ESG - Achieving our business goals through the UN Sustainability Development Goals

The 17 UN Sustainable Development Goals (SDGs) were adopted by 193 United Nations (UN) Member States in September 2015. The SDGs are an urgent call for action by all countries - developed and developing - and provide a common framework and language for governments and businesses to work together towards a better future. The SDGs are encapsulated in the 2030 Agenda for Sustainable Development, which provides a shared blueprint for peace and prosperity for people and the planet, now and into the future.

Advantages of aligning business goals with the UN SDGs

There is a strong business case for aligning business strategy and sustainable practices to the SDGs. Organisations have a huge responsibility to look after the environment and the society that supports their business, from whom they owe their licence to operate: upsetting this environment or society will jeopardise the sustainability of the business. This article outlines how the SDGs provide a framework for businesses to drive their sustainability initiatives through addressing environmental, climate, and social risks and integrating them into their corporate strategies.

Aligning a business strategy with the SDGs both contributes towards the SDG global agenda and creates value for the business. This alignment enables businesses to identify and address the risks and opportunities related to environmental, social and governance (ESG) or economic issues within an established framework. It can aid businesses in boosting their reputation, trust and legitimacy among their customers and employees, as well as investors, suppliers and communities. Implemented consistently, this will increase the social return on investment and can improve operational efficiency, productivity and profitability through the reduction of waste, emissions - and costs.

However, there is still some way to go. According to the SDG progress report by the UN Secretary-General in 2023 – i.e. midway to 2030 - 15 per cent of the assessable targets are on track to be achieved by 2030, while 48 per cent of the targets that can be assessed show moderate or severe deviations from being achieved by 2023. 37 per cent of these targets have experienced no progress. These results are a clear demonstration of the need for businesses to incorporate ESG in their business strategies.

What are the key steps in aligning business goals with UN SDGs?

Aligning an organisation’s strategic plan with the SDGs requires a tailored approach: every business has a role to play, regardless of size, and needs to understand its role and how it can play its part. The steps outlined below may be helpful in using the SDG framework to drive sustainability activity in your organisation.

Understand the principles underpinning the SDGs and link them to your business activities.

A review of each SDG - and the relevant targets and key performance indicators (KPIs) – will help a company to assess direct and indirect impacts on the business’ operations, value chains and communities. Ideally, this process should involve all key stakeholders, both external and internal.

Prioritise your actions to maximise impact

Companies can use the SDG framework to assess areas they can contribute towards progress by considering those with the highest impact on risk or opportunity in the medium- to long-term. It’s possible (but unlikely) to conclude that all 17 SDGs are relevant to your business but, when allocating resources, it is helpful to prioritise the goals with the highest impact. For example, a company producing electricity from coal can prioritise investing in renewable energy to ensure access to clean energy and mitigate climate change (SDG 7 Affordable and Clean Energy and SDG 13 Climate Action).

Set ambitious targets

Having identified the SDGs that are relevant to your business and its Net zero commitment, these can be linked to the actual business targets and KPIs to facilitate monitoring, reporting and communicating on progress. For example, science-based target setting for SDG 13 Climate Action has become standard business practice through the Science Based Targets initiative (SBTi). This initiative provides companies with a clearly defined pathway to future-proof growth by specifying how much and how quickly they need to reduce their greenhouse gas emissions, using science-based validated targets to monitor and evaluate performance. It’s worth noting that there is a greater chance of success if this goal-setting process is driven with the active support of the CEO and Board of Directors – not just middle management.

Integrate targets into business strategy

An organisation can integrate its sustainability-led targets into its business strategy by considering business models, existing projects and supply chains, as well as research and development. Build time and know-how capacity in your managers and professionals at every level so that there is support and ownership across all corporate functions (operations and support service). This will ensure your sustainability strategy is effective and connected with the business.

In realigning your business’ sustainability strategies and corporate goals, it can be helpful to reference the SDGs to identify where you can draw from existing commitments and projects to contribute positively toward SDGs. For example, a business can identify that by greening its supply chain (i.e. integrating environmentally responsible principles and benchmarks into the supply chain), it contributes towards SDG 12 Responsible Consumption and Production.

Innovate and collaborate

A sustainability strategy should enable a business to innovate, create business growth opportunities, diversify products and services, explore new models and scale up, resulting in business resilience and sustainable operations. Significant and effective collaboration is required to achieve constructive outcomes. This is where CFOs will need to be convinced that there is a positive return on investment. For example, a cement and production company can decarbonise its cement and concrete production process to mitigate climate change and bring efficiencies in production (SDG 13 Climate Action).

Measure and report

The adage “Whatever gets measured, gets done” holds. Companies will need to allocate a dedicated officer to monitor and communicate progress on all sustainability-related targets. Bear in mind that areas where the business may be failing and successes – are equally important to report on. When sustainability is integrated into the broader business strategy, it is practical to develop integrated reporting, combining financial, social and environmental impacts to build transparency and accountability and avoid parallel reporting and duplicated efforts. There are several reporting frameworks (including the Global Reporting Initiative and Sustainability Accounting Standards Board) to assist organisations in creating a principles-based report. It’s worth noting that the Corporate Sustainability Reporting Directive (CSRD)*, which entered into force on 5 January 2023, is deemed to have created a new gold standard for ESG reporting and how leaders need to challenge the status quo of their reporting to keep pace with change.

*Although aimed primarily at businesses within the European Union, a large number of companies not subject to the CSRD intend to comply with its principles nonetheless.

Regardless of size, industry or location, there is a role for every business in driving the future we all want to see. Businesses now have the power and the opportunity to translate ESG principles into responsible business practices, innovation and investment and help to build a more prosperous, inclusive and sustainable world. The added benefit is that this approach nurtures trust and connections with a business’ key stakeholders and unlocks substantial value. Aligning sustainability objectives with business goals is both a moral imperative and a smart business strategy. Using the global agenda outlined in the SDG framework, companies can create positive change, drive innovation and secure long-term success.

How BDO can help

BDO helps organisations by outlining how to embed sustainability practices into their business, as well as offering a range of ESG-related services. Find out how BDO can help, specifically, around ESG reporting. Reach out to our sustainability reporting experts for assistance.

This article originally appeared on BDO UAE.