specific stage, and then identify the actions and investments that are necessary to improve performance and assign ownership and accountability for each of them.

Each of the 17 SDGs has specific targets (169 in total) and indicators (248 in total) that were created to allow States to establish measurable objectives and track and report on progress. Sustainable entrepreneurs can use the SDG framework directly to create their own framework for responsible business conduct—in fact, almost three quarters of the world’s largest companies report on their alignment with the SDGs—or they can use other sustainability standards such as the UN Global Compact or the IFC’s Policy and Performance Standards on Environmental and Social Sustainability (“IFC Performance Standards”) and focus on the links between the requirements of those standards and the relevant SDG targets and indicators.? For example, an analysis conducted by the IFC found that the IFC Performance Standards directly address all 17 SDGs, 75 SDG targets (44%) and 104 SDG indicators (42%) and argued that companies adopting the IFC Performance Standards (and the IFC’s Corporate Governance Methodology Parameters) could simultaneously reduce ESG risks associated with their activities and contribute to advancing the SDGs.[2]

A good example of how this might work comes from looking at a key strategic issue for sustainable entrepreneurs—accessing the human resources necessary for them to pursue and achieve their business goals.? Several SDGs address some aspects of the world of work; however, SDG 8 (Decent Work and Economic Growth) is particularly on point.? Among other things, targets associated with SDG 8 include supporting job creation and growing enterprises; full employment and decent work with equal pay; ending modern slavery, trafficking, and child labor; and protecting labor rights and promoting safe working conditions.? According to the IFC, several IFC Performance Standards address SDG 8, with the most relevant for this illustration being IFC Performance Standard 2 (Labor and Working Conditions), which recognizes that the pursuit of economic growth through employment creation and income generation should be accompanied by protection of the fundamental rights of workers.? The IFC also found that IFC Corporate Governance Parameters 2 (Structuring and Function of the Board of Directors) and 6 (Governance of Stakeholder Engagement) addressed SDG 8 by calling on companies to ensuring that the board of directors is qualified and adequately structured to oversee the strategy, management, and performance of the company and that the company has an adequate procedures and policies for stakeholder engagement and intaking and resolving grievances.

When discussing its Performance Standard 2, the IFC has noted that the workforce is an asset for any business and that a sound worker-management relationship is a key ingredient in the sustainability of a company.? Sustainable entrepreneurs need to acknowledge that failing to establish and foster a sound worker-management relationship from the beginning of the business can undermine worker commitment and retention and jeopardize the sustainability of the company and its ability to create and distribute its products and services to generate the desired impact.? At the same time, a sustainable entrepreneur who can create and maintain a constructive worker-management relationship by treating workers fairly and providing them with safe and healthy working conditions can create tangible benefits including enhancement of the efficiency and productivity of their operations.? Sustainable entrepreneurs should commit to policies and practices that are aligned with the objectives of IFC Performance Standard 2 including promotion of fair treatment, non-discrimination, and equal opportunity of workers; establishment, maintenance, and continuous improvement of the worker-management relationship; compliance with national and state employment and labor laws; protection of workers, including vulnerable categories of workers and workers in the company’s supply chain; and promotion of safe and health working conditions and the physical and mental health of workers and their families.? Regarding IFC Corporate Governance Parameters 2 (Structuring and Function of the Board of Directors) and 6 (Governance of Stakeholder Engagement), sustainable entrepreneurs should put human resources policies in place to attract, retain, and motivate staff, and establish company mechanisms to allow workers to safely communicate their concerns and have them resolved through fair grievance procedures.? In addition to addressing and protecting the fundamental rights of workers, IFC Performance Standard 2, like SDG 8, is also focused on employment creation and income generation, and sustainable entrepreneurs can make their contribution by establishing and achieving goals for creating new jobs for members of vulnerable groups and in previously underdeveloped communities.[3]

There is no formal disclosure framework that has been specifically developed relating to business reporting on the SDGs; however, reference can and should be made to several useful and evolving guidance documents and related tools:

