How the UN SDGs can help define & shape ESG outcomes

The United Nations' Sustainable Development Goals (SDGs) are increasingly being recognized as a beneficial foundation for responsible investment as the world shifts its focus more intently on ESG (Environment, Social, Governance).

As of February 2018, over 40% of the G250, the world's 250 largest firms, acknowledge the SDGs in their corporate reporting and include the global goals in their CEO and/or Chair's statement, according to Harvard Law.

Asset owners are putting significant effort into working out how the SDGs fit into their investment portfolios, according to Pensions & Investments, while institutional investor executives are now considering or have already implemented measures to connect their investment portfolios with the goals.

To meet increasing stakeholder demand, some businesses are moving beyond the standard ESG approach, which measures performance by limiting corporate impact, and instead of searching for ways to improve the world around them and have a positive, measurable influence.

In turn, the SDGs offer a realistic framework for ESG mapping at a higher level and can help to increase the adoption of sustainable investing, encourage responsible corporate behavior, and integrate sector and business specific ESG factors with broader social issues and global environmental goals.

What are the SDGs?

In 2015, the United Nations (UN) set out to solve the world’s major economic, social, and environmental challenges in 17 critical areas by 2030. All 193 Member States agreed to the “Agenda 2030”, calling on all businesses to actively and creatively be part of the solutions. While some of the goals directly fall under governments’ responsibility, the UN expects organizations and corporations, large and small, to take impactful steps toward achieving success. Below is a list of the 17 goals and their priority targets:

1. End extreme poverty in all its forms, everywhere
This goal targets the eradication of poverty, currently measured as people living on less than $1.25 per day, through equal access to economic resources, rights to basic services, appropriate social protections, financial support, and efforts to reduce exposure to climate-related events and other hardship.

2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
Reaching this goal will require access to nutritious and sufficient food year-round for poor and vulnerable people, ending malnutrition, doubling the agricultural productivity of small-scale food producers, implementing resilient agricultural practices designed for climate change adaptation, as well as protecting biodiversity and soundly managing natural and genetic resources.

3. Ensure healthy lives and promote well-being for all at all ages
Some successful outcomes for this goal include ending preventable deaths for newborns and children under 5 years of age, reducing the maternal mortality ratio and premature mortality rates, ending the AIDS, tuberculosis and malaria epidemics, combating diseases, and providing universal access to health care services, medicines, education, and vaccines.

4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
This goal seeks to ensure all boys and girls complete primary and secondary school and have access to quality early childhood development, to increase the number of adults and youth who have relevant employment and entrepreneurial skills, provide safe, accessible, and gender-equitable education and vocational training, including persons with disabilities and minority groups, and support school infrastructure, provide access to scholarships and increase the number of qualified teachers.

5. Achieve gender equality and empower all women and girls
This objective for this goal is to end discrimination against women and girls, eliminate harmful gender-based practices and all forms of violence against women and girls, ensure women participate equally in leadership and political/economic decision making, and provide women universal, equal access to economic resources, technology, sexual and reproductive health and rights, public services, and social protections.

6. Ensure availability and sustainable management of water and sanitation for all
The UN hopes to achieve universal and equitable access to drinking water, adequate sanitation and hygiene for all, improve water quality and water-use efficiency, protect and restore water-related ecosystems, as well as improve water resource management.

7. Ensure access to affordable, reliable, sustainable, and modern energy for all
This goal seeks to provide universal access to affordable, reliable, and modern energy services, increase renewable energy, improve energy efficiency, and expand infrastructure to support sustainable energy services in developing countries.

8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
This goal directly relates to economic growth and productivity through support for entrepreneurship, job creation, and innovation, a decrease in environmental degradation via sustainable production and reduced consumption, and the eradication of practices such as child forced labor and modern-day slavery.

9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
Reaching this goal will require building quality infrastructure at the regional and transborder levels, developing industrialization in poor countries, increasing access to financial services for small businesses, retrofitting infrastructure toward clean and sustainable technologies and industrial processes, as well as supporting technology development, research, and innovation in developing countries.

10. Reduce inequality within and among countries
Successful outcomes for this goal include income growth at a rate higher than the national average for the bottom 40% of the population, economic and political inclusion for all regardless of age, ethnicity, or religion, the elimination of discriminatory laws and policies, improved regulation of global financial markets, as well as safe and responsible facilitation of people’s migration and mobility.

11. Make cities and human settlements inclusive, safe, resilient and sustainable
This goal aims to ensure access to safe and affordable housing and sustainable transport systems, enhance sustainable urban planning and management, increase protection of the world’s cultural and natural heritage, provide safe public spaces and municipal services, as well as support national and regional development planning.

12. Ensure sustainable consumption and production patterns
Achieving this goal will require the implementation of a 10-year framework focused on responsible consumption habits, the efficient use of natural resources, significant waste reduction, the promotion of sustainable living and public procurement practices, as well as the development and implementation of sustainable consumption and production patterns, including tourism.

