IS CORPORATE PRIORITISATION OF THE SDGs IN SYNC WITH DOMESTIC MARKET NEEDS?

The field of practice related to environmental, social and governance (ESG) aspects is peppered with acronyms – from the headline “ESG” acronym to the various reporting standards, frameworks and guidelines.

We have the International Sustainability Standards Board (ISSB), Global Reporting Initiative (GRI) and Task Force on ClimateRelated Financial Disclosures (TCFD), to name but a few. The most well-known framework in the ESG and indeed broader sustainability field, however, is the United Nations Sustainable Development Goals (SDGs).

The 17 SDGs underpin the 2030 Agenda for Sustainable Development, a plan adopted by all UN member states in 2015.

The agenda is intended to act as a guide that provides strategic direction to achieve peace and prosperity for people and the planet, now and into the future 1

The goals encompass issues spanning from poverty alleviation to gender inclusion from a social perspective, to climate, biodiversity and a circular economy from the environmental perspective, and finally to peace, justice and strong institutions from a governance perspective. Each SDG has a subset of targets (169 targets in total) and indicators, as well as data collected periodically to track progress for each of the indicators. The table below provides an overview of the 17 SDGs and a summary of the highlights for each of these indicators as captured in The Sustainable Development Goals Report 20222

The Covid-19 pandemic followed by the war in Ukraine and global rise in inflationary pressures have derailed and erased four years of progress for this SDG.

End hunger, achieve food security and improved nutrition and promote sustainable agriculture

Ensure healthy lives and promote wellbeing for all at all ages

Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

Achieve gender equality and empower all women and girls

Factors such as conflict, Covid-19, climate change and growing inequalities is undermining food security. This is likely to be compounded by rapidly rising food prices. Approximately 1 in 10 people globally are suffering from hunger.

Decreases in global life expectancy and immunisation coverage in conjunction with the prevalence of anxiety and depression and rise in deaths from tuberculosis and malaria demonstrate how Covid has disrupted decades of progress in global health.

The pandemic worsened entrenched inequities in education –147-million children missed over 50% of in-person instructions in 2021-2022 and 24-million learners (pre-primary to university level) may never return to school.

While women represented 39% of total employment in 2019, 45% of global job losses in 2020 were women. One in four women is subjected to partner violence at least once in their lifetime. Women representation in politics remains low (26.2%) and it will take another 40 years to achieve equal representation at the current rate.

1 https://sdgs.un.org/goals

2 https://unstats.un.org/sdgs/report/2022/

Sdg Description

Ensure availability and sustainable management of water and sanitation for all

Ensure access to affordable, reliable, sustainable and modern energy for all

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Highlights From The Sustainable Development Goals Report 2022

Drinking water, sanitation and hygiene targets won’t be met unless the pace of progress increases fourfold in the run-up to 2030. Failure to do so will leave 1.6-billion people without safely managed drinking water, 2.8-billion people without safely managed sanitation and 1.9-billion people lacking basic hand hygiene facilities.

Electrification rates continue to improve yet the rate of progress has slowed. Energy efficiency needs to improve and the number of people reliant on inefficient and polluting cooking systems remains high at 2.4-billion. Renewable energy (RE) consumption is rising but remains proportionally low at 17.7% of total energy consumption. Financial flows for RE to developing countries more than halved from $24.7bn in 2017 to $10.9bn in 2019.

Global unemployment rates rose during the pandemic and only pulled back slightly to 6.2% in 2021 (compared to 5.4% pre-pandemic). Factors stifling global growth include rising inflation, supply chain disruptions, policy uncertainty, labour market challenges, new Covid-19 waves and the Ukraine crisis. Worker productivity in least developed countries (LDCs) has not rebounded from pandemic levels. One in 10 children was engaged in child labour as of 2020 (160-million total children worldwide).

Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation

Reduce inequality within and among countries

Make cities and human settlements inclusive, safe, resilient and sustainable

A strong rebound in global manufacturing masks a continued decline in manufacturing in LDCs. The post-pandemic recovery for small-scale industry continues to be hampered by a lack of access to financial support, with one in three manufacturing jobs negatively affected by the crisis. Higher-tech industries, meanwhile, have been far more resilient to pandemic shocks.

Between-country income inequality increased for the first time in a generation during the pandemic and the global refugee figure hit a record high in 2021. The latter will be pushed even higher by the Ukraine war. Between 2015 and 2021, the number of refugees outside their country of origin increased 44% to 311 per 100,000 people.

At least 1-billion people globally live in slums and these communities remain the most vulnerable to disaster risk. Access to public transport remains highly restrictive in sub-Saharan Africa, while air pollution affects 99% of the world’s urban population.

Ensure sustainable consumption and production patterns

Take urgent action to combat climate change and its impacts

Excessive consumption remains the root cause of climate change, pollution and biodiversity losses while reliance on natural resources continues to rise. At the same time, between 13.3% (post-harvest) and 17% (at consumer level) of food is wasted every single day.

