Sustainability Reporting Frameworks

Leveraging Existing Private Sector Sustainability Reporting Frameworks

Tracking all that business is doing to advance the SDGs begins with tuning in to the private sector wavelength on sustainability reporting

Some thoughts on recognizing existing corporate sustainability reporting frameworks within the 2030 Agenda’s follow-up and review mechanisms to galvanize greater business engagement

In the Sustainable Development Summit of September 2015’s outcome document, Transforming our World: The 2030 Agenda for Sustainable Development, the UN Member States in article 67 “call on all businesses to apply their creativity and innovation to solving sustainable development challenges.” Indeed, that is what business does best -- innovate for problem-solving -- and last year saw major business groups and companies stating their commitment to carry forward 2015’s outcomes. And while SDG target 12.6 “[e]ncourage[s] companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle,” business engagement will go far beyond that: nearly every goal and target are relevant to the business community and will no doubt rely on business involvement to be achieved.

If business’ role is now fully recognized (as compared to the approach taken by the Millennium Development Goals), then presumably there is an expectation that these actions - beyond just sustainable practices and product innovations - in all their diversity are to be reported. Yet serious questions remain about how that would work: Where is this information supposed to go and how will it be utilized in the UN system? How will corporate contributions to sustainability - either through core business operations or philanthropic, CSR efforts - be counted on the national and global scale and integrated into ongoing national and global policy decisions on where to focus our collective energies in the 2030 Agenda?

Unfortunately, the UN currently satisfies itself mostly with a handful of recurring private sector speakers providing anecdotes about their company’s contributions - but there is so much more activity going unnoticed in terms of reporting of business contributions to the thematic goals and specific targets which now comprise the SDGs. The UN is frankly not tuned in to the business wavelength.

At the moment, there are no plans to integrate the emergent SDG indicator framework - which aims at tracking Member State progress towards fulfilling the SDGs - with the myriad existing corporate reporting frameworks, which for decades have enabled companies to report on their contributions and impacts on sustainable development. Nor has there been an invitation on behalf of the UN community to adequately recognize the full breadth of the private sector contributions to the SDGs in a more methodical, statistically sophisticated manner. The slight exception has been the inclusion by the Department of Economic and Social Affairs of Business for 2030 as an action network in its Partnerships for SDGs Platform.

This is a substantial missed opportunity. A more formal platform for acknowledgement would dramatically incentivize increased activities from the private sector, and would give true meaning to the notion of a revitalized partnership that lies at the core of the 2030 Agenda.  The power of such a collaborative platform, particularly one paired with existing Official Development Assistance spending, would also enhance our learning about which goals and targets are receiving too much or too little attention in terms of resources and programs so that reprioritization and rebalancing can occur as needed. A good example of the potential of such an approach is on display at the new philanthropy project - SDG Funders - which blends philanthropic donations alongside ODA flows in an accessible and interactive fashion.

Our Business for 2030 catalogue of case studies is a step in the right direction, as it matches company contributions to specific Goals and targets. But this collection is anecdotal and highlights the best of the best in order to demonstrate what is possible to the UN community and to galvanize others in the private sector to take action. What we will need, however, is a big data approach to truly leverage the insights and collective learning that integrating these separate strands of data might yield. There are no doubt technical and likely political complexities to such integration, but the building blocks are in place.

Some initial steps in the right direction

On the business side, corporate reporting on sustainability issues has been dramatically increasing for years. According to the Governance & Accountability institute, over 80 percent of the S&P 500 now files a CSR or sustainability report. In addition, KPMG noted in 2015 that 92 percent of the world’s largest 250 companies produce a CSR or sustainability report.

The trend towards greater reporting on sustainability has had a meteoric curve in recent years, which have seen 180 policies and initiatives on sustainability reporting introduced in 45 countries, roughly two thirds of which are mandatory. All evidence suggests that the trend will continue. For example, the World Federation of Exchanges - the world’s global association for 64 stock exchanges and clearinghouses - recently released a guidance recommending 34 key performance indicators for ESG listing requirements and there are now 38 such exchanges participating in the Sustainable Stock Exchange Initiative.  

Investors continue to respond in kind, with the number of assets under management invested pursuant to socially responsible investment strategies has also increased exponentially in recent years. It would be even better if leading reporting frameworks continued on their trajectory of harmonization so that businesses can reflect what they are a doing in a single, coherent language enabling others to more readily understand their contributions to sustainability and progress on the SDGs.

And what about at the UN? A few initial steps have been taken that could lead towards greater integration, but no one within the UN system has yet stated that as a goal.  For example, the UN has created space for the private sector to participate in the High-Level Political Forum in July 2016, which will be the first accounting of progress on implementation of the SDGs for member states, so there is an opportunity at least for business to share what it is doing - again, anecdotally. In addition, the UN Global Compact, GRI and the WBCSD have jointly created the SDG Compass, which correlates SDG targets to existing corporate reporting frameworks. Another initiative, Measuring What Matters (MWM), is separately seeking to align corporate reporting with the emergent UN SDG framework and even recommended as such to the UN back in 2014. But from a policy and organizational perspective, this integration has yet to be placed on the agenda.

Moving Forward

Over the course of the next fifteen years, and beyond the 2030 Agenda, the business community will play a leading role in mobilizing resources, forming partnerships, and finding innovative ways to alleviate poverty by contributing to economic growth and revolutionizing production processes to be less impactful on and more efficient with our planet’s resources.  Corporate sustainability reporting that is officially recognized -- not mandated, just recognized -- by the United Nations could potentially stimulate increased engagement from the private sector.  At the same time, that reporting needs to reflect and accommodate what business is already disclosing and how.  

Now that we’ve entered the SDGs’ implementation phase, it is time to follow through on the bold ambition for a more collaborative partnership with business; this depends on the UN system becoming attuned to how business tracks and reports its sustainability actions. Member States should evaluate whether current working methods really allow for true partnership and what they could be missing out on by not deepening the private sector’s engagement in policy processes and strategic planning. The SDG indicators are a perfect place to start experimenting with improved working methods.