UN Sustainable Development Goals

The Importance of SDG Reporting and Reporting Linkages

In addition to the importance of the Sustainable Development Goals a(SDGs), this post will discuss an available linkage document between the SDGs and the Global Reporting Initiative (GRI) Standards.

The Sustainable Development Goals, also known as the Global Goals or SDGs, are the cornerstone for assessing the progress of the 2030 Agenda for Sustainable Development.

The 2030 Agenda, adopted by the United Nations in 2015, defines a plan of action for countries to protect the planet, to end poverty, foster peace, and ensure prosperity. The 17 SDGs provide a structure for countries to implement the 2030 Agenda. The Global Goals are integrated, meaning that action in one area will affect outcomes in others. Because they are interconnected, they need to be implemented with concern for creating balance among the goals. Tradeoffs have to be considered. For example, if a positive action such as installing solar farms removes land available for food, the development of solar energy must incorporate consideration of its social and economic impacts.

What is the progress on the achievement of the goals?

To date, progress on obtaining these goals at the country level is poor. In The Sustainable Development Goals Report 2024, the UN reported

“… that only 17 percent of the SDG targets are on track, nearly half are showing minimal or moderate progress, and progress on over one third has stalled or even regressed.”

There are many reasons for the lack of progress. The effects of the COVID-19 pandemic continues to take a toll on many countries’ human and economic resources. In addition, escalating armed conflicts and geopolitical disputes along with worsening effects of climate change are major impediments to progress. Assessing progress is also dependent on the availability and the quality of data. Good quality country data is not available for several reasons. Many countries lack the capacity to collect data. And although most countries have government agencies that compile and publish national government statistics, reporting on SDG indicators is often beyond the financial and technical capabilities of many countries’ statistical organizations.

What is the private sector’s role in meeting SDG targets?

The UN’s Sustainable Development Report 2024, The SDGs and the UN Summit of the Future, emphasizes the important role non-governmental entities will have in meeting SDG targets.

“The private sector must be a key driver for sustainable development, including leadership of technological transformations in energy, agriculture, climate resilience, digital economy and urban infrastructure essential for sustainable development. Profits must be the reward for contributions to the common good, not private gains achieved at the public’s expense. Ethical businesses should align with the SDGs and hold themselves accountable to these global goals.”

Although the UN calls for companies to support the SDGs in conducting business and creating products, there is no formal coordination between companies’ and countries’ SDG activities and reporting. This lack of coordination often leads to confusion about what companies should be doing with SDGs. The assumption is that if companies strive to contribute to sustainable development and in particular engage in business activities that support the SDGs, countries will benefit from these activities. Until there is a formal data collection system between companies and countries, direct analysis of how companies contribute to the SDGs in specific countries is difficult. To address this issue, the UN has called for the private sector to assist in developing national reporting systems. This will take time and resources.

There are many reasons that companies should in the meantime engage in and report on their SDG support. SDG reporting encourages companies to be transparent about their actions and impacts as they relate to supporting the SDGs. This transparency can help companies build trust and improve their reputations. An added benefit is that new opportunities and partnerships that support the SDGs can be identified. Along with external business opportunities, SDG reporting helps companies with internal management and decision making.

How can companies engage with the SDGs?

To help businesses operate more sustainably and contribute positively to sustainable development and the SDGS, the UN in 2023 developed The SDG Impact Standards. These standards are management standards designed as a guide for companies to embed sustainability and the SDGs at the heart of their internal management and decision-making practices. The framework supports organizations in deciding which impacts are important and relevant. Because this guidance is holistic in nature, it encourages organizations to reimagine their business models, explore new partnerships, and create solutions to achieve the SDGs.

Company SDG reporting, like all sustainability reporting, involves a comprehensive review of what the company does, how it could do it differently, and how these actions can be communicated internally and externally. Much like financial reporting, it can serve as a management tool for evaluating the company’s current and future state. Businesses that subscribe to the SDG goals must first address those activities where improvement is needed, e.g., reduce water consumption in their manufacturing processes, and then bolster those activities where they are already facilitating goal attainment, e.g., utilizing sustainable energy sources.

SDG reporting signals a company’s commitment to sustainability by measuring and tracking its progress toward achieving the SDGs that are most relevant to their business. Reporting can pinpoint a company’s helpful and harmful impacts. This can lead to developing product and process innovations that are less damaging and even beneficial.

Is the private sector responding to SDG reporting?

The answer is yes, mostly. Based on two surveys of sustainability reporting trends, companies are reporting on the SDGs. KPMG’s 2022 Big Shifts, Small Steps reports that 74% of the G250 companies (world’s 250 largest companies by revenue based on the 2021 Fortune 500 ranking) report on SDGs. Among the 900 companies of the Russell 1000 companies (1000 of the large cap US equities) that published sustainability reports in 2022, Governance & Accountability Institute, Inc., found that 52% of the 900 reports aligned with the SDGs.

