Aligning corporate objectives, evaluation, and reporting to the Sustainable Development Goals
Integrating the SDGs into corporate reporting: A practical guide
The publication outlines a process of ‘principled prioritization’ aimed at helping companies to identify and prioritize their SDG targets, take action and report on their progress. This approach assists companies in integrating the SDGs into existing corporate responsibility and sustainability reporting programs. It also weaves together risk management and new business models that can contribute to the advancement of the SDGs.
This guide by the UN Global Compact and Stichting Global Reporting Initiative (GRI) helps businesses—regardless of size, sector or operating location—move beyond merely mapping SDG-related initiatives and programs to comprehensively integrating them into corporate reporting and evaluation. This guide may be used along with other references such as “Business Reporting on the SDGs: An Analysis of the Goals and Targets”, and while its recommendations were mainly targeted to reporting practitioners, they are also relevant to corporate sustainability officers/ professionals.
In order to create targeted impacts that contribute to SDG achievement, businesses should:
1. Conduct a principled prioritization of SDG targets.
These SDG targets are determined by 1) identifying the most severe and likely risks (potential and actual) to people and the environment and their related SDG targets, and 2) identifying which SDG targets the business can best contribute to through beneficial products, services or investments. Businesses should refine their priorities according to the services/products the company can provide by using two criteria: significance of the benefits they could bring to society, and significance of the benefits they could bring to the business. Note that each impact may be linked to more than one SDG. Avoid “cherry-picking” or selecting the easiest goals to accomplish over those that actually cover the business’ highest priorities.
2. Engage with different stakeholders in order to have a better picture of the SDGs most relevant to business operations.
Businesses should gather insights from various stakeholders, including affected stakeholders (i.e., those who may be negatively affected by company), proxy stakeholders (i.e., actors who are very knowledgeable about affected stakeholders such as local NGOs and academics), expert stakeholders (i.e., actors who have insight into the industry and sustainability such as NGOs, trade union federations, academics, representatives of other companies, lawyers, and consultants), and internal stakeholders (i.e., departments and employees within the company). Stakeholder consultation and communication should happen throughout the entire process of goal-setting and internal/external evaluation in order to refine and improve business approaches to achieving the SDGs.
3. When setting business objectives, seek to not only avoid harm but to also maximize positive outcomes.
When setting business goals and objectives, keep this in mind to increase the business’ chances of creating enduring and systemic change. When assessing trade-offs of certain impacts, it is important to recognize that not all tradeoffs are directly comparable. For example, negative human rights impacts cannot be offset by other positive impacts. It is also important to consider planetary boundaries and other thresholds when setting corporate objectives, as this helps lend scientific backing to the rationale behind certain actions. For example, the Science-Based Targets initiative helps companies determine how much they must reduce their greenhouse gas emissions to prevent the worst impacts on climate change.
4. Avoid SDG washing.
“SDG-washing” means reporting on positive contributions to the Global Goals but purposely overlooking important negative impacts made. While easy wins and profitmaking are part of a coherent strategy, it is essential that companies also identify and act on the full range of priority SDG targets that intersect with their operations and value chains. It will be helpful to include stakeholder inputs and opinions on initiatives/solutions. In its reporting, businesses should include any situations where the organization has caused or even indirectly contributed to actual negative impacts, and the steps taken to allow meaningful mitigation or solutions.
5. Use a combination of quantitative and qualitative indicators to measure success.
These indicators should be specific, measurable, achievable, relevant, and time-bound (SMART). The guide recommends the publication ““Business Reporting on the SDGs: An Analysis of the Goals and Targets” to find relevant disclosure standards and guidelines from different reporting frameworks to measure SDG-related progress. Companies may also refer to other publications or create their own indicators to fill in gaps in measurement. The collection of qualitative and quantitative data for each indicator should be conducted on a regular basis. Businesses can also utilize existing data related to the SDGs on top of the data that it collects. Every evaluation cycle, businesses should assess if it meets set objectives in relation to priority SDG targets, anticipate performance gaps, reflect on improvements, and include this information in company reports.
6. Use other relevant channels to communicate sustainability strategies and SDG performance.
Other channels include the company website, social media, podcasts, events, product and service labeling, marketing, and advertising. This helps align better the messaging with business objectives while also promoting the company’s SDG-related strategies and initiatives. Communicating regularly a company’s strategy and progress to the broader workforce can encourage greater employee engagement and leadership. When consolidating data, consider different data users’ needs such as those of governments, investors, civil society, consumers, and academia. Transparency and effective reporting help build trust internally and externally.
It is well within businesses’ interest to pursue the SDGs as part of their agenda because issues like poverty, unrest or environmental harm all affect business operations and the achievement of corporate goals significantly. Investing in the SDGs is essential to create more stable returns for investors, represent values of business clients, and create sustainable products that increases a company’s reputation and competitiveness in the marketplace. The SDGs are expected to generate at least USD12 trillion worth of market opportunities by 2030. By detecting and reducing risks to individuals and the community, and delivering new products and services that promote sustainable development, companies can reap benefits both for themselves and their markets.
Reporting on SDG alignment and contribution is integral to move businesses into developing and nurturing more sustainable value chains and impactful initiatives. SDG Reporting should not be only be utilized at the start or the end of sustainability planning and execution but also be considered as a strategic approach to engage stakeholders better to inform business strategies, facilitate sustainable decision-making processes, drive greater creativity and productivity, improve value creation, and attract sustainability investments.