193 countries, 9000 companies, and investors with more than $4 trillion1 in assets have pledged their support to the United Nations Sustainable Development Goals (SDGs). But while the SDGs garner widespread backing for their effective harmonization of the three dimensions of sustainable development – social inclusion, environmental protection, and economic growth – businesses face challenges in prioritizing action on the SDGs and, to date, have most commonly focused reporting on their positive contributions, rather than their holistic impact.
The Trucost SDG Evaluation Tool assesses company performance on the SDGs by building a map of SDG exposure across the value chain, based on a company’s geographic footprint and key markets. It then evaluates company efforts to manage and mitigate their exposure to each SDG, and assesses the positive impacts created by a company through its products and services, charitable activities, contributions to economic growth and employment, and commitments to transform business models in line with the SDGs.
The output of this analysis is an overall SDG Evaluation score for use in benchmarking against peers and tracking performance over time, plus a series of visualizations to aid businesses in targeting and enhancing their SDG strategy.
When evaluating company performance on the SDGs, it is important to consider the positive contributions they make to the SDGs, but also their actual or potential negative impacts, and the effectiveness with which these impacts are managed.
Leading companies are already taking significant action to address many of the issues underlying the SDGs, but performance varies greatly with some issues being addressed robustly, while action is limited on others. Understanding exposure to SDG issues across the sectors and countries in which a company operates can aid in prioritising action and the deployment of scarce resources to target those SDGs most closely tied to a company’s business model and operations.
Aligning business models with the SDGs by focusing on the delivery of products, services, and technologies that address specific SDG needs is critical. In addition, the impact of such efforts can be maximised by pursuing new markets that expand access to SDG-aligned products and services in those countries that need them the most.
Effective management of ESG risks in company operations is critical, but will not necessarily safeguard the company against hidden SDG risks in the supply chain, and ultimate product use or disposal. Modelling techniques can offer an effective means to screen value chains for SDG risks that may not be immediately visible.
The SDGs can encourage companies to consider SDG-related issues that are not commonly monitored and reported in the corporate community, but are still important to the achievement of the SDGs. For example, engaging beyond the sustainability department to target issues of tax transparency and corporate governance that are critical to Peace, Justice and Strong Institutions (SDG 16), and Partnerships for the Goals (SDG 17).
Data and modelling can be an effective and efficient means to better understand SDG risks and opportunities where direct engagement with suppliers and customers is challenging. The results must be placed within the company context, however, and be considered with reference to the corporate strategy and financial materiality.
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