How companies can avoid 'SDG-washing'

Our CEO Marion Verles explains how new guidelines developed with WWF can help businesses make a credible commitment to the Sustainable Development Goals

Remember the wild west of companies taking on environmental issues? The days where common practice was to place a claim like “environmentally friendly” on packaging and fluff up a corporate social responsibility section for an annual report. Effective in marketing terms, but not a lot of impact.

Watchdogs quickly – and rightly – called out these disingenuous tactics as greenwashing. As a result, companies have started to follow more rigorous requirements for making environmental claims. Fast-forward to 2018, where the global community has agreed that it is imperative to limit temperature rise to well below 2°C, and has committed to deliver the UN Sustainable Development Goals by 2030 to create a more equitable and prosperous society for all.

This ambition leaves no room for tall tales. Nor can meeting it rely solely on a moral argument for business to be a force for social good. The UN’s Sustainable Development Goals Report from 2017 cites that “the rate of progress in many areas is far slower than needed to meet the targets by 2030,” flagging the urgency to accelerate action. At the same time, a Business and Sustainable Development Commission report highlights that “achieving the SDGs could create 380 million jobs and help unlock at least $12trn in opportunities for business by 2030.”

To connect a global need with business opportunity, we joined forces with Worldwide Fund for Nature (WWF) Switzerland to publish a report, Business and the Sustainable Development Goals: Best practices to seize opportunity and maximise credibility. This publication guides the private sector in defining and delivering against ambitious strategies to help the world meet the SDGs.

This report is timely. While business has been quick to take notice of the SDGs, engagement strategies are still in their infancy and can be inconsistent from one company to another. In its latest review of members’ sustainability reporting, the World Business Council for Sustainable Development finds that 79% of the companies analysed acknowledge the SDGs in some way. However, only 6% have aligned their strategy and targets to specific target-level SDG criteria and measured their contributions to key SDGs.

This is backed up by more recent research by KPMG, which finds that while four in 10 top companies acknowledge the SDGs in their corporate reporting, only 8% have reported a business case for action,  while 10% have set specific and measurable (SMART) business performance targets related to them.

Companies that reframe their communications while maintaining business as usual run the risk of accusations of overclaiming or “SDG washing”. They also run the risk of setting internally driven targets that are focused on what’s easily achievable rather than a company’s “fair share” contribution to an SDG.

By focusing on only positive impacts and leaving out negatives and trade-offs, companies also risk  material omissions and, worse, unintentional adverse effects.

Our report offers a clear, actionable set of best practices for sustainability professionals to avert such risks. These include:

  • Commit to comprehensive quantification of impacts and target setting, including assessing negative impacts and trade-offs in consultation with relevant stakeholders and experts
  • Make good use of third party verification and certification to ensure credible, comparable impact assessment and claims
  • Embed SDG quantification and reporting into internal decision making to understand the holistic impact of initiatives, identify new opportunities and achieve maximium impact

Let’s take a (much simplified) example. A consumer goods company maps its current impact against relevant SDGs and identifies a “hot spot” in its household detergents: 50% of the company’s total GHG emissions and 60% of its water footprint come from the manufacturing and consumer use of one product line.

While setting a Science Based Target to reduce GHG emissions, the company prioritises this product line and allocates R&D to identify opportunities to improve sustainability. Product scientists adjust the formula to require less water at lower temperatures to maintain performance –reducing both carbon emissions and water consumption.

Working with NGOs and authorities where the detergents are manufactured, the company finds energy and water efficiency opportunities that will maintain the health of the local watershed. In the process, it identifies that its activities also affects the water access downstream of one of its primary customers. With better water stewardship, the company ultimately improves resource availability and quality for a key customer, boosting goodwill with a direct revenue source as well as with the local stakeholders and community members where they operate.

In parallel, the company shifts to packaging made from sustainable sugarcane, a renewable resource. Their marketing managers introduce a new consumer engagement platform that provides incentives to return packaging for re-use and voluntarily offset the product’s remaining GHG footprint – a new “carbon neutral” selling point for millennial consumers.

All initiatives have clear targets that map to SDG indicators, which are monitored, verified by a third party, and certified where relevant. The new consumer engagement platform also gives the company a new opportunity to update its user base with information about its sustainability programme and provide them with promotions about these and other goods.

Such examples of “virtuous circles” undoubtedly require effort and investment to kick-start. But the message is clear: Sustainability is the path to creating long-term value.

By following simple standards for best practice target setting and following with robust monitoring and impact reporting that stakeholders can trust, business can drive the paradigm shift to a sustainable world, and reap the rewards for their actions.

Originally published on Ethical Corporation>>


Event Dates: Thursday, March 1, 2018