The role of Sustainable Development Goals (SDGs) in the new generation of comprehensive corporate reporting
Written by Andrés Melendro, Sustainability Manager.
The private sector’s progressive adoption of the SDGs
Ever since Agenda 2030 was released in 2015, the UN Global Compact and more recently UNDP through its SDG Impact initiative have been eager to find ways to embed the SDGs in the DNA of the private sector’s sustainability disclosure. In fact, reaching such ambitious and transversal goals requires private commitment reflected by companies’ consistent actions to progress against the SDGs.
As a result, sustainability standard-setters, which aim at harmonizing the way companies disclose their impacts -positive or negative- on people, the planet and prosperity have naturally taken up the challenge of including the “SDG language” in their requirements.
Tearing down the Berlin wall between financial and sustainability reporting
In parallel, as sustainability gains recognition as a key set of variables directly impacting market risk and business valuation, financial standard-setters like the IFRS Foundation have also been trying to connect the dots by integrating sustainability into their reports.
These two major evolutions of corporate reporting are highly visible in the recent “Statement of Intent to Work Together Towards Comprehensive Corporate Reporting” written by the main sustainability standard-setters and framework creators (CDP, CDSB, GRI, IIRC and SASB). This declaration is a major landmark in the 30-year long history of sustainability reporting. As corporate (financial and sustainability) standard-setters reinvent their frameworks to make them compatible or even to unify them and put an end to the “alphabet soup of metrics”, referring to the multiplicity of standards and the complexity of navigating them all. ALLCOT strongly supports this initiative and argues that this is the right timing to fully articulate corporate reporting with the SDGs.
Comprehensive corporate reporting should erase the conceptual wall lying between sustainability and financial reporting, but also make sure transparent disclosure of present impacts is complemented by ambitious goal-setting.
The rationale for embedding the SDGs in comprehensive reporting
Sustainability disclosure standards are meant to gather precise, consistent and comparable company-reported information which shareholders and stakeholders, such as clients, potential employees or investors can use to make decisions about the company.
In the current trend towards ESG (environment, society and governance) standards and metrics consolidation, it can seem paradoxical to advocate for the inclusion of an additional framework, the SDGs. In fact, the SDGs are not completely equivalent to other sustainability or ESG frameworks. First, besides metrics SDGs are a call to action, to track progress toward common and absolute goals, beyond just making public information about current performance. Second, the SDGs enable companies to better account for their dependency on people and planet by focusing on external stakeholders. That dependency must also be linked to financial information.
From market-based to planet-based benchmarks
Sustainability ratings systems and rankings, such as the CDP, classify companies by comparing them to their peers. These benchmarks are useful, yet they lack an absolute view of what must be achieved to achieve sustainable development. In the SDG logic, ambition must be absolute rather than relative to current company and industry performance. Initiatives such as Science-based targets and Future-fit business are aligned with the view that systemic conditions should define the thresholds within which society and business must operate to maintain a planetary balance.
ALLCOT’s SDG services aim at shifting business practice from just quoting a general qualitative alignment with SDGs or using the SDGs to report current activities differently, by translating sustainability information to the “SDG language”, towards using them to set ambitious goals. This way sustainability can be embedded into decision making, as advocated by the SDG Impact Standards and certified by their SDG Impact Seal. The time has come for the new generation of comprehensive corporate reporting that recognizes that no enterprise can create value in the 21st century if it ignores the wellbeing of the social and natural systems upon which it relies.
Written by Wilson Rangel Sustainability Consultant.
According to the report, ‘Approaching the Future 2020’, the commitment of companies to the 2030 Agenda has increased progressively over the last 5 years, being today the third most relevant trend for the executives consulted.
Among other data, about 41% of the companies are already working on the Sustainable Development Goals, and 60% claim to have defined the SDG on which they will focus their contribution to 2030 Agenda. These data reflect the growing interest in the corporate world to generate investment to achieve an impact on the SDG.
