Aligning Business with the SDGs and the Paris Climate Agreement

6/24/2020

Aligning Business with the SDGs and the Paris Climate Agreement

Jeffrey D. Sachs Director of the UN Sustainable Development Solutions Network and Lisa E. Sachs Director of the Columbia Center on Sustainable Investment

Business enterprises play a critical role in achieving the Sustainable Development Goals (SDGs) and the Paris Climate Agreement (PCA). Their product lines, business operations, supply chains, and interactions with government and society, can make or break the SDGs. We therefore need accurate, reliable, and standardized guidelines and reporting standards to ensure that businesses align with the SDGs and the PGA. Such standards do not yet exist. There are several current initiatives that should be strengthened and harmonized to support the business sector as it reorients towards sustainable development, and to hold companies accountable that resist the necessary changes.

The UN Sustainable Development Solutions Network (SDSN) and the Columbia Center on Sustainable Investment (CCSI) are working to develop a robust framework for promoting and measuring business alignment with the SDGs and PCA across a number of industries, starting with the electric-utility and food sectors.

The proposed standards – for practice, disclosure and measurement - should reflect the needs of five main constituencies. The first are the boards and senior managers of the companies, who need objective guidance and information to ensure alignment of the company’s operations with the SDGs and PCA and to assess performance relative to competitor firms. The second are the policymakers, who have choices to make from among interested investors and are charged with formulating and implementing key policies (such as emissions standards, impact assessments, disclosure requirements, and accounting). The third are investors, which are increasingly subject to ESG investment mandates that encourage them to consider the impacts of their investments, and not only ESG risks. The fourth are civil-society organizations that advocate for effective environmental and social policies and that hold governments and businesses accountable. The fifth is the general public, including customers, young people, and the broad citizenry.

Today’s diversity of guidelines and reporting frameworks is causing serious problems for each of these constituencies. Standards, reporting frameworks and metrics are both divergent and inadequate to promote and measure holistic alignment with the SDGs; they often give a relatively free pass to companies that are promising more than they are delivering. Rigorous standards and assessment tools should hold companies to account for their real actions, not only their rhetoric, and clearly distinguish between good and weak performers.

The SDSN-CCSI framework recommends four dimensions of business alignment with the SDGs and PCA:

  • Product lines are beneficial for society: What does the company produce? What are the
    the impacts of the goods and services that it markets today and plans to market in the future?

    Some products have been transformative for health, clean energy, and quality of life, while others, like sugary beverages and fossil fuels, are inherently misaligned with improved living standards and the sustainability of our planet.

  • Production processes are socially and environmentally sustainable: How does the
    company produce its goods and services? What are the resulting environmental and social impacts of production? 

    There are many issues here, including strict limitations of environmental damages to biodiversity and human settlements; responsible engagement with and law-abiding consent from affected communities, especially marginalized communities; and the protection of all worker rights to health, working hours, representation, and remuneration.

  • Value chains are socially and environmentally sustainable: Where does the company
    source materials from, and how are its products used downstream? Does it take responsibility for its value chain? 

    Global value chains can be complex, involving energy, transport, services, agriculture, and other sectors. Companies must assume co-responsibility for the sustainability of their value chains both upstream and downstream, rather than shifting risks and externalities toward the producers or consumers.

  • Good company citizenship:
    How does the company see its role in domestic economies and in the global economy?

    Good company citizenship includes: respect for and fulfillment of all applicable regulations and best practices; transparency in corporate affairs; gender equality in human resources; honest tax practices; responsible use of litigation; refraining from corporate lobbying to weaken regulations; and so forth.

We note that most existing reporting processes, including the annual sustainability and corporate reports of companies themselves, touch on a relatively narrow subset of the variables outlined above as key to SDG and PCA alignment.

SDSN and CCSI look forward to working with industry leaders to support their efforts to align with the SDGs and the PCA, and thereby to contribute to a more prosperous, healthful, inclusive, and sustainable world.


Aligning Business with the SDGs and the Paris Climate Agreement