Why Private Sector Reporting on the Sustainable Development Goals is Important
Goals and targets to advance corporate social responsibility (CSR) and sustainability have been widely embraced by the private sector.
KPMG reports that 90 per cent of the world’s largest companies now report on aspects of their sustainable development performance. However, public disclosures show that the types of CSR and sustainability goals and targets used by businesses vary widely, even amongst companies in the same industry. Tailoring goals and targets for specific business contexts is necessary for materiality. However, a common reference point is also needed to promote meaningful comparisons of sustainable development performance. The United Nations Sustainable Development Goals (SDGs) should provide this reference point going forward.
The United Nations held a summit on September 25-27, 2015, to adopt its post-2015 development agenda, of which the SDGs are a core part. The SDGs are intended to build on and extend the Millennium Development Goals (MDGs), which expire at the end of 2015. There are 17 SDGs with over 160 accompanying targets that aim to holistically address sustainable development over the 2016-2030 period. The SDGs are ambitious and will require coordinated action from the public and private sectors if they are to be achieved. Several of the goals, such as those on ensuring sustainable consumption and production patterns, taking urgent action to combat climate change, and promoting sustainable growth, have direct relevance to the private sector. Other SDGs, such as ending poverty or ending hunger, also hinge on private sector contributions.
Several efforts are underway that recognize the importance of the private sector to achieving the SDGs. The Global Reporting Initiative, World Business Council for Sustainable Development, and United Nations Global Compact are currently working on the development of a guide that will “support businesses in assessing their impacts, aligning their strategies with the SDGs and setting company goals.” A number of articles that focus on the logic of incorporating SDGs into business strategy have already been published. Efforts to catalogue the private sector’s contributions to achieving the SDGs are already under way. There are two key reasons why it is important that these initiatives, and others like them, succeed (reasons have been largely overlooked in the discussions to date).
First, linking private sector sustainable development reporting to the SDGs will provide a common reference point in the development of goals and targets. As articulated in the work of Peter Senge, a systems scientist, a shared vision of sustainable development is needed to foster greater commitment to its achievement. The lack of common goals and targets linked to the broader context may encourage a situation where reporting is largely self-referential. The SDGs, which are explicitly intended to be universal, provide a means to link private sector reporting with the broader sustainable development imperative globally, nationally, and locally.
Second, using the SDGs as a basis for sustainable development reporting provides a mechanism for improving linkages between public and private sector reporting. A concept as broad as sustainable development cannot be achieved or accurately reported by either the public or private sector acting alone. Unfortunately, linkages between public and private sector sustainable development reporting are currently weak or non-existent. Private sector entities rarely explicitly report on how they contribute to achieving public sector sustainable development goals and vice versa. The SDGs provide a basis for more standardized reporting around widely accepted goals and targets. This could facilitate greater usage of publicly reported data. For example, a federal government could draw on private sector data in the development of national sustainable development reports. Improved alignment in reporting would help clarify whether organizations, communities, regions, and nations are making meaningful progress on sustainable development. This is currently difficult, given the fragmentation of reporting.
However, there are a number of challenges in using the SDGs as a reference point for private sector sustainable development reporting. It is possible that some of the SDGs could be interpreted differently by different organizations. This could result in different views on what data would be needed to report on goals and targets. Greater alignment in reporting would likely require improved verification mechanisms in both public and private sector entities. Since sustainable development reporting—including setting goals and targets—is largely discretionary, some mandatory reporting requirements may need to be introduced. These challenges mean there is likely to be some confusion, at least initially, in applying the SDGs to private sector reporting. Increased upfront costs are also likely. However, given that the SDGs are intended to be in place for the next 15 years, these upfront investments may mean less effort is needed on a year-over-year basis once the foundation for reporting is in place. In any case, progress towards sustainable development simply cannot be assessed in the absence of connections to the bigger picture and linkages between the various entities that report.
Fortunately, many companies are already reporting on aspects of the SDGs. This provides a strong foundation on which to build. The charge going forward is to report on goals and targets in a consistent systematic way that provides insight into whether or not meaningful progress on sustainable development is being made.
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