A frequently asked question by companies at the start of their ESG journey is, “What is the difference between the Sustainable Development Goals and Environmental, Social & Governance reporting?” Indeed, companies often find themselves overwhelmed at the start of their ESG journey. All of a sudden, CEOs find themselves up against multiple frameworks, expensive consultants and a myriad of complicated terms, phrases and metrics.
Many people are aware of the SDGs, with some companies ‘adopting’ or ‘reporting’ against a select (or even all)SDGs. But what are they precisely? The 2030 Agenda for Sustainable Development, adopted in 2015 by allUnited Nations Member States, provides a shared blueprint for peace and prosperity for people and the planet.At its heart, are the 17 Sustainable Development Goals (SDGs), which act as an urgent call for action by all countries - developed and developing - in a global partnership(1).
Simply put, the SDG’s are a series of goals and targets created in order to help us all - individuals, countries and companies - to achieve the ideal of a sustainable, diverse and inclusive society, which leaves no one behind, by 2030.
So, where does that leave ESG? Environmental, Social, and Governance refers to criteria that broaden and deepen the analysis of companies and generate more data upon which investment decisions could be made. Equally, ESG reporting enables stakeholders to evaluate a company’s adherence to its contract with society and its contribution to the SDGs.
In 2017, the International Business Council (IBC) of the World Economic Forum sponsored The Compact for Responsive and Responsible Leadership(2), which declared that “society is best served by corporations that have aligned their goals to serve the long-term goals of society.” Here, they identified the SDGs as the roadmap for achieving this alignment.
It was therefore fitting that the four pillars of the SCM’s (governance, planet people, prosperity) were created to be aligned with, and inspired by the SDG’s.
It is important to remember that while the SDG’s represent global goals and targets for society overall, ESG represents methods and processes for the business community to gather and transparently report data. ESG frameworks allow companies to measure responsible and sustainable corporate growth and business continuity in a structured and standardized way.
Today, the World Economic Forum’s Stakeholder Capitalism Metrics ESG framework set a gold-standard in reporting on genuine, structured, and standardized change in the world.