Harvard’s Eccles on the UN SDGs – They Are “Good for Business”

After months of study, deliberation and negotiation, members of the United Nations task force charged with establishing “Sustainable Development Goals” can take a bow — all 193 member nations have signed on to the goals, which address a wide range of ESG issues, such as solving hunger and poverty issues, addressing inequalities, dealing with climate change issues, creating more “sustainable cities,” and encouraging “more responsible” consumption.

There are 17 goals in total, and large—cap company managers we are speaking with in North America and Europe describe how their enterprises are now at work adopting goals and applying these to their long-term planning and target setting.  Companies are structuring programs and actions around the goals.  The actions/programs usually relate to the mission of the company.  A handful of companies that we’ve chatted with are attempting to address all 17 goals.

Are these companies unusual?  Should corporate boards and managements be wary of the UN setting goals that affect their business prospects? Do senior managers view this as the UN interfering with the ability to create value for shareholders?

Harvard University professor Bob Eccles says “no,” business leaders should and are adopting the goals for their companies.  Writing in Forbes, Eccles advises:  “The 2030 Agenda is very good news for the corporate community. Its goals represent clear business opportunities for those companies that understand sustainable change can be met through innovative products and services.”

Some goals, he explains, are industry-specific (such as clean water); some goals can be supported by every company (such as gender inequality). The goals represent aspirational markers for managements in both the short- and long-term (the goals go out to 2030).  Important:  Eccles sees it as the duty of the board of directors as fiduciaries to recognize the importance of the SDGs, and work to ensure that their company is responding with appropriate strategies.

The UN first set these types of goals in 2000, at the start of the new century, with the Millennium Goals.  Many public companies adopted these and fitted the goals to their own operations (such as reducing Greenhouse Gas Emissions).  The usual practice was to align the company strategies and actions with the 2015 target date of those goals.  The new goals are much more sweeping and comprehensive and take the actions out to the 2030 date…companies are now assessing the 2000/2015 efforts and strategizing their embrace of the Sustainable Development Goals.

The goals were officially launched in September at the United Nations meetings in New York City.  In the weeks and months ahead, there will be much news and commentary about the SDGs, with companies, governments, NGOs, multi-lateral agencies, investor coalitions, and other stakeholders weighing in.  If you have not tuned in yet, we should point out that Harvard Professor Eccles is a prominent and credible voice in sustainability circles -– we encourage you to read the story below with his views.

And finally… if you’re a company that wants to explore what the SDGs mean to your organization’s strategy we’ve put together several resources and services here at G&A (and through our partners) that can assist you in this important strategy setting process.

Please contact us at lcoppola@ga-institute.com to learn more about how we can help.

UN Sustainable Development Goals: Good For Business
(Wednesday - October 21, 2015)
Source: Forbes - Businesses today are expected to be part of the solution to our world’s greatest challenges – from climate and water crises, to inequality and poverty – as captured in the Sustainable Development Goals …

VW – Expanding Troubles in Media Spotlight What About Its Cultivated “Responsibility Profile?”

A significant number of large, global industrial companies have been carefully cultivating a public image of being responsible in ESG performance (environmental, social, governance). VW is among those enterprises marketing to consumers and businesses worldwide (in both developing and more developed economies) that publish sustainability reports that chronicle their ESG progress and achievements. But – what if the information is misleading, inaccurate, or worse, utterly untrue? What if data sets and narrative are incomplete, and doesn’t tell the whole story of the company’s responsibility journey? Or really undermines investment in the journey itself?

In order for this critical ESG strategy & performance information to be decision useful for important stakeholders, it must be accurate and reliable. When the management of a company makes decisions utilizing ESG data to allocate resources, can they depend on the accuracy of the information? When a public employee pension fund invests on behalf of its beneficiaries utilizing ESG disclosures as a part of their due diligence, can they all rely on the data being accurate — or will they lose part of assets that are important to beneficiaries ‘retirement because of a serious omission or inaccurate or false data?

A growing body of research and evidence argue that sustainability data is in fact “material” to investors as well as other stakeholders, and make the case that this type of ESG-related information should be measured, managed, and disclosed with the same rigor and professionalism that financial data is disclosed.

