Greater transparency and marshalling of private-sector support for the SDGs will make a huge difference.
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The United Nations’ adoption of the Sustainable Development Goals (SDGs) in 2015 was a momentous step forward on the path towards a greener, safer future for the global economy. The 17 goals include targets to combat climate change, end hunger, improve health care and make cities more environmentally friendly.
It is a radical, forward-thinking project. It is also an ambitious one. If the 193 member states of the UN are to deliver the SDGs by 2030, as promised, the support of the private sector will be crucial.
But there is a problem. There is currently no mechanism by which investors, civil society, governments and individuals can recognise the work of companies that are contributing to the SDGs or hold the laggards to account. Therefore, there is little incentive for companies to engage with the process.
This is why Aviva, the United Nations Foundation, the Business and Sustainable Development Commission and Index Initiative have come together to launch (Sep 21) the World Benchmarking Alliance, an open-source sustainability data and ranking project.
Over time, the Alliance will produce publicly-available, best-practice sustainability benchmarks, which will form the basis for simple, free, transparent and easily-understood league tables ranking companies on their contribution to the SDGs. The aim is to encourage firms to compete against each other to improve their performance, sparking a race to the top on corporate sustainability.
The need for change
Over the past two decades, the institutional investment industry has helped bring about a quiet revolution in the disclosure of environmental, social and governance (ESG) information among companies. Recent initiatives such as the Financial Stability Board’s Task Force on Climate-related Financial Disclosures have encouraged firms to become more open about the ESG
implications of their business practices. And this builds on the legacy of the UN Global Compact, the Global Reporting Initiative, Integrated Reporting and others too.
But this greater transparency is not yet having an effect at the scale required to mobilise sufficient capital to reposition the global economy on a sustainable footing. There are several reasons for this. The information disclosed is frequently hard to digest and understand. Although a clutch of research providers has emerged to collect and interpret the data, the resulting analysis is usually privately-owned and inaccessible. On the rare occasions when civil society does gain access to this sort of analysis, it tends not to make use of it; mostly because the ranking methodologies that underpin it tend to be proprietary, if not opaque.
All of which means there exists very little open-source research into how companies both within and across industries compare with each other on sustainability performance. The result is that end investors tend not to be able to see how their money is shaping the world they wish to retire into. They typically can’t see how the companies they own score on non-financial issues included in the SDGs.
Creating the benchmarks
This is where the World Benchmarking Alliance comes in. The benchmarks and league tables the Alliance produces will provide governments, civil society and investment organisations with a way to quickly and easily compare corporate performance across sectors and markets.
So how will the benchmarks work?
We advocate a differentiated approach. Some of the SDGs address issues that are material for a range of industries, such as climate change, labour
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