SDGs or sustainable development goals are becoming increasingly important to investors because they represent environmental, social and governance responsibilities.
It is not just ethical; there are also strong business cases for investing in companies aligned with the SDGs. Companies aligned with SDGs show secure and steady returns for the investors.
According to a report by “Better Business, Better World”, business models aligned with SDGs could open opportunities worth $12 trillion and increase employment by up to 380 million jobs by 2030.
This tells you integrating SDGs is not just morally right but also economically very profitable.
Companies that want to implement SDGs and maximize opportunities should follow the steps mentioned below.
The steps are very simple to understand. Here they are.
Have a clear understanding of the SDGs
Let us start with understanding the SDGs (Sustainable Development Goals).
Between 2000 and 2015, the Millennium Development Goals (MDGs) provided an important development framework and achieved success in various areas such as eliminating poverty and improving health and education in the developing world.
The SDGs are basically a successor of MDGs. There are 17 goals (not mentioned in this article) applicable in developing and developed countries. SDGs want companies worldwide to advance sustainable development through their investments, solutions they develop and business practices they adopt.
For the success of SDGs, companies around the world have to develop more sustainable and inclusive business models.
As a company, your first step should be learning more about the 17 goals and how they relate to your business activities.
Companies should prioritize SDG targets by considering which one will have the biggest impact in terms of risk and opportunity for the company.
Defining priorities will help your company to benefit from the opportunities and challenges presented by the SDGs.
Not all 17 SDGs will be equally applicable to your company. The extent to which your company can contribute to each goal will depend upon many factors.
Companies can define priorities by focusing on three major actions.
- Mapping the value chain to identify impact areas
- Select the indicators and collect data
- Define your priorities
Your company might be contributing to all the 17 goals, but when it comes to allocating resources and defining a timeline, it is important to choose those targets which can create the largest impact.
Mapping high-impact areas will help your company to understand where they can concentrate their efforts.
Setting goals will depend upon the previous two strategies: understanding SDGs and prioritizing.
Setting specific time-bound sustainability goals helps drive performance across the organization. Big companies, large startups and small businesses alike can set more meaningful goals by aligning them with SDGs.
Goal setting consists of four actions:
- Defining the scope of the goal and selecting Key Performance Indicators (KPI)
- Define baseline and select goal type
- Set level of ambition
- Announce commitment to SDGs
Once companies have identified key SDGs, merging those goals to actual business targets and KPIs is important. While developing SDG strategies, companies can leverage their existing targets and actions.
It is recommended to consider the company’s ambition level regarding goals and consult with internal and external shareholders.
By setting goals, not just big companies but also small and medium businesses are more likely to spur innovation and incentivize creativity.
Integrating SDG targets into your existing business strategies is one of the most important strategies for achieving the SDG index.
As a result of goal setting, companies will identify specific KPIs and set goals for the company’s strategic priorities. However, integrating sustainability into your business is the key to addressing these goals.
Companies must consider business models, procurement and R&D processes and supply chain transformations.
You have to take the following actions to integrate SDGs into your business:
- Anchoring sustainability goals within the business
- Embed sustainability across all functions
- Engage in partnerships
For any business integration, active leadership by the top executives and senior managers is the key to the success of any organizational change.
Engaging in partnerships is very important because you can’t carry out any integration in isolation.
Innovation and collaboration
The SDGs provide a framework for innovation, creating business growth opportunities and new business models that drive towards the goal.
Besides innovation, the framework also helps identify partners within the sector and across different industries, enabling the company to scale up its operations and achieve its goals.
For example, telecom companies decoupled data growth from energy use by developing base station solutions (BTS) for mobile operators, which reduced power consumption by 28%. It helped companies to build zero-emissions networks.
Innovation and collaboration are helping companies to achieve SDGs goals for reducing emissions.
Reporting and communicating
It is essential to report and communicate your achievements regarding SDGs to meet the demands of the stakeholders.
Today, most of the world’s largest companies disclose their sustainability performance to the public.
These two steps outline the actions needed for reporting and communicating.
- Effective Reporting and communication
- Communicating on SDG performance
For effective and meaningful reporting, it is important to integrate sustainable development issues into everyday business decision-making.
Integrating SDGs into the core business reporting process ensures transparency and accessibility of the company’s performance to various internal and external stakeholders.
It is recommended to use existing practical, efficient tools to create transparent reports accessible to every stakeholder.
Various methodologies and tools are emerging for companies to understand how they can holistically integrate SDGs.
In the concluding remarks, I would say businesses play a very important role by aligning their strategies with sustainable development goals and targets. They are driving innovation and implementing the best practices across the value chain.
Those companies which don’t have sustainability commitments and do not align their strategies are likely to face stakeholder scrutiny and risk access to capital and new marketing opportunities.
Hence companies need to implement these strategies and achieve the SDG index.