Today’s World Benchmarking Alliance launch will spark a race to the top on corporate and investor sustainability

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 ESGimplications 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
conditions, gender equality and human rights, and the benchmarks tracking corporate performance in these areas will feature companies from different industries. The existing Corporate Business and Human Rights Benchmark, which uses a sophisticated methodology to compare a wide range of high-risk companies on human rights issues, could serve as a useful template here.
We also propose sector-specific benchmarks, which will focus on a single industry’s impact and contribution across a number of relevant SDGs. A model for this approach is the Access to Medicine Index, which assesses how leading pharmaceutical companies contribute to SDG 3 – which promotes health and wellbeing – by improving access to medicine in low- and middle-income countries.
By producing accessible league tables on sustainability, the Alliance will ensure companies doing their bit for the SDGs receive due recognition. The benchmarks will help guide companies’ sustainability strategies and enable them to compare results with their peers. Investors will be able to use the benchmarks to identify risks and opportunities, as non-financial sustainability metrics have been shown to be crucial drivers of long-term performance. They will also gain valuable insights that will inform their engagement with individual companies.
The league tables will provide civil society with a platform for informed debate and scrutiny, as well as a basis for constructive engagement with companies.By putting the SDGs on the corporate agenda, the Alliance will also mobilise private-sector support for policymakers as they work towards the Goals. And the league tables may help governments identify potential partners for public-private partnerships focused on sustainable development outcomes.
Next steps.
As noted in the interview with our CEO earlier this week, we are here at the UN General Assembly in New York and have launched a global consultation process on the Alliance’s concept: which issues we start with and the institutional governance structure. We hope to build the initial benchmarks on climate action, gender equality and marine ecosystems by September 2019.
The Alliance has received financial backing from the governments of the UK, Denmark and the Netherlands. But we would also like to invite companies, members of civil society, investors and independent rating providers to join us in building out the Alliance.
We need help. We need political allies to help promote the idea. We need intellectual allies to help us structure the institution and the benchmarks we build. And we invite contributions from everyone in the responsible investment industry who wants to make sure we maximise our positive impact for people and the planet while helping our clients profit.
Please respond to the consultation, and indicate your interest in becoming an ally, at: World Benchmarking Alliance
The hard work begins now – but we believe that, working together, we can deliver the SDGs and a help build a brighter future.