Sustainability reporting has become a critical tool for organizations worldwide to communicate their environmental, social, and governance performance to stakeholders. The Global Reporting Initiative (GRI) is a widely recognized framework for sustainability reporting, providing guidelines and standards for organizations to disclose their sustainability performance. In recent years, there has been a growing emphasis on aligning sustainability reporting with the United Nations Sustainable Development Goals (SDGs) to create more comprehensive and impactful reporting.
The United Nations introduced the Sustainable Development Goals (SDGs) in 2015 as a global call to action to end poverty, protect the planet, and ensure prosperity for all by 2030. The SDGs consist of 17 interconnected goals addressing various global challenges, such as climate change, inequality, responsible consumption and production and poverty.
In a world marked by instability, poverty, and environmental stress, it is imperative for businesses to prioritize the delivery of the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals, as their prosperity hinges on it. Companies can do this by adopting sustainable practices and integrating sustainability information into their reporting cycle as spelled out in Target 12.6 of SDG 12.
To effectively incorporate the Sustainable Development Goals (SDGs) into their sustainability reports, companies should engage in a principled prioritization process. This process involves identifying the most crucial SDG targets to focus on, considering factors such as the company’s potential risks to people and the environment (referred to as entry point A), as well as the beneficial aspects of SDG-related products, services, and investments (referred to as entry point B) which are shaped by the company’s capacity to contribute further to the SDGs by leveraging its knowledge and expertise.
This systematic approach serves several crucial purposes. First, it aligns the company’s overall strategy, initiatives, and resource allocation with the SDG targets that have the greatest impact on the company. Additionally, it aids in identifying new actions and efforts necessary to contribute to the SDGs. It’s important to highlight the substantial innovation and business opportunities that can emerge for companies through this approach. Furthermore, the process guards against two common pitfalls. It prevents “cherry-picking,” which involves selecting SDG goals and targets based on ease of implementation rather than what accounts for the company’s highest priorities, and “SDG washing,” which refers to reporting positive contributions to global goals while neglecting to address negative impacts.
The initial step of the principled prioritization process involves the establishment of Priority SDGs. This entails a comprehensive review of all the SDGs and their targets to gain insight into how the issues they raise may relate to a company’s business operations and value chain. Subsequently, the company should identify SDG targets that it can significantly contribute to by leveraging its expertise to develop products and services that contribute to the achievement of SDGs. Additionally, companies should consider SDG targets that may not have been initially anticipated within certain SDGs but can be significantly impacted by addressing risks associated with the company’s operations and value chain. SDG 3 on good health and wellbeing for example includes a target to halve the number of global deaths and injuries from road traffic accidents therefore reducing deaths and injuries from road accidents could be a legitimate priority SDG target for companies with large distribution networks as they face a high risk of road accidents. It is also crucial for companies to acknowledge the interconnectedness of SDGs and their targets at this stage. This is because a company’s actions might contribute to multiple targets or SDGs. For instance, renewable energy companies are likely to identify SDG target 7.1, which focuses on ensuring universal access to affordable, reliable, and modern energy services, as a priority. This, in turn, links to SDG target 13.1, which seeks to enhance climate-related resilience, and SDG target 1.4, which aims to ensure access to basic services.
Organizations can then measure and analyze the outcomes of step 1. This assessment serves as a foundation for defining objectives that will contribute to the SDG priority targets. When addressing these priority SDG targets, companies should go beyond merely avoiding harm. Instead, they should focus on identifying strategies that create opportunities to maximize positive outcomes. A coffee company seeking to tackle harassment and health risks to women in its supply factories for instance might collaborate with local organizations to provide health training to female workers, enhance managerial capacity to combat harassment, and ensure access to complaint mechanisms and support resources, resulting in positive impacts on SDG targets 5.1 and 5.2 on discrimination and violence against women, as well as SDG 2 targets related to women’s health. It’s crucial to acknowledge that trade-offs between positive and negative impacts can be problematic when the impacts are not directly comparable. Specifically, negative human rights impacts cannot be offset by other positive outcomes. For instance, while a renewable energy installation may reduce fossil fuel dependency and provide energy to underserved communities, if it displaces local indigenous communities from their ancestral lands without their consent, the positive and negative impacts cannot be offset; they must each be addressed independently. Fortunately, sustainability consultants can play a crucial role in guiding organizations through the process of managing trade-offs and conducting comprehensive measurements and analyses. Once the objectives are established, identify the indicators that the company will use to gauge its progress toward these objectives.
Finally, once objectives are established, organizations can effectively report their significant impacts and strategies to contribute to the priority SDGs, having followed the principled prioritization process.