Read more at:

VW Sustainability Reports May Have Hinted at Problems
(Saturday – October 17, 2015)
Source: Bloomberg BNA – Research suggests there may have been hints of the still-unfolding diesel emissions scandal at Volkswagen AG hidden in corporate sustainability reports…. “It’s definitely something that’s going to be looked at as a case study for years and years to come around sustainability,” Louis Coppola, Executive Vice President and head of information technology at the Governance & Accountability Institute, told Bloomberg BNA…. “We’ve seen time and time again that self-regulation and voluntary reporting of this type of information is better than nothing, but it’s not good enough,” Coppola said, adding that VW’s reports are proof that in order for sustainability data to be trustworthy, it needs to be accurate.

GRI Reporting 2025 — Future of Reporting: Deeper Integration, Greater Scrutiny

The GRI global organization is looking ahead to the sustainability and reporting trends in 2025, GRI’s Reporting 2025 project aims to facilitate the discussion around the future of reporting. These papers examine the key decisions businesses will focus on in the next decade in order to transition to a sustainable economy, and how disclosure and reporting should be shaped to support decision makers in this process.

The insights presented in this Second Analysis Paper Sustainability and Reporting Trends in 2025, launched in October 2015, provide the main conclusions of the Sustainability and Reporting 2025 project. They result from the analysis of 22 interviews conducted as part of the project, as well as other sources.
Download the Second Analysis Paper 

 

 

 

 In May 2015 GRI published the First Analysis Paper, which provided the first set of preliminary conclusions of the Sustainability and Reporting 2025 project. They resulted from the analysis of the first nine interviews conducted as part of the project, as well as other sources.

Download the First Analysis Paper

 

“Corporate Sustainability”-– Advice For Fortune Readers — It’s Not a “Choice” but Critical to Your Business

Two McKinsey managers present a commentary for Fortune readers – corporate executives, board members, managers -– corporate sustainability is now critical to your business.  Cited: a McKinsey survey of 340 executives; 90% of respondents initiated their sustainability journey based on risk management concerns.  Authors Jeremy Oppenheim and Martin Stuchtey present brief examples of corporate benefits of sustainability efforts (a brewing company, water utility, China-based industrial), and examples of WalMart Stores, Nike, Unilever, DuPont sustainability initiatives.  These explain the important “how” of the companies’ efforts.

Sustainability, they write, is a “crucial competitive tool” for the corporation today.  Managements are, after saying “yes” (let’s start our journey) and then setting priorities, deciding on targets, estimating costs and looking at incentives (including CEO compensation).   But on setting targets – McKinsey looked at S&P 500 companies, and while the majority now publish sustainability reports, only 1-in-5 companies have long-term goals in place even though execs consider sustainability among their top 3 concerns. (G&A Institute looks at S&P 500 reporting each year; our most recent finding is that 75% of the companies now publish reports.  The content of course is as varied as the body of companies that comprise this important and most widely-used investing benchmark.)

In our close monitoring of the corporate sector, we are seeing continuing pressure on companies to embrace sustainability as a core or crucial aspect of corporate operations.  Customers are surveying their supply chain partners to determine the activities — and the progress made or not — by their key service and product suppliers.  Third party service providers are profiling supply chain partners’ sustainability efforts.  Company boards and senior managements are carefully evaluating the activities of their investing and industry peers to benchmark where they are.  Employees are asking, “what are we doing to be more sustainable” a question that can impact recruitment and retention and employee motivation.  And more mainstream asset management houses are adopting approaches to evaluate corporate ESG performance in their portfolio management.

The Fortune commentary is very useful for your internal discussions, one more helpful aid in “making the business case” to board and senior management team.  We encourage your reading.

Here at G&A Institute we help our clients at all stages of the Sustainability journey.  Part of our pro-bono work with the Global Reporting Initiative (as their exclusive data partner in the US, UK and Ireland) involves analyzing every sustainability report published in these three countries for over 100 important data points.  This underlying “big data” is one of the important resources that we utilize in creating client services and intelligence that no other U.S. sustainability consultancy offers. For example, G&A’s competitive benchmarking services and materiality projects start by utilizing the underlying foundation of this big data which makes our process more efficient, accurate and complete.  If you’re interested in engaging with the Institute on your company’s sustainability journey, please contact Louis Coppola at lcoppola@ga-institute.com to set up a complimentary consultation call.

Like it or not, sustainability is now core to your business
(Friday - September 25, 2015)
Source: Fortune - What used to be considered green virtue has now morphed into a crucial competitive tool. That business has a role to play in improving the environment and dealing with climate change is certain