Article first appear in allafrica.com: Environment, Social & Governance (ESG) Business Pillars - Synergies with the UN SDGs - By Dr. Robin Renee Sanders, CEO-FEEEDS
Over the last two decades, the framework
known as Environment, Social and Governance (ESGs) has gained prominence as a
basis for measuring a company’s efforts toward sustainability, socially responsibility
(values), and acceptability as a set of metrics to gauge operations, investment,
shareholder decisions, and inclusion in capital market listings. ESG pillars first
began to take shape in 2004-2005, stemming from thought-provoking reports like
the “Who Cares Wins,” by Ivo Knoepfel, connecting
financial markets to a changing world, and advocacy by the late UN Secretary
General Kofi Annan encouraging CEOs of financial institutions to view ESGs as
having a positive impact on capital markets. These efforts led to such important related programs as the New York
Stock Exchange’s 2006 Principles for Responsible
Investment (PRI), and the Sustainable Stock Exchange Initiative (SSEI).
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Credit: Michelle Patrick Photography,LLC |
The ESGs have
grown to be more or less reflective of certain actions under
each of the E, S & G Pillars, which FEEEDS sees as being synergistically connected to the UN SDGs. This connecting
allows for the E, S & G Pillars to be both measurable, and also thematic
related to the SDGs:
Environment: For FEEEDS, this is the Climate Change Thematic Pillar, as it
incorporates many of the key climate change sub issues such as waste management,
reduction in pollution and carbon emissions, incorporating renewables, and natural
resource protection that companies are addressing.
Social: We view as the Humankind or Human Protection Thematic Pillar,
given this is where the treatment of personnel, relationships with outside
stakeholders, communities, and consumers come in, including issues of human capital,
good labor practices, and product liability.
Governance: Is the Inward-Looking
Thematic Pillar, meaning how well a company is managing itself from its
governing board (including board diversity), to transparency on financials,
taxes, investments, risks and ethics.
Given the
importance of the ESG Pillars to businesses and organizations today, adding a
thematic lens to the measurable metrics can be useful. Moreover, it helps
connect ESGs synergistically with the globally-agreed upon UN Sustainable Development Goals (UN
SDGs), running from 2015-2030, which seeks to improve the overall well-being of
mankind. Historically, this ESG-SDG discussion makes even more sense if one thinks
back to the early 2000s when the ESGs were being bandied about. This was just
after the creation of the 2000-2015 UN Millennium Development
Goals, the first global iteration of measuring mankind’s well-being -- a
precursor to the current SDGs.
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Credit: Елена Верхотурова |
The SDGs, with its 17 goals (and 169
subsections) encourages and measures a country’s (and by extension the world’s)
concerted efforts to improving mankind’s well-being by addressing extreme
poverty, development shortcomings in education, food security, health and joblessness,
particularly for women and children. The SDGs and their progress are analyzed
by a wide variety of organizations. This includes the UN SDG 2020 Report & Progress Tracker, the latter highlighting COVID’s role in unfortunately pushing 71 million
people back into poverty, the largest poverty rise since 1998; Gallup World
Poll, tracking SDG progress on food insecurity (790 million people facing hunger), labor & safety practices, financial inclusion; the World Health Organization, monitoring progress on both core
and attendant health-related SDGs; the World Bank’s SDG Atlas Tracker, on energy and hunger; and the
Sustainable Development Solutions Network’s SDG Index.
So, what is
the argument on linking ESGs synergistically with relevant thematic SDGs?
And, would that be for all 17 goals? The answer is no. But consideration should be made toward those
SDGs that are complementary to a business and its sector(s). Where a company
can thematically link (directly or indirectly), it should. By doing so, the
SDGs provide a way forward for a company to plug into the “greater good” themes
agreed upon by 193 countries, contributing to improved optics, perceptions and
by extension, positive metrics and visibility on its ESG framework.
Linking up
ESGs to appropriate SDGs shouldn’t be that hard to do. The bigger value-addition
is, by doing so, we all speak with one “improving humanity voice” as we work across
business and development sectors (as opposed to stove piped). Moreover, the SDG
link can provide the twofold benefit to companies of:
·
shining
an international (or country-level) light on a business’ positive actions; and,
·
serving
as touchstones to (directly or indirectly) aid or assist boards and investors evaluate
or further appreciate the outcomes of their ESG efforts.
In analyzing
the 17 SDG goals, there are 10, of the 17, which FEEEDS views with direct
thematic synergy to the ESGs, and seven, which could be viewed as indirect. The
blend, in the end, is up to companies.
The 10
SDGs with Direct ESG Synergies:
The 10 SDG goals,
we see with direct thematic connections to the ESGs fall mostly under Environment
and Social. They include, SDGs 5-9, 12-15, and 17. Granted, many
businesses are focused already on these in internal operations, therefore
linkages should be easy. Below highlights which SDG goal make sense under the
ESG Pillars:
Under the Environment (or Climate Change) Pillar, SDGs 6-7, 9, and 12-15 since these SDGs primarily focus on climate change issues of water, waste management and sustainable energy; to climate smart manufacturing, industrialization, production patterns and agricultural practices; to protecting land and ocean biodiversity systems.
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Credit: Dr. Robin Sanders/CEO-FEEEDS |
Under the Social (or the Humankind) Pillar, SDG
5, 8, and 17 since these SDGs focus on key elements of equality,
empowerment, productive employment and partnerships. But can also apply to a
company’s internal operations such as human capital and ensuring living wages;
to productive, descent work and healthcare for employees; to safe and humane working
conditions.
SDG 17, on strengthening Global Partnerships for Sustainable
Development, further
underscores FEEEDS’ core argument for the ESG-SDG synergy discussion. Businesses
which see this interconnectedness will likely benefit with quality relationships
with outside stakeholders, contribute differently to communities where they operate,
and improve partnerships or corporate social responsibility projects. These
changes can help reduce risks factors to bottom lines, which recent and
historic events continually show can lead to financial loss and instability costing
billions.
Under the Governance
(or Inward-Looking) Pillar SDGs 5 and 8 are also applicable. Although
this pillar tends to be focused on a company’s internal governance, regulations
and transparency, there is still synergy with these SDGs. The connections are
on diversity and equality -- not only in the board room, but also with
executive pay, investment dollars in minority and small businesses, and shares
in ownership. Studies show less reluctance today accepting female managers than
five years ago, in places like Canada (Randstad), and as shown in Gallup’s recent polling
in Latin America, Eastern Europe, and the U.S. Whereas, in the 21 African countries polled, the
region’s reluctance level toward women managers is still high (a median of 47% of
the population prefer men, while a median of 34% said they prefer woman). Companies
which systematically address this data point in their governance pillar –
increasing the number of female managers – would go a long way in synergistically
advancing SDG goal 5, while providing productive and descent work helps goal 8.
The Seven
SDGs with Indirect ESG Synergies:
The seven SDGs where a company’s good ESG report card can be helped indirectly, include SDG goals 1-4, 10-11, and 16 given these are the larger greater good SDGs (ending all poverty, hunger, and overall improving the human condition). Certainly, good ESG stewardship will have an attendant contribution to these global SDGs as companies uplift the lives of their employees with good practices. All of which can be achieved through climate-smart behavior, providing good healthcare and life long learning opportunities, and ensuring equitable pay, diversity and gender equality from the board room through to the assembly line and agricultural fields -- all very synergistic to these seven SDGs.
Article was also posted on Council of Foreign Relations blog site at: Environment, Social & Governance (ESG) Business Pillars - Synergies with the UN SDGs | Council on Foreign Relations (cfr.org)
A FEEEDS Series Blogspot
