Corporate Sustainable Development Goals Reporting

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Table of Contents

Introduction
Companies and SDGs reporting
Limitations of SDG Reporting
Recommendations
Conclusion
References

Introduction

Over the past few decades, there has been an exponentially growing interest in reporting non-financial information, including several sectors like sustainability and human rights. This has been witnessed not only in academic literature but also in practice. The most recent addition to this type of reporting is the development and promotion of the Sustainable Development Goals (SDGs) by the United Nations (Calabrese et al., 2021). There are currently 17 SDGs that aim to create a better and more liveable planet by 2030 (Kücükgül, Cerin, & Liu, 2022). The diagram below highlights the 17 sustainable development goals

Figure 1: Sustainable Development Goals (The International Agency for the Prevention of Blindness, 2021)

SDG reporting refers to the practice by organizations to publicly reveal their commitment to achieving the 2030 agenda demands. This type of non-financial reporting gives stakeholders a third eye on how the reporting company is working with sustainable development (Fonseca & Carvalho, 2019). Although several organizations are committed to the SDGs, they lack reporting guidelines and thus ignore how to assess their efforts in meeting the goals (Hummel & Szekely, 2021). Moreover, major sustainability reporting frameworks typically publish guides to support corporations’ SDGs commitment, making it challenging for corporations to use these guides to achieve corporate sustainability goals and provide valuably reliable reporting on the same.

This paper aims to critically analyze the several existing reporting frameworks for SDG reporting. The essay will evaluate the multiple disclosures available under the numerous frameworks highlighted. In addition to this, an analysis of the challenges and limitations of SDGs reporting will be achieved based on five FTSE 100 companies and their non-financial reporting. The paper will argue the importance of SDGs reporting to improve life.

SDGs Reporting Frameworks and Guidelines

The global reporting initiative presents a comprehensive set of measures to enable companies to assess their contribution to sustainable development goals. This set of criteria includes topic standards, sector standards, and universal standards (Bose & Khan, 2022). The latter applies to all organizations and has been revised to include environmental due diligence and human rights reporting. On the other hand, sector standards are specific towards reporting on impacts of certain sectors, while the topic standards list disclosures that are applicable to a particular topic. GRI standards ensure any organization, whether small, large, public, or private, are able to report and understand the influences it has on the people, economy, and environment (Heithaus, Mills, & Perkiss, 2018). The standards ensure an inclusive picture of the company’s material topics, their effects, and how they are managed.

Sustainability Accounting Standards Board

This board highlights a subset of issues that are most relevant to the financial performance of any organization depending on the industry they operate in. The Sustainability Accounting Standards Board (SASB) is an independent non-profit company developed in 2011 in the US (Ionașcu et al., 2020). It encourages firms to carry out their sustainability accounting by providing cost-effective, brief, and materialistic information. The SASB standards are formulated to enable organizations to disclose financially related sustainability information to investors (SASB, 2020). It helps organizations and investors determine those SDG targets most relevant to the firm’s financial and operational performance.

United Nations Global Compact

This third reporting framework centres of attention is to sway the society into adopting sustainability principles. The United Nations Global Compact (UNGC) is centered on ten main principles which should define an organization’s approach and value system when doing business (United Nations Global Compact, (n.d.)). These principles are interconnected to one or more SDGs as they cover the area of labor, corruption, human rights, anti-corruption, and the environment (Izzo et al., 2020). The standards set by this UN-led initiative encourage activities that emphasize on sustainability to ensure a better world.

International Integrated Reporting Framework

Contrary to the other frameworks, the IIRC is based on the view that organizations are not just financial entities. Instead, they consist of a system that “interlinks and coordinates” the management of several sectors, including both financial and non-financial (Di Vaio & Varriale, 2020). In this case, management teams are expected to define their corporate goals and how the company will attain them. This framework uses an approach that pushes firms to report on six capitals (critical non-financial resources), including human, financial, natural, intellectual, social, and manufactured capital (Integrated Reporting, (n.d.)). Most businesses are dependent upon these capitals in their daily operations. Thus, linking them to SDGs reporting in an integrated framework will ensure that reporters can focus on and understand the relationship of value created through SDGs reporting, as shown in the diagram below.

Figure 2: The value creation process aligned with the Integrated Reporting (IR) (Adams, 2017)

Taskforce on Climate-related Financial Disclosures

The financial stability board established this framework in 2015 to establish voluntary and consistent financial disclosures related to climate. These would provide information and understanding to investors, insurance organizations, and lenders on the financial risks and opportunities associated with climate (Rosati & Faria, 2019). The TCFD accounts for reporting in four main areas, including governance, targets and metrics, risk management, and strategy. Through this, investors are provided with useful, future-oriented, and valuable information on how companies address and prevent climate-related risks. The framework is also user-friendly for organizations that use it.