Despite this, institutional transformation has been slow to align business resources into effective actions to meet these ambitious global goals by 2030. In fact, a recent UN report points to an urgent need to modernize the global financial system in order to meet the SDG.
Indeed, the United Nations Conference on Trade and Development (UNCTAD) in 2019 discussed the need to increase financing to meet the ODS. Neverlethless, the key point is to make the best use of these resources, and the efficiency of these resources per se can help attract more resources.
For this reason, several international organizations have promoted Impact Evaluation as an effective way to provide scientific evidence of the impact of social investments on SDG. In Latin America in particular, the IDB Group uses Impact Evaluation to close knowledge gaps and build more effective investment models, with a view to increasing the efficiency and scale of investments that work best.
Corporate results frameworks, Impact Evaluations, and other tools help assure governments, aid funds, donors, and investors that the money has a tangible impact. In this way, social investment resources can be focused on the projects that have the greatest impact on SDG.
The ambitious goals of the Sustainable Development Goals have become a major challenge to meet. For this reason, the participation of the various stakeholders in society is fundamental: Governments, NGOs, companies, civil society. ALLCOT as an organization focused on climate change and sustainability services has managed to properly identify the structural conditions of the current market and understand that the key point is to increase resource efficiency.
ALLCOT has a portfolio of services focused exclusively on organizations that are interested in working on Sustainable Development Goals. In particular, these services are focused on efficiently managing the resources of the organizations and generating the greatest possible impact.
For organizations that are in an early and intermediate stage, ALLCOT provides advice for SDG Mapping, understanding what the impact of the organization’s business model with ODS is. It also helps organizations SDG Quantify in their business model. Finally, it supports organizations in managing the impact on SDG through an Improvement Roadmap.
On the other hand, for organizations that are at a mature stage and make social investments in particular programs, ALLCOT provides advice on measuring impact on SDG, and thus helping organizations to efficiently invest their resources in the right programs.
Achieving the ambitious Sustainable Development Goals of 2030 Agenda is a major challenge for society at large, but the best way to meet the challenge is to use all resources in the most efficient way. This ensures that the resource is generating the greatest possible impact.
The two companies join forces to support organizations in achieving sustainable and non-polluting business models. The alliance aims to respond to current needs of the Mexican market and the Sustainable Development Goals (SDGs) of the United Nations.
From the time of the launch of Agenda 21 and, more recently, the Agenda 2030, Mexico has actively voiced her commitment to sustainable development and to strengthening the channels for monitoring, communicating and regulating actions that have allowed us to reduce the gap between the high indices of inequality and the high indices of pollution of the 1980s up to the second decade of the 21st century. Undoubtedly, the COVID 19 pandemic of 2020 marks a turning point—not only in Mexico—that calls for being even more rigorous and exhaustive in complying with sustainability goals. The 17 Sustainable Development Goals (SDGs) take on greater relevance and emphasize the right path for humanity and the planet.
Mexico became a signatory to the Agenda 2030 and the Paris Climate Agreement and included their objectives in national planning through passing reforms to the legal framework and prioritizing those goals in the development strategies. Green House Gas Emissions (GHG) are to be reduced by 22% in 2030 and by 50% by 2050, and the national contribution to the Paris Agreement is being updated to reflect a vision of net zero emissions by mid-century.
To meet its climate mitigation objectives, Mexico established a carbon tax in 2014 and, with its launch of a carbon trading system in 2023, will become the first Latin American country to set a ceiling on emissions through efficiency schemes that promote competitiveness in sustainability. In addition, in 2020 Mexico presented its National Strategy for Implementation of the Agenda 2030 including concrete action plans for achieving each of the 17 SDGs and putting people in the center of the development program under the slogan, “No One Left Behind”.