• The SDG Compass, developed by the Global Compact, Global Reporting Initiative (“GRI”), and the World Business Council for Sustainable Development (“WBCSD”), includes preliminary information on the SDGs for business.[4]
• The Value Driver Model, developed by the Principles for Responsible Investment (“PRI”) and the Global Compact, uses key business metrics to determine and illustrate how corporate sustainability activities contribute to overall performance and this tool can be used by companies to assess the financial impact of their sustainability strategies and communicate that impact clearly and effectively to investors.[5]
• “An Analysis of Goals and Targets”, developed by GRI and the Global Compact, contains qualitative and quantitative disclosures from globally established reporting frameworks that can be used by business to measure and report on their impact and contribution to the SDG targets.[6]
• “Integrating the SDGs into Corporate Reporting: A Practical Guide”, developed by the GRI, PRI and the Global Compact, can be used by companies alongside the Analysis to prioritize the SDGs, set business objectives, improve SDG-related performance, and disclose material information on outputs, outcomes, impacts and contributions to the SDGs.[7]

Part of making the business case for sustainability-related activities is identifying new opportunities that can simultaneously boost the financial performance of companies while supporting the universal drive toward achievement of the SDGs.? There are a number of resources available to businesses and other organizations looking for ideas on how to integrate the letter and spirit of the SDGs into their sustainability initiatives.[8]? For example, the Global Compact offers participants an extensive toolbox of resources that companies can use to do business responsibly and take action to achieve the SDGs.[9]? The “Better Business Better World” report identifies the 60 biggest market opportunities related to the achievement of the SDGs in the areas of food and agriculture (e.g., reducing food waste in the value chain, product reformulation, technology in large-scale farms, micro-irrigation and urban agriculture); cities (e.g., affordable housing, road safety equipment, water and sanitation infrastructure, office sharing and car sharing); energy and materials (e.g., expansion of renewables, resource recovery, energy access, shared infrastructure, energy efficiency and carbon capture and storage); and health and well-being (e.g., weight management programs, better disease management, better maternal and child health and health care training).[10]? While incorporating SDGs into a company’s sustainability commitments, goals, and targets is a promising initiative, research indicates that much remains to be done in converting the national-level goals and targets of the SDGs into company-level KPIs.[11]??

For further discussion of the SDGs as sustainability standards for businesses, see the author’s chapter on Sustainability Initiatives of Governmental or Intergovernmental Bodies .

Notes?

[1] Integrating the SDGs into Corporate Reporting: A Practical Guide (Global Reporting Initiative, Principles for Responsible Investment and United Nations Global Compact, 2018) , 4.

[2] Advancing UN Sustainable Development Goals through IFC’s Environmental, Social, and Governance Standards .

[3] IFC Corporate Governance Methodology Tools , IFC Performance Standard 2: Labor and Working Conditions (January 1, 2012) , and Good Practice Note: Non-Discrimination and Equal Opportunity (IFC, January 2006) .

[4] SDG Compass – A Guide for Business Action to Advance the Sustainable Development Goals .

[5] Value Driver Model (UN Global Compact) .

[6] Business Reporting on the SDGs: An Analysis of the Goals and Targets (UN Global Compact, 2022) .

[7] Integrating the Sustainable Development Goals into Corporate Reporting: A Practical Guide (UN Global Compact) .

[8] An extensive library of information relating to the SDGs, including an inventory that maps existing business tools against the SDGs, is available from SDG Compass .? SDG Compass suggests that the inventory can be used to explore commonly used business tools that may be useful when assessing an organization’s impact on the SDGs.? The inventory includes the name and description of the tool, identifies the developer of the tool and indicates that SDGs to which the tool is applicable.

[9] The SDGs Explained for Business (UN Global Compact) .

[10] Better Business, Better World (Business & Sustainable Development Commission, January 2017) .

[11] F. Giri and T. Chaparro, “Measuring business impacts on the SDGs: a systematic literature review”, Sustainable Technology and Entrepreneurship, 2(3) (2023), 100044 .