Efforts to place the UN’s Sustainable Development Goals (SDGs) front and centre of business thinking are to receive a shot in the arm following a new agreement to integrate them into corporate reporting.
The UN Conference on Trade and Development (UNCTAD) this week signed a memorandum of understanding with the International Integrated Reporting Council (IIRC), agreeing that the two bodies would intensify their activity to persuade companies that the SDGs should provide a framework for building sustainable business models.
The organisations aim to boost business reporting on efforts to align with—and achieve—the SDGs. A focus on financial reporting is in line with Goal 12 of the SDGs, which declares the aim of ensuring “sustainable consumption and production patterns”.
Richard Howitt, chief executive of the IIRC, said: “This is not just about the contents page of a report, but the pressing need for relevant and reliable information on business’ contribution to the SDGs, which is fully integrated across the company and its reporting cycle.”
Meanwhile, Isabelle Durant, deputy secretary-general of UNCTAD, said the integrated reporting framework advocated by the IIRC was “was an effective and flexible tool for tackling the key challenges for businesses in Goal 12 of the SDGs”.
UNCTAD and IIRC will now work together on building a method for implementing a key indicator of progress towards the SDGs: the number of companies publishing sustainability reports.
SDGs: a critical tool
The indicator has prompted much work to define “sustainability reporting” and the methodology for collecting the data.
Business observers, including governance experts from some of the major fund managers, have long expected the SDGs to become a critical tool for companies to manage sustainable business models.
Launched in 2015, the SDGs include 17 aims and 169 targets. They cover a wide range of issues including climate change, poverty, education, conservation, economic growth, responsible trade and gender equality, among others. The UN aims to achieve its targets by 2030. The UN also agreed to monitor progress using an agreed set of indicators.
UN officials have long since recognised that company reporting could be a critical data source. Guidance provided on the indicators says: “As a primary source of information on company performance, reporting can enrich and enhance Goals monitoring mechanisms by providing stakeholders, such as governments and capital providers, with the means to assess the economic, environmental and social impacts of companies on sustainable development.”
Writing for Board Agenda last year, Professor Carol Adams from Durham University Business School said the longevity and sustainability of many industries relies on achieving the goals.
“Therefore, it is in the interests of many organisations to contribute to tackling these challenges not only for the good of the planet, but also the future of the organisation,” she said.
However, she warned that it was impractical for companies to think they could contribute to all 17 goals and should focus on the SDGs that “best align with their business strategies and business practices”.
Adams has also authored a key paper for the IIRC on how to align SDGs with integrated reporting.
Integrated reporting involves reporting on what the IIRC dubs the “six capitals”: financial, manufactured, intellectual, human, social and natural. Adams warns that in pursuing an SDG agenda, a company will have to increase or decrease one or more of the capitals. It is those changes that should be reported in an integrated report.
There is just over ten years before we reach the UN’s SDG deadline and pressure to participate is only likely to increase. Business would do well to take note.