With the growing number of eco-conscious investors, environment-related regulatory changes and the transition towards the decarbonised economy, transparency in reporting ESG metrics has become a crucial element for businesses in recent years. Companies are under the radar for conducting sustainable business operations and to incorporate the same into their reporting process. Business leaders from across the globe face mounting pressure from various stakeholders including investors, employees, customers and suppliers. In today’s world, reporting the business impacts is no longer an option but a necessity for businesses.
The SDG goals or Global Goals provide a universally agreed set of goals for businesses to report their ESG impacts.
What are SDGs or Global Goals?
Introduced in September 2015, the United Nations (UN) introduced 17 SDG goals to fight poverty and safeguard the planet. The 17 goals aim to resolve the socio-economic and environmental problems plaguing the world, by 2030. The goals are set out to envision a world devoid of hunger and poverty, provide equal opportunities for all and preserve our biodiversity. All the 193 member countries of the UN committed to the 17 SDG goals.
Although the SDG goals are formulated for governments to take action, businesses play a vital role in helping to realise the goals by 2030. It also provides opportunities for companies to spin their innovation wheel to tackle sustainability-related challenges.
Companies have started to engage with SDG goals or embed them into their business model.
According to PwC research, 71% of the companies plan to engage with SDGs 1 . Also, a KPMG International report titled ‘How to report on the SDGs: What good looks like and why it matters’ states that ~40% of the world’s major companies refer to the UN SDGs for their reporting process. Some companies have taken it to the next level by incorporating it into the business model and analysing the impacts on the environment and society. For example, Unilever has integrated the SDG goals into its corporate business strategy 2 . Through its Unilever Sustainable Living Plan, the company handles all environmental and social issues across its value chain.
Key advantages of SDG-aligned reporting
The World Economic Forum (WEF) states that focusing on the environment is beneficial for businesses and building a resilient economy. The WEF has found that nature-led business solutions can result in 395 million jobs by 2030 3 . Also, the Future of Nature and Business Report highlights that by adding value to the environment, companies can tap into the US$10.1 trillion business opportunity 3 .
The real challenge!
The UN defined the goals, however, there was no standardised process for companies to follow and report them. Hence, there was a need for a unified approach to help companies in their SDG reporting process.
There are 3 key benefits to a standardised reporting process:
- It will prevent companies from painting a picture-perfect story and force them to be transparent with their operations
- Transparent and accurate representation of information will aid investors to make the right financial decision
- It will also help governments understand how companies are performing with respect to the SDG goals, hence giving an overview of a country’s alignment with the goals
GRI to the rescue!
The Global Reporting Initiative (GRI) has launched its guidance to assist companies in reporting their SDGs using GRI standards. Business disclosures are available for each of the SDG goals to facilitate easy and hassle-free reporting.
To incorporate the SDG goals in reporting, GRI also recommends a three-step process:
- Define the company’s most important SDG targets
- Select appropriate disclosures, measure and analyse the information
- Consider best practices of SDG reporting and include the disclosures in the report
Companies can find all the relevant information to integrate SDGs in their reporting here
Companies need to adopt effective corporate reporting to build trust among stakeholders. To do so, transparency is crucial. Reporting not only benefits the external stakeholders but is also valuable for internal stakeholders as it fosters internal discussions and decisions related to achieving SDGs.
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