Required disclosures vary depending on the type of framework. General GRI disclosures include contextual information regarding the corporation and its reporting practices, stakeholder engagement, governance, and activities, among other things. It also includes disclosures regarding the company’s material topics and their effects (Global Sustainability Standards Board, 2020). GRI disclosure rests on its trustworthiness. To achieve this trust, governments must first highlight the volume of involvement that the management can have in sustainability compliance, policy setting, and reporting (Global Sustainability Standards Board, 2020). Additionally, the general rules for the quality and content of GRI reports have to be established and recorded. For the reports to be acknowledged, independent experts must verify them to ensure they are correct.

Like the GRI approach, the UNGC has indifferent disclosure requirements. However, it has a mandatory disclosure framework that requires business participants to communicate annually with their stakeholders regarding their progress (De Luca et al., 2020). This progress should be regarding the ten principles and efforts to support societal priorities (United Nations Global Compact. (n.d.)). Participants can express their commitment to sustainability and provide their investors with metrics showing the company’s gains linked directly to their sustainability initiatives.

Since the SASB non-profit organization is not a government entity, it does not bind organizations through its standards. As a result, disclosure requirements for this framework are hard to define. However, there exists an eight-step approach that aids reporters through the SASB standards disclosure (Value Reporting Foundation, 2021). First and foremost, one needs to understand the shareholders’ expectations and determine the specific SASB standards that apply to the business. This is followed by performing a gap analysis of the company’s environmental, social, and governance practices as well as the current disclosures. One needs to consider any necessary changes to current practices and draft a SASB standards disclosure. This is then discussed with the executive management and socialized by conducting several shareholder engagement discussions (Value Reporting Foundation, 2021). Similar to the GRI, credibility is of vital importance in this framework.

Among the disclosure requirements for the IIRC include an organizational overview, risks, opportunities, governance performance, and outlook, among other things. An integrated report highly depends upon completeness and reliability as it must consist of all material matters (both positive and negative) without any error (Integrated Reporting. (n.d.)). It should also provide disclosure on the issues that substantively impact the ability of the firm to create value in the short, medium, and long term. The IIRC mandates that insight into the nature and quality of the company’s relationships with its main stakeholders be provided.

On the other hand, the TCFD framework’s disclosure requirements are specific to climate-related risks and opportunities. It mandates organizations to disclose material information concerning the potential and actual impacts of this type of risk and opportunities on the firm’s business, strategy, and financial planning. Additionally, the company needs to disclose the targets and metrics it uses to assess and manage relevant risks related to climate.

Companies and SDGs reporting

RELX’s inclusion of women in the company ensures that they have achieved SDG 8, gender equality. Its strategy to ensure women are included in the company has recruited 25% of the women from its 10000 technologies in its business (RELX, 2021). Additionally, the company continues to empower women within its industry by organizing mentoring programs. Thus, RELX strives to enforce gender equality in its business and create equal opportunities for leadership at each level of decision-making that affects the company’s operations.

Aside from gender equality, RELX has contributed to the promotion of decent work and economic growth. In all the countries the company is in, it has ensured that the recruited employees are getting living wages, thus promoting decent jobs (RELX, 2021). At the same time, RELX contributes towards reducing inequalities. This is achieved by creating opportunities for people and paying them well, thus reducing the income inequalities among nations. Hence, RELX is an advocator of decent work and economic growth and promoter of income equality.

Pearson

Pearson recognizes the need of people in society to learn as education yields better results such as job employment and effective leadership. Due to this, Pearson uses its finance to deliver education in its connections academy, including GED and BTEC businesses. Pearson introduced a £350m social bond in 2020 to support education for the minority groups in the society (Taurel, 2020). Additionally, the company is striving to reduce carbon emissions in the environment. It has achieved this by using internal expertise and external input to align its criteria for products that teach about social responsibility and sustainability.

Furthermore, Pearson has participated in promoting gender equality in its business by increasing the representation of women at all levels within the company. For instance, in 2020, it had 55% of women on the board of directors and 64% as senior managers (Taurel, 2020). Thus, the company ensures gender equality, environmental sustainability, and education provision to fulfill SDG 4,5 and 13.

Rio Tinto

The company’s operations are contributing highly to the carbon footprint. However, to enforce the SDGs, the company has worked towards improving its impact on the environment. For instance, they constantly work with the local community to improve the management of natural resources (Rio Tinto, 2021). The company has also developed standards that specify what they have to do while on-site to avoid destroying the environment. Hence, the company fulfills one of the sustainable development goals to improve the environment.