13. Take urgent action to combat climate change and its impacts
This goal seeks to strengthen our resilience and adaptive capacity to respond to climate-related hazards and disasters around the world by integrating climate change measures into national policies, strategies, and planning while improving education and awareness on climate change migration, adaptation, and risk reduction.

14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development
Reaching this goal will require the prevention and reduction of marine pollution, sustainable management of marine and coastal ecosystems, regulation of harvesting and overfishing, including the elimination of illegal or unregulated fishing and destructive fishing practices, conservation of coastal and marine areas and sustainable management of fisheries, aquaculture, and tourism.

15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
This goal calls for immediate implementation of sustainable forest management to halt deforestation and biodiversity loss and increase reforestation, restoration of degradation of land and soil, reduction of natural habitat destruction, prevention of poaching and trafficking of flora, fauna and illegal wildlife products.

16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
To reach this goal, the UN is calling for the significant reduction of violent deaths, the end of abuse, exploitation, trafficking and all forms of violence against and torture of children, the reduction of illicit financial and arms flows to organized crime syndicates, reduction of corruption and bribery, strengthening of global governance, and equal access to justice and protection of fundamental freedoms.

17. Strengthen the means of implementation and revitalize the global partnership for sustainable development
Successful outcomes for this goal include strengthening developing countries through resource mobilization and implementation of development assistance commitments, growing financial resources, providing access to sustainable long-term debt and financing as well as science, technology and innovation, and promoting a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization.

How the SDGs support ESG planning & outcomes

The SDGs were established to achieve a worldwide consensus on serious and widespread social and environmental issues. Because the SDGs are internationally recognized, they impact all countries and sectors on a macroeconomic level, meaning investors and businesses can utilize them to assess the impact of ESG investment strategies and set ESG goals.

Investors with highly diversified and long-term portfolios are exposed to the vast risks mentioned under each development target by default. Accounting for these objectives helps promote sustainable enterprises, markets, and economies and ensures that investment decisions will play a significant role in achieving the outcomes of the goal targets.

Investors and companies alike gain from aligning ESG initiatives with the SDGs. The SDGs identify key areas where more positive change is needed and provide a realistic framework to complement and support ESG considerations. These objectives serve to mainstream sustainability goals and anchor ESG-based investing decisions. A better ESG framework and greater data outcomes are only two of the numerous advantages of alignment.

A strengthened framework

Scenarios based on the SDGs can give ESG issues a new perspective. By connecting SDGs to current ESG measures, companies and investors can establish a common vocabulary for business decision-making and investment strategies. Furthermore, the SDGs allow businesses to consider financially significant regulatory, operational, and ethical problems related to the goals, which strengthens their existing ESG frameworks.

Companies may be more motivated to pay attention to financial and non-financial concerns such as corporate governance, direct and indirect environmental footprint, and human rights issues if they use an investing strategy that considers both SGDs and ESG issues.

Greater data transparency

Investors frequently cite a lack of data and transparency around ESG performance as a major impediment to making investment decisions. Investors spend valuable time attempting to analyze unstandardized data, which hinders investment growth. This difficulty is exacerbated by a number of factors. ESG statistics are generally qualitative, discretionary, and uncontrolled. And chaotic data systems are caused by a lack of standardized reporting, inconsistent data reporting measures, various scoring systems, divergent data points, and complex communications.

However, successfully attaining the SDGs necessitates a data-intensive process at both the global and company/sector level. This is due to the fact that several of the SDGs are quantitative in nature. Companies must acquire and communicate relevant, measurable data with investors by integrating and syncing ESG outcomes to SDGs' ambitions. This integration, ideally, will also help anchor company sustainability disclosures in sounder governance and transparent management.

Creating long-term value

Long-term value development for business and society is the goal of ESG-based investment decisions. This is a natural fit with the SDGs, which were founded on globally shared values, social expectations, and a sustainable and inclusive approach to economic growth and well-being.

In simple terms: the SDGs are the why and ESG is the how.

ESG factors can be roughly translated to SDGs on the corporate level as unique parts of ESG considerations can be assigned to all 17 goals. Businesses can utilize multiple strategies to align with the SDGs, including assessing, mapping, and setting goals, strategic integration and collaboration, and reporting and communication.

The SDGs provide a wide range of chances for businesses to make a difference, with 169 specific aims. Ultimately, organizations and investors who proactively focus on the SDG Agenda 2030 are likely to improve their ESG score and uncover new growth and development opportunities.

ESG materiality assessments

With investors inquiring more and more frequently about what your company is doing in regard to responsible investment, how you treat employees and vendors, your dedication to sustainability initiatives, and other activities that fall under the ESG umbrella, it’s important to have answers to these questions.

An ESG materiality assessment empowers you to easily report on your current state and outline future initiatives while taking into consideration your business goals and risks. Download our guide to creating and extracting the maximum strategic value from an ESG materiality assessment.

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Helee Lev

Helee joined our team in 2012, overseeing strategic account management, new business, and industry alliances. In 2015, she participated in raising $5M of venture capital funding. She leads sales, business development, and Conservice ESG's strategic consulting group.

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