In response to these priorities, ALLCOT and Green Tank, after many years of promoting sustainability with different approaches, draw closer to combine efforts and advance toward a shared purpose. Today, our goal of promoting compliance with the SDGs and protecting the planet’s resources is intensified, but above all, we strive together to generate prosperity, shared value and promote better living conditions in communities.
ALLCOT, with more than 10 years of experience, develops sustainable projects around the world, supporting its clients and collaborators with know-how and management of initiatives that fulfill the Sustainable Development Goals and actively combat the climate crisis by reducing emissions of Greenhouse Gases (GHG). Since 2017, ALLCOT began operations in Mexico aimed at breaking paradigms in the private and public sectors by promoting vigorous efforts to reduce greenhouse gases through adopting sustainable projects designed to produce social impacts. Also, we have served as a spokesperson for the SDGs with leaders in banking, industry, waste management, construction, tourism and academia. ALLCOT is committed to and forms alliances with companies that, like us, value the environment.
The Green Tank team applies its extensive international experience and multi-disciplinary backgrounds to support businesses as change agents that protect the environment to foster successful and regenerative economies. Green Tank offers strategy, management and communication of projects and products that favor the planet and apply the Triple Impact approach. Our consultancy works to create shared value through collaborative models that stimulate cooperation among businesses and exchange of products or services between Large Businesses and Small and Medium Enterprises for achieving energy efficiency and the circular economy. Green Tank consulting services enable businesses to develop business strategies and measure and comply with the SDGs of the Agenda 2030, and the firm is committed to the movement of B Corps.
ALLCOT and Green Tank merge their pathways and combine tools to pursue a single vision of forming sustainable alliances to promote a sustainable and low-carbon economy and, why not?, to advance towards a carbon-neutral economy motivated by promoting the well-being of the people, communities and organizations where we leave our marks.
Written by Felipe Jiménez, Climate Change Mitigation Consultant
Humankind is destroying natural environments at accelerating rates. Deforestation, extensive agriculture, climate change, habitat invasion, biodiversity loss, and wildlife traffic, not only destroy vital ecosystem goods and services for humans but also open the way to zoonotic diseases and contamination of urban centers exposing people to deadly pathogens like the SARS-CoV-2, the virus responsible for the current Covid-19 pandemic. It was a matter of time for this time bomb to explode and cause such a dramatic impact in the world, as a result of environmental overexploitation and biodiversity’s mismanagement.
Governments, with the help of local and international organizations, have a great opportunity and responsibility to set their countries and the world on a more sustainable path. Currently, policies and subsidies have been structured towards the protection and conservation of ecosystems and biodiversity. Governments have understood the importance of reforming subsidies that are harmful to nature and introducing the payment of taxes for those activities involved in environmental degradation and biodiversity loss. The encouragement and promotion of effective nature-based projects and the strengthening of environmental monitoring and regulation procedures are being backed up by the governments and private sector initiative of creating more nature-based jobs. This in turn boosts up the economy and supports recovery processes within the ecosystems, promoting biodiversity’s conservation and restoration.
In addition to these actions, governments all around the world have banned wildlife traffic and taken precautionary measures to ensure food security and healthy consumption. In the same way, society leaders have conducted educational campaigns to raise awareness about the importance of establishing more sustainable alternative activities and confronting the problem through green investment and reinforcement of a more environmentally friendly economy and market.
Given the current situation, ALLCOT has a clear vision of its role in enhancing practices for the promotion of a resilient and well-functioning ecosystem. As a leader in the formulation of sustainable and climate change mitigation projects, ALLCOT supports the conservation of ecosystems and thus, the protection of biodiversity. Through the projects focused on reducing emissions from deforestation and forest degradation, ALLCOT tackles deforestation and forest fragmentation restoring biological corridors and protecting flora and fauna species, especially those key species considered vulnerable, endangered, or critically endangered due to their role as environmental indicators of a healthy ecosystem. Together with the mitigation and climate action scheme, ALLCOT develops a variety of sustainable initiatives around renewable energy, energy and resource management, and waste management. Through these series of projects, the organization conducts a qualitative evaluation of the Sustainable Development Goals (SDG) that could be positively impacted by the project’s activities and is currently working on a methodology that will allow monitoring this impact.