The climate change crisis is now deemed an imminent climate catastrophe, threatening coral reefs, a 30-60cm rise in the sea level by 2100, displacement of 700-million people due to droughts by 2030 and a 40% increase in medium- to large-scale natural disasters (droughts, hurricanes, forest fires and flooding) from 2015 to 2030. Carbon emissions are still rising, as are global temperatures, while climate finance falls short of requirements.

Conserve and sustainably use the oceans, sea and marine resources for sustainable development

Conserve and sustainably use the oceans, sea and marine resources for sustainable development

Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

Plastic pollution remains rife – more than 17-million tonnes of plastic entered the ocean in 2021 and this volume is projected to at least double by 2040. The broader oceanic ecosystem continues to be threatened by marine pollution, ocean warming, acidification, eutrophication and over-fishing.

Biodiversity spend remains neglected while 10-million hectares of forest are destroyed every year (mostly due to agricultural expansion); 40,000 specie remain at risk of extinction in coming decades.

A quarter of the global population lives in conflict-affected areas, while a record 100-million people having been forcibly displaced worldwide as of May 2022. Meanwhile, corruption remains endemic globally, with nearly one in six organisations reporting bribe requests from public officials.

Strengthen the means of implementation and revitalise the Global Partnership for Sustainable Development

Official development aid, foreign direct investment and remittances rebounded strongly in 2021 after taking a hit during the pandemic, while internet uptake accelerated from 54% in 2019 to 63% in 2021. However, the alarming trend of rising debt-to-GNI ratios in sub-Saharan Africa (from 23.4% in 2011 to 43.7% by 2020) persists.

A major breakthrough took place in 2015 for collaborative global policy setting and multilateralism with the adoption of several landmark international agreements, including the SDGs, the Sendai Framework for Disaster Risk Reduction (March 2015), the Addis Ababa Action Agenda on Financing for Development (July 2015) and the Paris Agreement on Climate Change (December 2015). To achieve the SDGs by 2030, between $3.3-$4.5-trillion in finance must be mobilised each year. As it stands, the financing gap for developing countries to reach this target is approximately $2.5-$3-trillion per year.

The SDGs have been widely adopted by stakeholders with an interest in sustainability – from the public sector to private corporations, development aid providers and nonprofit organisations – to support strategic integration of these goals into the activities selected to improve either ESG performance or achieve positive social and/or environmental impact. The findings from the ESG Barometer survey are consistent with this global trend, as the SDGs are the most widely used set of targets to structure planning for social and economic development and environmental action.

Furthermore, respondents’ ESG strategies are almost always aligned with SDG 8: Decent work and economic growth. The second-most targeted SDG is number 13: Climate action, and the third was SDG 12: Responsible consumption and production.

How does the SDG prioritisation by domestic companies match up to international trends? A 2016 study by the Ethical Corporation titled “State of Responsible Business 2016” 3, which surveyed 2,045 individuals from 114 countries, found that 86% of corporate respondents indicated that sustainability was becoming an increasingly important part of their company’s business strategy. At the time, however, only 46% of corporate respondents indicated that they were looking to engage in the UN SDGs.

3 http://s3.amazonaws.com/cms_assets/accounts/690b848f-131d-4af6-a319-824db8c89e5b/site-50109/cms-assets documents/264163-193652.ec-state-of-sustainability-2016-1.pdf

The SDGs have gained significant prominence in recent years and it is, therefore, unsurprising that a much larger proportion of South African companies are engaging in the SDGs than in the global 2016 survey. This also offers some explanation for why South African companies generally had a meaningfully higher engagement with SDGs than international companies.

The average engagement across all SDGs in the local market is 50% vs 39% for international companies. Nevertheless, the top three SDGs that companies are engaging with both domestically and in the international market are the same:

• SDG 8: Decent work and economic growth

• SDG 12: Sustainable consumption and production

• SDG 13: Climate change

The chart illustrates that the order of priority differs, with South African companies engaging with SDG 8 more frequently than SDG 13. This makes perfect sense considering South Africa’s deeply entrenched structural challenges related to unemployment and poverty, as well as perpetually sluggish economic growth. It is striking, however, that although South Africa is the most unequal nation in the world based on the Gini coefficient 4, SDG 10: Reduced inequalities, only ranks fifth on local company SDG engagement. Meanwhile, SDG 13 ranks second. While South Africa is an outlier on carbon emissions per capita, addressing climate change issues is only one part of the equation.

That said, given the overwhelming focus globally on the climate crisis, it is unsurprising that companies in the domestic market place significant focus on this goal, especially as they deem investors the most important stakeholders that influence strategic ESG decision-making (as discussed in the introduction article to this report). This highlights how there might be divergences in development needs based on the local market’s context, yet prioritisation of development needs does not always offer a true reflection of the most pressing development issues.

Companies should pause and reflect on whether their SDG prioritisation is being driven by actual domestic needs and aligning with national objectives (such as those set out in the National Development Plan, in South Africa’s case) or whether strategies are being driven by political (or other) agendas dictated by the northern hemisphere. Failure to do so risks misalignment between allocating resources for development purposes and actually solving country-specific development goals.

4 https://worldpopulationreview.com/country-rankings/gini-coefficient-by-country