Commitment to impact

…Aligning ESG objectives with the SDGs

By Bright Ampadu OKYERE

Many people confuse SDGs and ESG, but we need to address them with the knowledge and evidence available. Both the Sustainable Development Goals (SDGs) and Environmental, Social, and Governance (ESG) principles aim for a sustainable future. Nonetheless, they operate at different levels with different frameworks.

The SDGs, also known as the Global Goals, are a global framework set by the United Nations. They are built on 17 pillars, with a focus on peace, prosperity, and the planet. They all seek to guide nations, organizations, and individuals toward a common vision of sustainable impact.However, the ESG, on its part, is a corporate-level framework guiding businesses on how to measure and manage their sustainability performance through three primary pillars: Environment, Social, and Governance. The ESG framework serves as a springboard for organizations to track their performance and influence toward attaining the SDGs.

Another point is that organizations have a daunting task of preserving the environment and the society that provides the needed support for their business operations and survival. Any act of irresponsibility that seeks to impact the environment or society adversely will jeopardize the sustainability and existence of their investment.

Additionally, an integration framework is required to align ESG (Environmental, Social, and Governance) with the SDGs (Sustainable Development Goals).  Organizations must therefore identify the most relevant SDGs for their business operations and design an implementation roadmap with the ESG initiatives. Incorporating a business strategy with the relevant SDGs contributes to the overall Global Goals set for attainment in 2030.

Moreover, such arrangements facilitate the identification and addressing of potential risks, as well as the development of adaptation and mitigation plans. Organizations are concerned about their brand and public reputation, and they will do everything lawful to ensure that. Aligning ESG with SDGs helps strengthen disclosures and reporting clarity, as well as adhering to regulatory compliance.

A clearly defined approach will enhance confidence, position the organization as the brand of choice, and attract the needed footprint and investment. Surprisingly, communities, customers, employees, and suppliers are increasingly becoming aware of the relevance of ESG and how it directly affects them.

By lowering waste, emissions, and expenses, this will boost the social return on investment and enhance productivity, profitability, and operational efficiency at all levels. Aligning ESG with the SDGs also helps build internal capacity while supporting the SDGs through ongoing projects.  Organizations must align their ESG strategic plan with the SDGs and ensure compliance regardless of the size of the business.

Furthermore, organizations must also recognize the SDGs’ guiding principles and apply them to their routine operations. The framework must again have standards for evaluating the direct and indirect effects of ESG strategy on its operations, value chains, communities, and other stakeholders by monitoring and reviewing them periodically. Using the SDG framework to promote sustainability initiatives in your company will be made easier using the following measures.

Setting priorities for gain

Business entities can utilize the well-formulated SDG framework to choose which areas they can help advance by taking into account those that have a medium-to long-term impact on risk or opportunity for their business and community. All 17 SDGs are crucial; however, it is important to align with the very goals that directly impact your business. An example is a financial institution that prefers to give a credit facility to a manufacturing company. They must be interested in how that manufacturing company treats carbon emitted into the atmosphere as a result of their operations. Such an organization should be interested in SDG13-Climate Action. Again, SDG7-Affordable and Clean Energy, SDG9-Industry, Innovation, and Infrastructure, and SDG12-Responsible Consumption and Production should be priority areas for them in guiding resource allocation on measures to mitigate the adverse impact of their operations.

Establishing well-defined objectives

After determining which SDGs are directly related to your company and its net-zero commitment, they can be connected to the real business goals and KPIs to make tracking, monitoring, evaluation and reporting easier. For instance, the Science-Based Targets initiative (SBTi) has made science-based target setting for SDG13-Climate Change a routine business practice. This is actualized by defining how much and how rapidly businesses must decrease their greenhouse gas emissions; this project gives them a clear roadmap on future growth. Interestingly, performance is tracked and assessed using science-based, and validated targets. It’s important to note that if management actively supports and participates in this goal-setting process, there is a higher likelihood of success rather than leaving its implementation to middle management, as is usually seen.

Embed ESG targets within core business strategy

By taking into account business models, ongoing initiatives, supply chain activities, research and development, an organization can incorporate its ESG-led goals into its business strategy. It can increase the time and expertise of your managers and professionals at all levels of the business so that all business functions and units have the required support and ownership. This will ensure that the sustainability plan is well rolled out with clear achievements.

It is essential to look to the SDGs when realigning your company’s ESG plans and corporate objectives in order to determine how you can use current commitments and projects to positively contribute to the SDGs. For instance, a company can determine that it contributes to SDG 12 Responsible Consumption and Production by greening its supply chain—that is, including ecologically conscious standards and principles into the supply chain.

Foster creative partnerships
In order to achieve business resilience and sustainable operations, all ESG plans should enable a company to innovate, generate commercial growth prospects, and diversify products and services. This can be done through product innovation, investigating and investing in new models of attending to customer demands, and scaling up the enterprise to be more efficient and effective. To get positive results, significant and productive cooperation is needed throughout the business value chain. At this point, it must be understood that the return on investment is favourable for the sustainability of the business. For instance, to reduce climate change and increase production efficiency, a manufacturing company can reduce its carbon emissions by investing in a carbon extraction technology.

Design a monitoring, evaluating, and reporting metric
One surest way of identifying progress is the ability to monitor and measure activities, especially a scientific and data-driven means of reporting. Businesses must designate specific measuring metrics to track and report on all ESG-related goals. Remember that reporting on both the company’s achievements and potential failures is equally crucial; they help in attracting the needed investments for business growth.

It is feasible to create integrated reporting structures that combine financial, social, environmental, and governance effects when ESG is  incorporated into the larger company plan. This will increase accountability and openness while preventing redundant and parallel reporting, thereby duplicating functions unnecessarily. Organizations can create a principles-based report structure with the help of a number of reporting frameworks, such as SASB, TCFD, GRI, and CDP. All these reporting standards have well-defined metrics for ESG reporting.

Every firm, regardless of size, sector, location, and stakeholders, has a part to play in creating the future that we all desire. In order to contribute to the creation of a more affluent, inclusive, and sustainable society, businesses today are  tasked to integrate ESG principles into ethical business practices.

The additional advantage is that this strategy unlocks significant value while fostering relationships and trust with a company’s important stakeholders. It is both morally required and a wise business strategy to match environmental concerns with corporate objectives. Businesses are expected to ensure long-term prosperity, foster innovation, and bring about positive change by utilizing the global agenda presented in the SDG framework.

Essentially, the ESG framework is distinct in diverse ways, and notable amongst them are its commitment to environmental responsibility, which hinges on climate action, clean and renewable energy, reduction of waste, biodiversity, etc. They also emphasize the criticality of social accountability, addressing health and safety concerns at work, fair pay, equal opportunities, diversity, and inclusion, working conditions, child labour, etc. Again, corporate governance adherence is an essential element in the sustainability of every business. Governance structures in this context tackle issues of enterprise risk management, cybersecurity compliance, anti-corruption, ethical leadership, shareholder rights, etc.

Ultimately, these principles do not only ensure sustainable businesses but also preserve the environment and position the brand as an employer of choice. Businesses that are making frantic efforts to incorporate ESG principles into their overall strategic plan will position themselves as market leaders going into the future with the right culture for sustainability.Source: https://www.bdo.com.qa/en-gb/insights/esg-aligning-business-goals-to-the-un-sdgs,

Bright is a SDG Advocate) and Lead Partner SDG Alliance-Ghana Email: [email protected] Twitter: @ghanasdg Facebook: SDG Alliance-Ghana Tel. # 0244204664

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