In 2022, the GRI commissioned a study of a sample GRI reporting companies to evaluate how they communicate their support and actions regarding the SDGs. The analysis of the study, State of Progress: Business Contributions to the SDGs, revealed that 83% of the companies included a commitment in their sustainability reports to the Sustainable Development Goals (SDGs), but less than 50% set measurable targets with actions contributing to the Goals.

A clear majority of business in the research study support the SDGs, indicating that they believe the goals are valuable in developing their sustainability plans. Other studies have also supported these findings.

The most commonly supported goals include Decent Work and Economic Growth (#8), Responsible Consumption and Production (#12), and Climate Action (#13). Other studies have obtained similar results for these most commonly selected goals.

Most Commonly Selected Company Goals

Most research shows that Zero Hunger (#2) is the least often supported. Support for No Poverty (#1) and Life Below Water (#14) varies; other studies have not always shown them to be among the least supported goals.

Least Commonly Selected Company Goals

Even though most companies (69%) think that the goals are relevant to the operation of their business, only 40% have made measurable commitments to meeting the goals they think are important. One of the conclusions of this study demonstrates that companies need to improve their reporting.

“Although many businesses have set targets that are explicitly aligned with the SDGs, in this research, the majority have not. The overwhelming majority of businesses are also not yet reporting data on progress towards the SDGs.”

SDG graphic 2

“Make data on their SDG performance easily accessible by using internationally recognized frameworks, such as the GRI Standards.”

In my last post, I noted how there are a multitude of sustainability reporting standards and frameworks. One might go so far as to say that there is a plethora, i.e., “an uncomfortable fullness,” of them. Although these standards and frameworks are different and were created for different purposes and audiences, they often overlap. If, for example, your company reports using the GRI Standards, it will have already collected much of the data needed to address specific SDGs. I recommend this valuable document by the GRI, which links the GRI Standards with the SDGs. It contains a list of the existing disclosures in the GRI Standards mapped against the 17 UN Sustainable Development Goals at the target level.

Although all 17 SDGs are addressed in the GRI document, here are two examples which demonstrate the connection between two GRI Topic Standards and SDG Goals.

GRI Topic Disclosure: Tax 2019

GRI Tax 207-4

a. All tax jurisdictions where the entities included in the organization’s audited consolidated financial statements, or in the financial information filed on public record, are resident for tax purposes.

b. For each tax jurisdiction reported in Disclosure 207-4-a:

i. Names of the resident entities;

ii. Primary activities of the organization;

iii. Number of employees, and the basis of calculation of this number;

iv. Revenues from third-party sales;

v. Revenues from intra-group transactions with other tax jurisdictions;

vi. Profit/loss before tax;

vii. Tangible assets other than cash and cash equivalents;

viii. Corporate income tax paid on a cash basis;

ix. Corporate income tax accrued on profit/loss;

x. Reasons for the difference between corporate income tax accrued on profit/loss and the tax due if the statutory tax rate is applied to profit/loss before tax.

SDG 1 No Poverty

1.1 By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day

Setting aside the existence of kleptocracies and crony capitalist states, the purpose of taxes is to secure the well-being of persons living within the state. Countries do this more or less well, of course, and there are differing points of view on what taxes should buy and how much they should buy. Nonetheless, when the public realm is improved, poverty is usually reduced. Better infrastructure allows goods to reach markets more easily. A reliable electrical network facilitates education, health, and other services. Taxes provide a base of funding for a variety of social goods. When a company pays taxes within a country, it is helping that country reduce its poverty. A company that avoids paying taxes is not helping. Thus, your company wants to document the taxes that it pays and how they are relevant to reducing poverty.

GRI 207 Tax 2019 supports SDG Goal 1 No Poverty Target 1.1. A company’s approach to taxes in various countries can have a significant effect on the resources that governments have to reduce poverty. Companies using the GRI Sustainability Standards can readily document their commitment to SDG 1 No Poverty Target.

GRI Topic Disclosure: Training and Education 2016

GRI Training and Education 404-1-a

Average hours of training that the organization’s employees have undertaken during the reporting period, by:

i. Gender;

ii. Employee category.

SDG 4 Quality Education

4.4 By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship.

GRI 404 Training and Education supports SDG Goal 4 Quality Education. There is little doubt that better educated workers are more productive, more flexible in the work setting, and better able to contribute to the company’s and country’s well-being. A company that helps train its workers is directly addressing the SDG Quality Education target and, indirectly, the SDG No Poverty target. A company that reports on its commitment to training and education in its GRI report can also easily note how it supports the SDG Quality Education target.

SDG reporting is a worthwhile endeavor for companies. As discussed above, companies that already publish GRI reports can readily make the connection to the SDGs. Better reporting can perhaps lead to better assessment of progress on how companies are supporting the SDGs and a better world. In a future post, I will discuss how some investors are using companies’ SDG reporting as an assessment tool for potential investments.

Footnote

aI support the United Nations’ Sustainable Development Goals.

Scroll to Top