Power of SDG Impact Standards in business

The UN Agenda 2030, adopted in 2015, with its ambitious set of 17 sustainable development goals (SDGs) and 169 targets, was agreed to by all governments.

Across the Caribbean and other parts of the world, transformation is under way.

In 2023, we have reached the halfway mark and can look back at what we have achieved.

The Economic Commission for Latin America and the Caribbean (ECLAC) reports that the situation in the Caribbean is not too dissimilar from that of the rest of the world: 23 per cent of our goals are reported to be on track after 50 per cent of our allocated time has passed.

In some areas, we have even moved away from the target.

The disconnect between aspirations and commitment, from action and achievement, has become apparent.

Current challenges in achieving sustainability

The traditional "business as usual" model is ineffective in addressing our current sustainability crises.

Despite widespread acknowledgement of the need for change, progress in achieving the SDGs is far too slow.

Some have put their hope in the new global consensus – environmental, social and governance (ESG) frameworks. Within the Caribbean, it's mainly the International Sustainability Standards Board (ISSB) standards, published this year, because they will likely be adopted within the region in the coming years.

However, these ESG frameworks, while valuable in promoting awareness and transparency, predominantly focus on how sustainability issues affect the company rather than how the company affects sustainability issues.

Even those that incorporate double materiality – considering outcomes for people and the planet as well as the financial impact on the firm, as is the case with the European Sustainability Reporting Standards (ESRS) – focus primarily on reporting and not decision-making processes that prioritise well-being and real impact.

A telling indicator of this discrepancy is the rise in ESG-branded funds, which has not corresponded with equivalent progress in achieving the SDGs.

This situation suggests a decoupling of investment growth from actual sustainable development, highlighting the shortcomings of current approaches.

Need for a transformative pivot in business sustainability

To address these shortcomings, there is a pressing need for businesses to pivot towards a new vision of sustainability. This transformation involves shifting from:

– Profit-only focus on financial and non-financial value creation,

– Short-term to long-term decision-making,

– Sustainability as an add-on to a core feature of how all business gets done,

– Shareholder-only value to multi-stakeholder value,

– SDG alignment to SDG action,

– Measurement and reporting to strategising, managing and decision-making for impact,

– Financial risk management to value creation and innovation.

Introducing the SDG Impact Standards

To help businesses achieve this transformation, the UN Development Programme (UNDP) developed the SDG Impact Standards, a transformational decision-making tool.

These standards represent more than guidelines; they enable a fundamental shift in the business approach to sustainability. They aim to integrate sustainable practices into businesses' core operations, allowing them to effectively manage and improve the company’s contribution to sustainable development and the achievement of the SDG targets.

The SDG Impact Standards are unique in several respects:

– Holistic strategy integration: Encouraging businesses to embed sustainability and the SDGs into their core purpose and strategy, emphasising long-term value creation for both the business and society.

– Emphasis on impact management: Advocating for an approach beyond reporting, focusing on assessing, managing, and optimising the social and environmental impact of business decisions.

– Governance and transparency: Enhancing governance structures that ensure sustainable practices are enacted and not just promised. Transparency is vital in communicating actions and impacts to stakeholders.

– Practical decision-making tools: Providing tools and guidelines for making decisions aligned with the SDGs, including setting targets, measuring impact and improving practices.

New normal and role of the private sector

The adoption of the SDG Impact Standards signifies the new normal for the private sector's role in sustainable development. They enable businesses to actively make decisions, develop strategies and drive investment to make measurable and auditable progress towards the specific SDG targets and sustainability goals.

The private sector's involvement is crucial for several reasons:

– Innovation and economic activity: As engines of innovation and economic growth, businesses can drive significant positive change and avoid profiting from creating harm.

– Resource mobilisation: Businesses can mobilise resources and expertise to develop sustainable solutions.

– Stakeholder engagement: By engaging with a broad range of stakeholders, businesses can ensure that their actions consider the voices of those affected by their operations.

SDG Impact Seal: A new benchmark for sustainable excellence and credibility

To promote trust and credibility, UNDP is also developing the possibility for companies to attain the SDG Impact Seal through the SDG Impact Assurance Scheme.

The scheme sets its minimum requirements at an accessible level. This approach enables organisations to strive towards best sustainability practices progressively.

It will serve as a beacon of international credibility as it will adhere to the rigorous standards of ISO 17065.

The SDG Impact Seal is a crucial element of this initiative and a distinct marker. It identifies and celebrates organisations genuinely committed to sustainable operations and effective contributions to the SDGs.

In this way, the seal becomes more than a symbol; it becomes a testament to an organisation’s dedication to making an authentically sustainable difference.

Dr Axel Kravatzky is managing partner of TT-based Syntegra-360 Ltd, vice-chair of ISO/TC309 Governance of Organizations and president of EUROCHAMTT. He enables companies to flourish through integrated governance, certified management systems and transformational leadership.