For the world to achieve the United Nations Sustainable Development Goals (SDGs) by 2030, the private sector clearly needs to step up its game. Companies want to show that their practices contribute to the SDGs, and investors want to put money behind those efforts. But a lack of consistent guidance on how companies should align their reporting with the SDGs has stymied progress.
The Corporate Reporting Dialogue, a coalition of the major international corporate reporting standard setters and framework providers, is determined to change that. A recent position paper outlined the group’s intention to work together to support the development of better reporting guidelines for the SDGs.
That will be good news for investors, especially impact investors who align their money with the SDGs, as TriplePundit has reported. The most recent effort is COIN, a new conscious investing platform backed by 157-year-old financial services company John Hancock, which launched the platform on March 4. Its mission is to help anyone, with as little as $50 to invest, to invest directly in companies contributing towards the SDGs.
“The SDGs are a fairly new framework to invest in and we wanted to help investors of all kinds to align their own personal values with their investments,” COIN CEO Megan Schleck told TriplePundit.
COIN will offer personalized portfolios aligned with eight Impact areas aligned with the SDGs. These include gender equality, climate action, better health, clean water, reduce waste, quality work, modern cities and shared prosperity.
As Schleck explained, customers own direct shares of the companies in their portfolio, which are chosen by scoring and ranking a company's contribution to a specific impact area through a proprietary methodology aligned with the SDGs. Each company undergoes extensive review on how well their goals, business revenues and corporate conduct to support positive change in various impact areas.
A company’s public reporting on sustainability is typically part of such reviews. But impact investors—and sustainability and ESG (environmental, social and governance) investors in general—have long criticized a lack of consistent and reliable data on how companies’ practices have an impact on the SDGs.
A recent study by investment management firm PIMCO on the quality of reporting on SDGs found that companies have a high level of awareness of the SDGs, with 63 percent referencing them in their reporting and 55 percent mapping business activities to specific goals.
Yet according to PIMCO, despite the high awareness, only 12 percent of companies referencing the SDGs set quantitative targets for meeting the goals, indicating that many companies find it challenging to translate well-intentioned support into action.
That can be frustrating to both corporate reporters and investors, which is the problem the Dialogue seeks to address. Last November, as 3p reported, the Dialogue announced two-year project focused on driving better alignment in the corporate reporting landscape. With more companies looking to align performance against the SDGS, providing clarity in this area was a top item on the group’s agenda.
The Dialogue consists of eight reporting framework organizations that address both financial and non-financial reporting. These are CDP, Climate Disclosure Standards Board, Global Reporting Initiative (GRI), International Accounting Standards Board, International Integrated Reporting Council, Internal Standards Organization (IIRC) and the Sustainability Accounting Standards Board (SASB).
Collectively, the group says it is able to address all SDGs and have already contributed guidance on an individual basis. Such efforts include the SDG Compass from the GRI together with the United Nations Global Compact (UNGC) and the World Business Council for Sustainable Development. The IIRC has issued a report on the implementation of integrated reporting while taking account of the SDGs. More recently GRI and the UNGC have developed a “Reporting on SDGs Action Platform,” an initiative that intends to accelerate corporate reporting on the Global Goals.
Still, despite these and other guidance, there are overlaps between the frameworks as well a number of gaps at the level of the underlying 169 targets of the SDGs “where our frameworks collectively or individually do not yet provide guidance,” as the Dialogue noted in the paper.
This paper describes the Dialogue’s goals:
"To enable effective and efficient capital allocation for the benefit of companies, investors, and society. This includes providing frameworks that measure progress toward achieving the SDGs and providing frameworks that enable a better understanding of the link between the SDGs and company financial performance and risk.”
According to the U.N., achieving the SDGs by 2030 will require a total annual global spend of $5 trillion to $7 trillion, with an investment gap in developing countries of about $2.5 trillion.
Therefore, the more reliable that companies’ information is, the more likely that private capital will flow towards projects that can help organizations achieve the SDGs—at least, that’s the hope.
If not, other initiatives are already underway to lend clarity to how the SDGs' progress is measured. In January, as 3p reported, the non-profit organization Verra launched the “Sustainable Development Verified Impact Standard,” in response to investors’ frustration with misleading claims around SDG impacts. The standard sets out criteria for how a project must demonstrate to the satisfaction of a third-party assessor that they advance the SDGs.
COIN’s Schleck agrees that while it is difficult to measure the SDGs’ ongoing impact, the forward march of socially responsible investing is unstoppable. Even if the metrics landscape is evolving, she says it’s important to provide options now to investors.
“We think it is critical for people to start using their money to advocate for their values and to hold companies accountable for their practices,” she said.
Image credit: Global Festival of Ideas for Sustainable Development/Flickr
Based in southwest Florida, Amy has written about sustainability and the Triple Bottom Line for over 20 years, specializing in sustainability reporting, policy papers and research reports for multinational clients in pharmaceuticals, consumer goods, ICT, tourism and other sectors. She also writes for Ethical Corporation and is a contributor to Creating a Culture of Integrity: Business Ethics for the 21st Century. Connect with Amy on LinkedIn.