For everything that can be said about 2020, one certainty is it didn’t go to plan. Governments had whole policy agendas thrown to the side. Many businesses abandoned growth plans in favor of survival. And we all, as individuals, essentially stopped living our lives as we intended.
The challenges of the past year still loom large, but with the rollout of vaccines and a new US Administration that is supportive of international cooperation, we’re seeing the first signs we might be able to resume some of our plans as the year progresses.
Setting targets is not enough: a company must report against them and be transparent about progress.
Nowhere is this more important than progress toward our most ambitious, shared vision: the Sustainable Development Goals (SDGs). Agreed by the UN General Assembly in 2015, the SDGs set out a series of goals for the world to achieve by 2030. From eradicating poverty and hunger to tackling the climate crisis, the SDGs encompass the most fundamental challenges we face as a society. They are simple and daunting in equal measure.
After 2020—when evidence shows progress on a number of the SDGs went backward for the first time since they were adopted—it is time to get back on track. As with all great human endeavors, it won’t be achieved unless governments, businesses, and individuals play their part.
For businesses to have a meaningful impact, they must put the SDGs at the heart of their business strategies. Done properly, this can help businesses both improve their impact and identify innovative opportunities for growth. The problem is that businesses rarely know how to effectively center their strategy around the SDGs.
Most pick a handful of SDGs and focus their charitable “corporate social responsibility” efforts around them. This is an old-fashioned approach that sees sustainability as separate from a company’s core operations. At best, it doesn’t have the needed impact. At worst, it serves as a PR strategy that allows companies to avoid truly overhauling their impacts.
The other problem with the selective approach is it can lead a company to focus on areas where they can have a positive impact, at the expense of addressing their areas of negative impact.
The starting point for any business needs to be an honest assessment of their operations, finding both the positive and negative impacts their work may have against each of the SDGs. If this sounds excessive, it is worth asking whether it is acceptable for a modern business leader to not know the impact they have on issues like poverty, inequality, or climate change.
From that starting point, a business should take three steps to genuinely integrate the SDGs into its business strategy. The first is to set clear and specific targets. This may sound basic, but most businesses fail to do so. An analysis of company reports conducted by PwC shows that while 72 percent of companies mentioned the SDGs, only 14 percent reported having specific targets for their contributions.
To set its own targets, a business should look at the global targets agreed for each SDG, as a basis for a tangible and relevant business target. For example, the Goal on responsible consumption and production (SDG 12) includes a target to “achieve the sustainable management and efficient use of natural resources” by 2030 (SDG target 12.2). A business could address this by deliberately reducing the use of unsustainable materials in its supply chain. For guidance, businesses can access a UN database of indicators for all sub-targets that give examples of how you can measure progress, as well as use the Global Reporting Institute’s reporting framework.
But setting targets is not enough. A company must also report against them and be transparent about its progress. This should be an annual process and include detail on the measures they took to reach them, their effectiveness, and what they plan to do in the year ahead. Given the opportunities and risks that such reporting will uncover and monitor, this is something that will matter to all stakeholders, including investors and business partners.
The third and final thing businesses must do is the most important. They need to place the value of meeting these targets on an equal footing with financial targets. This could include tying employee or executive compensation to success on the company’s SDG targets. Well-run businesses that properly incentivize action toward SDG targets will achieve them. If the sustainability targets are seen as secondary to financial targets, or a low priority for senior management, success will be lower.
As the private sector looks to get back on track, there is a business case for making the SDGs a central part of business strategy. Research shows that 78 percent of customers would change their buying behavior on the basis of whether or not a company has signed up to the SDGs. The evidence is mounting: in the long-term only sustainable businesses will succeed.
This article was originally published in the SDG Knowledge Hub - a project by IISD