Among the activities that support the implementation of these programs, the projects include educational campaigns towards wildlife traffic, the correct resource, and environmental management, finance administration, governance, social leadership, etc. Additionally, supporting the previous idea of the encouragement and promotion of nature-based projects, ALLCOT develops well-structured plans that involve local community participation which gives them the opportunity to establish and learn about sustainable alternative activities and businesses.
We must realize that when we destroy biodiversity, we destroy the system that supports human life. Resources overexploitation, plastic pollution, overfishing, and the contamination of water sources are some additional critical issues that humankind must confront through the alignment of sustainable initiatives and actions. The formulation of such nature-based projects must receive clear support from the government and the private sector. These investments and subsidies will create a more resilient economy and will also tackle social problems such as poverty and hunger. Allcot’s contribution to the conformation and realization of these projects highlights the strong commitment that the organization has with the Paris Agreement objectives and the 2030 Agenda goals.
Written by Andrés Melendro, Sustainability Manager
Last Wednesday, June 16th, the Center for Sustainable Development for Latin America (CODS) launched its SDG Index: a measure of the progress of Latin American and Caribbean countries towards the Sustainable Development Goals (SDGs).
The report highlights that, overall, the region is not meeting the goals set forth in the 2030 Agenda, and that the health and economic crisis linked to the COVID-19 pandemic also represents a considerable setback in most of the SDGs. If the current trend continues, the goals set in 2015 would not materialize even on a 50-year horizon.
SDG 13, Climate Action, stands out as an exception because widespread quarantines and restrictions on production have led to a considerable drop in greenhouse gas (GHG) emissions. However, the rebound effect is foreseeable since the reduction is circumstantial. In particular, it is possible that the interest of investing in sustainable projects and green technologies gets delayed by the haste to reactivate or protect sectors of greater importance for the immediate future of a company. In this sense, ALLCOT’s work to develop projects that generate financial incentives to reduce emissions is more relevant than ever.
The methodology advanced by the CODS is based on the one that the Sustainable Development Solutions Network (SDSN) has been using for several years worldwide to establish international comparisons. The CODS adjusts it to the statistical reality of the countries of the region, given the unavailability of many indicators. In this way, the comparison becomes more valid. In some cases, for some States, there is no available methodology for SDG measurement. Another issue is the lack of data: the index requires figures ex-ante and ex-post 2015 to measure progress since the creation of the 2030 Agenda.
The report also includes a visualization tool called the dashboard. This allows to highlight, through a traffic light code, how close an SDG is to being fulfilled, in order to serve as a prioritization tool in each country.
The publication of the SDG Index, as well as the creation of the municipal SDG indexes in Colombia cities by the Corona Foundation through its network tracking cities’ wellbeing, illustrate the trend towards the appropriation of the SDGs by non-governmental entities and their measurement at sub-national scales. The private sector, and in particular organizations setting standards for corporate sustainability reports, have also included the SDGs in their performance metrics. Precisely, ALLCOT is currently developing statistical tools to quantify the impact of the socioeconomic co-benefits of its climate change mitigation projects, through the 230 indicators associated with the 17 SDGs.
This exercise presents several challenges, given that the project areas tend to be smaller than local political-administrative divisions in the country where the project is developed and usually do not coincide with their geographical limits. ALLCOT, like the CODS, adapts the SDG indicators to the real data availability and to variables that make more sense depending on the specific context. In addition, to mitigate the absence of local data in many rural areas of developing countries, ALLCOT has created mechanisms for collecting primary data to establish a meaningful SDG baseline. In this way, ALLCOT takes a leadership role in measuring corporate impact on sustainable development.