Why businesses should engage with the SDGs
How to build a more resilient and future-fit business model is a question that occupies the minds of leaders around the world.
The Sustainable Development Goals (SDGs) were formulated by the UN in partnership with businesses and with input from citizens as part of a commitment by world leaders towards ending extreme poverty, inequality, and climate change by 2030.
A new CGMA guidance paper, Creating a Sustainable Future: The Role of the Accountant in Implementing the Sustainable Development Goals, outlines the opportunities the SDGs offer to businesses and advice on how to embed them in your organisation’s work.
Taking action to contribute to the goals can benefit society. But they can also benefit a company in terms of reputation, licence to operate, and long-term financial performance. Incorporating the goals into strategy can also help businesses face up to key challenges of the years ahead, such as globalisation, digitisation, and meeting investor demand for greater reporting transparency, the report notes.
Factors driving engagement with the SDGs
The ease with which activists can share information about the activities of organisations via social media is one of the drivers encouraging companies to engage with the SDGs. Stories about poor practice have a direct effect on reputation, a valuable intangible asset. Conversely, news of innovative sustainable practices can also be promoted. One such initiative, involving turning waste coffee grounds into a biofuel to power London buses, is highlighted in the guidance paper.
Among the drivers for listed companies is that investment funds are increasingly looking at environmental, social, and governance (ESG) criteria in their investment decisions. In the near future, there will be more calls for reporting on these issues from all sorts of organisations.
Globally, by the end of 2016, at least $22.89 trillion of assets were managed under responsible investment strategies, up 25% from 2014, according to the Global Sustainable Investment Alliance.
Sustainability reports will increasingly revolve around an organisation’s contribution to the SDGs, said Michael Rogerson, ACMA, CGMA, of UK-based OEE Consulting.
Internally, too, the board will be looking for reporting on the SDGs, including information about how the company is working with governments, the results and outcomes they are getting, and the money they are spending, said Subhash Gupta, FCMA, CGMA, of GAPSS consulting.
Actively aligning business strategies with the SDGs can also enable companies to maintain and strengthen their licence to operate, added Gupta, former CFO of the United Nations Population Fund (UNFPA).
“Any progress on the SDGs in a given country will have a tremendous impact on the business environment,” Gupta said. “If there is a reduction in poverty in a particular country, you are increasing the consumer base for your product.”
The same is true of work on things such as education and gender balance. “And if a business is very active upfront on these issues, there will be a positive effect in terms of brand reputation,” he said.
The role of management accountants
The sustainable development goals sit on the spectrum between risk management and opportunity, and there is an opportunity for management accountants to be internal champions for progress in these areas, said Rogerson, the OEE consultant.
The insight that management accountants have into all areas of the business gives them the ability to build a business case and influence leaders.
A good starting point is to identify which of the 17 goals your company would want to make an impact on, those that are closest to your mandate, Rogerson explained.
Management accountants can then forecast the impact or progress their company could make on a particular development goal. In more developed economies, this might mean ensuring all staff are paid a living wage, or getting the energy to power your facilities from renewable sources. “Get collecting data internally and create a business case,” Rogerson suggested.
“Twenty years down the line, if you’re behind on sustainability, you’ll probably be behind in terms of bottom line also,” he said. “Conversely, there’s an opportunity to get ahead of your sector by prioritising delivering on the goals. That’s going to set you apart.”
— Samantha White (Samantha.White@aicpa-cima.com) is an FM magazine senior editor.