The Sustainable Development Goals (SGDs) were adopted in 2015 by all United Nations Member States to provide an international framework to move toward a more equitable, peaceful, resilient, and prosperous world by 2030. Initially, the Goals were formulated to be used by governments and multinational bodies as a guiding model for sustainability.
As time has passed, companies all over the world, from all different industries and of all different sizes, have taken steps to include the SDGs in their strategies and decision-making processes. With the Goals over a third of the way through their expected lifespan, we reflect on their use, purpose, achievability, and relevance to investors.
When the SDGs were first introduced, it was estimated that the amount needed to reach the Goals collectively by 2030 would come to around $1.7 billion per year. Five years on, this is now estimated at between $5 and $7 billion. Unfortunately, the COVID-19 pandemic has not only put some of the SDGs on pause but has reversed the progress of a number of Goals. SDG 3, for example, which aims to ensure healthy lives and well-being, was on track to being achieved but has been significantly impacted with many countries instinctively halting childhood vaccination programmes, cancer screening and treatment, and family planning initiatives, as well as neglecting non-COVID-19 infectious diseases. Mental health issues have also seen a rise with more people experiencing anxiety and depression as a knock-on effect of being socially isolated. Having said this, before the pandemic hit, most of the Goals were deemed to be "off track" for the 2030 finish line.
From both an investment and development perspective, having companies adopt the SDGs into their own practices has been a step in the right direction. However, there are a number of things that should be taken into consideration when assessing their impact.
- Firstly, there is no globally agreed standard for mapping SDGs to private enterprise. Moreover, each SDG goal has a distinct set of target criteria which is designed to orientate public sector initiatives, rather than commercial activity. This makes it difficult to truly assess and measure company impact against the Goals.
- Secondly, because the Goals were designed for governments and international institutions, and so not all of their targets can be attributed to company activities. We have found that there is a noticeable disparity between the most referenced and the least referenced Goals in company reports. This reflects the comparative divergent "investability" of each Goal and, the reality is, they are not all practically investable.
- Thirdly, we have found an abundance of "SDG-washing" in company’s self-reported data. It is easy for companies to pick a small activity, which is contextually insignificant, and praise it above and beyond its actual impact, while also linking it to indirect impacts against SDGs. This is a common find and can mislead investors into thinking major progress is being made. Rather than selecting relevant SDGs and moulding activities to those specific Goals, many companies merely link SDGs to current company activities.
On reflection, it is difficult to say whether the SDGs are still fit for purpose as their purpose has somewhat changed, as have the participants in their implementation. The pandemic has highlighted how important the SDGs are, more now than ever, and how a combined effort is the only way the Goals can be reached. The SDGs are still young and assessing performance against SDGs is an emerging discipline, but the likelihood of meeting them by 2030 is looking slim. Perhaps reflecting this introspection, in the summer of 2020, government representatives joined a virtual UN meeting to decide how best to achieve the Goals and posed the question of whether the SDGs are fit for the post-pandemic age, suggesting more evolution of global development initiatives and a re-balancing of public and private sector collaboration could be a theme of development practice in the post-pandemic era.
References:
https://www.nature.com/articles/d41586-020-02002-3
https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30189-4/fulltext
https://www.gov.uk/government/speeches/achieving-the-sdgs-amidst-covid-19
https://www.sdgwatcheurope.org/not-fit-for-purpose-sdg-monitoring-report-fails-to-illustrate-how-far-the-eu-is-from-a-sustainable-future/
https://www.sciencedirect.com/science/article/pii/S0305750X19303985
https://www.responsible-investor.com/webinars/responsible-company-are-the-sdgs-fit-for-purpose