How well are businesses reporting on the SDGs?
27 March 2018
The 17 UN Sustainable Development Goals have been described as the closest thing the world has to a strategy for future success. Simply put they will drive policy and regulation of every government, and, in turn, influence the business strategy and planning of every major company.
PwC’s most recent Reporting with Impact study highlights just how seriously business is taking the SDGs. Of the top 40 companies we evaluated, over half mention the SDGs (including 70% of our top 10) with most having prioritised the goals considered most relevant to them.
The reasons for embracing the SDGs affect every part of business. A forward thinking SDG strategy will help maintain a positive licence to operate by setting goals and policies that are in alignment with government priorities. It will help companies stay ahead of policy interventions designed to drive SDG achievement. It will mitigate the risks associated with the failure to achieve the SDGs and it will enhance corporate reputation by demonstrating respect for society and the environment. Perhaps most important, the SDGs are a big opportunity – there are significant business growth opportunities in products and services that address the SDG challenges.
In order to fully understand and effectively communicate its contribution to the SDGs business will need robust and consistent metrics to report on. So, to evaluate how well business is doing, we produced the SDG Reporting Challenge to learn how companies are currently reporting on the goals.
The results, frankly, are a wake up call for all of business – even those who consider themselves SDG leaders. Although the SDGs are being mentioned in corporate reports, our analysis found that companies are still reliant on descriptive statements in their reporting, with very few setting measurable targets or linking to societal value. At present many of the more sustainability-focused companies (judging by the quality of non-financial reporting) still haven’t aligned that reporting to an SDG framework.
Four key themes emerge around SDG reporting. The first is that companies produce better quality reporting on sustainability indicators that predate the SDGs. Our research showed that indicators such as ‘GHG emissions reduction’, ‘representation of women on boards’ and ‘energy efficiency’ scored highest in terms of reporting quality – most likely because companies have already committed to reporting on these specific issues and so have a process and measuring and accounting for them.
The second theme to emerge is that companies that prioritise specific goals had better quality reporting that those that simply stated support for the SDGs in general. Obviously this underscores the need for companies to have a clearly thought out SDG strategy because, when they do, they not only prioritise the goals that are most relevant (or that they believe to be so) but they begin to commit resources to meeting those goals.
The third is related to the second. Those companies that have prioritised the SDGs are more likely to have metrics and numerical targets to add weight to their reporting, rather than simple platitudes towards measurement and management. Those metrics and targets are crucial when demonstrating a license to operate, mitigating risk, managing reputation and proving the business case for the SDGs.
The final theme addresses the relevance and quality of SDG reporting. Are companies selecting the right metrics and KPIs to report against to show their impact against the SDGs? Or are they looking to shoehorn more general sustainability work into reporting on specific targets? If companies really want to fully understand the detail behind each goal they will need to delve down into the targets that sit beneath the 17 goals. The UNGC and GRI recently published an “Analysis of the Goals and Targets” that suggests business actions that could help achieve each individual SDG target and also sets out the available business disclosures that could be used to measure progress.
Moving forward the SDGs can put a financial value on the success of sustainable action both within the organisation and in larger society. To achieve this, however, business will need a reporting approach that takes into account both the importance of specific SDGs to the business and how to meaningfully measure progress against them.
Business will need more guidance on how and what to report on the SDGs and it will need to build the SDGs into business strategy in a more holistic way – one that can open up new opportunities and improve the chances of addressing the underlying business risks that the failure to solve the SDGs represents.
If you’re looking for ways to improve your company’s communication on the SDGs, please get in touch.