October 26

Mind the Gap!

Axel Kravatzky

Not only ambition is falling short but the decision making processes in organisations are leaving much to be desired. The Impact Standards for SDGs are intended to help organisation’s ramp up and maximise contributions to achieve the Sustainability Development Goals quickly.

In 2015 the Governments of all 192 UN member states agreed on 17 sustainable development goals (SDGs) as part of the 2030 Agenda for Sustainable Development which sets out a 15-year plan to achieve the Goals.

In 2019 the UN Secretary General, Antonio Guterres, reported at the SDG Summit that the world has made progress towards its destination of opportunity for all and a healthy planet but that “we are far from where we need to be. We are off track.”

By one estimation, we will not achieve the goals as agreed in the next 8 years, but may be some 52 years off track, even before COVID-19 hit: “At the 2019 rate of progress, it would be 2082 before all SDGs are realized – and that was before COVID-19, which is likely to set back progress by at least another ten years” (World Benchmarking Alliance, quoting 2020 Social Progress Index results). In fact, the World Benchmarking Alliance finds in 2021 “not one country on track to meet all SDGs by 2030”.

Source: Climate Action Tracker 2021

One report published in October 2021, the Production Gap report, which examines the gap between current plans by governments for the fossil fuel energy sector with those that would be consistent with the climate ambitions under the Paris Agreement 1.5 or 2.0 Degree Celsius increase,  finds that recent national energy plans and projections lead, in aggregate, to 110% more fossil fuels in 2030 for 1.5 degree C increase and 45% more than what would be consistent for 2 degree C (and by 2040 the excessive growth is 190% and 89% respectively).

Source: 2021 Production Gap Report

Standards and assurance are necessary

Three things are certain – the world’s problems are real and increasing, companies have awoken to the fact that there are great risks for laggards as well as great opportunities for agile and connected companies, and reliable information is key for decision-making. At the level of their global headquarters, the “big four” auditing firms have not only recognized this, but are also banking on it by investing vast amounts to ready themselves to provide assurance beyond financial values – preparing to include assurance on non-financial value contributions to sustainable development.  

Improved data, information, and audits will be absolute necessities. All development signs point in one direction: a path involving performance beyond financial and minimum levels towards maximum contributions to sustainability, regulation, and assurance. The days in which governments, investment funds and companies can get away with greenwashing based on declarations and glossy reports full of ‘giving back’ activities, and pledging support for cherry-picked SDGs and vague assertions of good governance are going to come to a rapid end.

How to get beyond ‘blah, blah’

The world’s youth, including Greta Thunberg, are losing patience with continued ‘constructive dialogue’. At the recent Youth4Climate conference Ms. Thunberg  warned of ‘creative carbon accounting’ and criticized world leaders for engaging in “blah, blah, blah” for the past 30 years, while adding 50% of all CO2 emissions since 1990 and a third since 2005.

There needs to be real, meaningful, science-based, and assured action. So, what should companies that want to seriously contribute to sustainable development do? UNDP recently published SDG Impact standards for enterprises, bond issuers, and private equity funds. The enterprise standard applies to all enterprises – irrespective of size, geography, or sector. The unique contribution of the SDG Impact enterprise standard is that it helps organizations integrate impact management into their strategy, management approach, disclosure, governance, and decision-making practices. In addition, UNDP is developing a voluntary assurance framework and SDG Impact Seal.

In a recent conversation with Jeremy Nicholls (Assurance Framework lead for the SDG Impact Standards) and another colleague within ISO/TC309/WG1 where we lead the development of new standards pertaining to governance, Nicholls explained the shifts that the SDG Impacts standards enable organizations to make in this way:

“The SDG impact standards are a decision-making framework designed to help organisations put in place the processes to assure that they are contributing positively to sustainability and the SDGs. The standards enable a shift from measuring ‘how much’ to ‘are we making decisions at the rate we need in order to have a positive contribution against those targets we need to achieve.’ That means assessing risk and considering the risk not just from the enterprise's or the entity's point of view but considering the risk tolerance of the people and planet experiencing the consequences of an organisation’s operations.”

These standards are process standards, not dissimilar to some ISO standards. They do not assess the actual contribution to sustainability but they provide the basis for performance that is more likely to be contributing positively to sustainable development. That means that organizations are considering the material impacts, or consequences of activities, informed by stakeholders who experienced those consequences and the requirements for sustainable development.

The SDG's themselves are a set of agreed goals and form part of the sustainability context within which organizations operate and they inform organizations in their understanding of their material impacts.

One of the most important aspects that companies and organizations in general, including governments, need to understand is that cherry-picking individual SDGs then simply reporting that some quantitative or qualitative contributions were made to those SDGs is not good enough even as a minimum level. Instead, minimum levels should be informed by a science-based target or a globally agreed framework, and if those don’t exist, then there must be a clear explanation for why a certain target can be considered a reasonable minimum level.

Everyone needs to understand that the most prevalent current method of reporting i.e. that they did a bit more than last year or that they had no negative impact, does not constitute a positive contribution.

Jeremy Nicholls further explained that:

  • If we're going to achieve the level of sustainability that we need by 2030, then we need to make sure that we have ambitious and rigorous goals against which we are managing our performance so that we're doing as much as we can.
  • We must maximize our contribution to sustainability and the SDGs (not merely meet the minimum level).
  • We have to ramp up the level at which we are making decisions, choosing between options, and try to choose the option which is going to have the most positive impact; we have to do this all the time at all levels within an enterprise from operations all the way up to business models and purpose
  • We have to consider whether the purpose or the way we are creating value or the strategy itself needs changing.
  • The way in which we change decision-making has to be reflected at all levels within an organization.
  • Making decisions against these requirements is going to mean making decisions where you may not have ‘perfect’ data and therefore we need to have an awareness of the associated risks; risk where the consequences are experienced by your stakeholders

In this way, SDG Impact Standards aim to drive more private investments and activity into where they are needed to support the delivery of the SDGs by 2030. Governing bodies and management teams that apply the standard can close the gap between current practice and the practices needed to achieve the SDGs, while promoting continuous improvement, impact integrity, and accountability.

This article is part of the "Purpose with Profit" Column and an earlier version was published in the business section of the Newsday (Trinidad & Tobago), Business Authority (Barbados). our.today (Jamaica), and The Voice Newspaper (Saint Lucia) in October 2021.

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