Commissioned research and write-up for The AR Initiative.
A long-term plan chosen by any organization or business to proactively share its performance and impact—positive or negative on environmental, social, and governance (ESG) issues is called sustainability reporting. After the Sustainable Development Goals (SDGs) were established, this initiative was created to provide governments, businesses, society, and other stakeholders with a means of assessing the economic, environmental, and social effects of corporations on sustainable development. As a result, it provided a way to improve and broaden SDG monitoring systems.
According to a recent survey carried out by the GRI (GRI, 2022) study in support of the Sustainable Development Goals, 80% of companies commit to achieving the Sustainable Development Goals (SDGs) in their sustainability reports, but less than 50% of these organizations have quantitative benchmarks for how their activities will help achieve those goals. Some of the key findings highlighted in this report include:
- 83% of companies say they support the SDGs, recognizing the importance of aligning their reports with the Goals;
- 69% of companies identify the Goals that are most pertinent to their industry, with 61 percent describing how their actions support the SDGs;
- 40% of companies make measurable commitments to help achieve the SDGs, while 20% include evidence to demonstrate their positive impacts.
Also, in a recent PwC survey (Scott and McGill, 2018) of more than 700 multinational corporations, it was shown that while the SDGs were mentioned in 72% of published sustainability reports, only 23% of them included useful KPIs and targets.
Although companies have introduced SDGs in their disclosures and storytelling practices, this information demonstrates the need for additional work because the transparency required to track advancement toward the SDGs cannot be achieved by focusing only on a few aspects of the report. The fact that interpreting SDGs in a context that prioritizes them, addressing the pertinent associated challenges, defining the specific key performance indicators, and providing evidence are still lacking, illustrates the importance of effective SDG communication.
For businesses to report on the SDGs accurately and guarantee progress toward the SDGs, there needs to be a set process, benchmark, or standard. Numerous initiatives act as manual assisting firms on how to measure their impacts, align their plans with the SDGs and set company targets, such as the Global Reporting Initiative, the International Organization for Standardization, the World Business Council for Sustainable Development, the Sustainability Accounting Standards Board, and the United Nations Global Compact (Searcy, Bizikova, and Swanson, 2015).
SDGs must, however, be included in business strategies, operational models, and evaluation procedures. To gauge progress and comprehend how businesses are involved in the cause, will require the creation of managerial frameworks, tools, methodologies, and metrics to better understand how startups and SMEs are contributing to the SDGs (Calabrese et al., 2021). Due to this, there will be an increase in the need for principles or guidelines on integrating sustainability to make sure that progress is made in the required manner.
A strategy to encourage action in this regard has emerged: integration in the SDGs. It is a more promising approach to disclosing one’s journey towards achieving SDGs. Studies have shown how integrated reporting and thinking can aid in the execution of actions and the tracking of SDG advancement. To monitor sustainable development globally, a paradigm shift in the implementation of an integrated approach should be encouraged. However, this could have economic and financial consequences. By incorporating the idea of sustainable development, the updated Integrated Reporting Framework can be applied at different levels of analysis, assisting businesses, governments, and other stakeholders in formulating effective plans to advance the creation of sustainable development (Trucco, Demartini, and Beretta, 2021).
Although a few startups are already reporting on various SDGs, the challenge moving forward is to report on goals and targets in an orderly, consistent manner that can show whether or not significant progress toward sustainable development is being made (Searcy, Bizikova, and Swanson, 2015). Additional efforts, particularly in sustainability communications, are required to verify this objective’s compatibility with current reporting standards and procedures, as well as the comparability of information and data supplied by firms on sustainability.
References
Calabrese, A., Costa, R., Gastaldi, M., Levialdi Ghiron, N. and Villazon Montalvan, R.A. (2021). Implications for Sustainable Development Goals: A framework to assess company disclosure in sustainability reporting. Journal of Cleaner Production, [online] 319, p.128624. doi:10.1016/j.jclepro.2021.128624.
GRI (2022). STATE OF PROGRESS: BUSINESS CONTRIBUTIONS TO THE SDGS — A 2020–2021 study in support of the Sustainable Development Goals. [online] Global Reporting Initiative. Available at: https://www.globalreporting.org/media/ab5lun0h/stg-gri-report-final.pdf [Accessed 29 Jul. 2022].
ISAR (2022). Sustainability reporting and SDGs — International Standards of Accounting and Reporting. [online] International Standards of Accounting and Reporting. Available at: https://isar.unctad.org/sustainability-reporting/.
Scott, L. and McGill, A. (2018). From promise to reality: Does business really care about the SDGs? [online] PwC. Available at: https://www.pwc.com/gx/en/sustainability/SDG/sdg-reporting-2018.pdf [Accessed 23 Jul. 2022].
Searcy, C., Bizikova, L. and Swanson, D. (2015). Why Private Sector Reporting on the Sustainable Development Goals is Important. [online] International Institute for Sustainable Development. Available at: https://www.iisd.org/articles/insight/why-private-sector-reporting-sustainable-development-goals-important [Accessed 22 Jul. 2022].
Trucco, S., Demartini, M.C. and Beretta, V. (2021). The reporting of sustainable development goals: is the integrated approach the missing link? SN Business & Economics, 1(2). doi:10.1007/s43546–021–00046–9.