Furthermore, the company promotes the 4th, 8th, and 11th sustainable development goals by contributing towards employees’ wages and investing in communities. The company has employed local people and uses local products. Moreover, in 2020, the company donated $72million as global social investments to cover education, health, and the environment (Rio Tinto, 2021). Therefore, it supports the community through its efforts by fulfilling some of the SDGs.

Reckitt Benckiser Group Plc

Reckitt Benckiser Group, in its operations, has included sustainable development goals to help the community access clean water and sanitation. The company has incorporated the goal by creating strategies that will reduce 30% of its consumption of water by 2025 (Reckitt, 2021). Besides this, the company has developed water catchments where they have sites. This has significantly reduced stress-related to water inadequacy. Aside from ensuring the 6^th goal is achieved, the company is attaining the 12^th goal using the same strategy. This is possible due to the limitation of water consumption, which is cheering the 12^th goal, responsible consumption, and production.

The company acknowledges the importance of saving the environment hence participating in the goal of climate action. The company is committed to reducing CO2 emissions by 65% from the sites it operates and to start using renewable energy. In 2020, it surpassed its target to reduce its carbon footprint. Additionally, in the same year, the company’s manufacturing sites in India, the US, and Europe had started purchasing renewable electricity (Reckitt, 2021). Thus, the company fulfills the goal for climate action through its implemented strategies of using renewable energy.

Royal Mail Plc

Like the above companies, Royal has been implanting sustainable development goals in its plans. Among the purposes, it is working to achieve are good health and wellbeing. As a result, in 2019, the company launched new health, safety, and environmental strategy. Its objectives were to ensure employees have the proper training, reinforce safe behaviors, and manage risk (Royal Mail Group, 2020). As such, Royal Mail ensures the safety of its employees to promote their wellbeing and promote the UN sustainable development goals.

As for the other goals, Royal Mail has developed strategies to reduce carbon emissions. In its actions to save the environment, it has adopted the use of electric cars. By 2020, it had 1137 electric cars hence reducing 6.9% of its carbon emissions (Royal Mail Group, 2020). Additionally, the company is practicing responsible consumption. This strategy allows it to reduce the number of natural resources it consumes while conducting its operations. Therefore, Royal Mail operations have been developed to emit less carbon in the environment.

Limitations of SDG Reporting

Lack of time affects SDG reporting due to companies focusing on their daily operations. The daily activities consume the time and resources needed for successfully implementing the goals. Moreover, small companies find it challenging to implement strategies that align with the SDGs. Due to the size of the small companies, they face limitations such as inadequate manpower and resources to accomplish them (Bardal et al., 2021). On the other hand, big companies, having vast resources, find it easier to accomplish most of the goals. Therefore, the lack of time and resources remains a hindrance to reporting the sustainable development goals.

The lack of knowledge also affects SDG reporting from organizations. Organizations with knowledge about the various goals have the capacity to implement most of the goals in their strategy. However, lacking the knowledge prevents the use of the SDGs within the company (Bardal et al., 2021). Hence, companies will have nothing to report as they have not utilized the goals.

SDGs reporting is also affected by the lack of tools and methods to implement the goals in the company. Lacking the tools and techniques suggests that the company may have limited resources that can be used to implement the goals, and it may lack the ways to go about it hence lowering the chance of reporting its success in using the goals (Bardal et al., 2021). Besides lacking the tools and methods, a company may also lack the accessibility to the tools and the time needed to explore hence preventing using the goals and reporting.

The lack of coordination between various departments within the organization hinders SDG reporting. The limitation is influenced by the failure of the managers to effectively communicate the goals to the employees (Bardal et al., 2021). As a result, the employees will not work towards accomplishing the goals leading to unsuccessful reporting of the implemented sustainable development goals. A company’s size also affects SDG reporting. Small companies lack enough resources to implement the goals, and at the same time, it does not see the importance of implementing the goals as no one will notice.

Recommendations

It should be recommended that companies allocate time to assess their progress and determine whether the SDGs will be attainable. This will prevent the company from neglecting the goals they had prior set. Since implementing the SDGs is costly, a good recommendation is that small companies should implement one goal at a time till they achieve their set objectives. Another recommendation is that managers should take it upon themselves to communicate effectively with the employees so that they may push forward the goals specified by the company. Furthermore, companies should invest in tools that are necessary to accomplish the SDGs. The recommendations will ensure the success of the reporting by improving on the limiting factors affecting them.

Conclusion

According to the research, it is evident that SDGs reporting carries more importance to the organisation and the world at large. It enables corporations to be more responsible for their actions and invest more in sustainability, thus improving the world. Through the contribution of reporting frameworks such as the GRI and SASB, organizations are able to be accountable, involved, and take steps in the right direction to fulfill the SDGs. Provided companies embrace the SDG goals, sustainable benefits will continue to suffice in the long run.

References

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