Aligning SDGs with Sustainability Reporting
Sustainability reporting has become an essential aspect of corporate transparency and accountability, reflecting a company’s commitment to environmental, social, and governance (ESG) criteria.
As global challenges like climate change, social inequality, and resource depletion intensify, aligning sustainability reporting with the United Nations Sustainable Development Goals (SDGs) is of utmost importance.
The SDGs provide a universal framework to address these issues and drive sustainable development worldwide.
This article explores how organizations can integrate the SDGs into their sustainability reporting to enhance corporate responsibility and stakeholder engagement.
About Sustainable Development Goals (SDGs)
The SDGs, adopted by all United Nations Member States in 2015, comprise 17 goals designed to end poverty, protect the planet, and ensure prosperity for all by 2030. Each goal includes specific targets and indicators to measure progress.
The SDGs address various aspects of sustainability, including climate action, clean water, affordable and clean energy, decent work, economic growth, and reduced inequalities.
The Importance of Aligning SDGs with Sustainability Reporting
Aligning sustainability reporting with the SDGs offers several benefits. It enhances credibility and transparency, demonstrating a company’s commitment to global sustainability standards and increasing credibility with stakeholders.
Improved risk management is another advantage, as it helps identify and mitigate sustainability risks and opportunities, ensuring long-term business resilience.
Additionally, this alignment engages stakeholders, including investors, customers, employees, and regulators, through transparent reporting on sustainability performance.
Lastly, it ensures strategic alignment by integrating business strategies with global sustainability goals, promoting innovation and long-term value creation.
Steps to Align SDGs with Sustainability Reporting
1. Identify Relevant SDGs
The first step in aligning SDGs with sustainability reporting is to identify which goals are most relevant to the organization’s operations and impacts. Not all 17 SDGs will be applicable to every business.
Companies should assess their value chains, industry context, and stakeholder expectations to determine the most pertinent SDGs. Engaging stakeholders in this process can provide valuable insights and ensure the selected goals reflect their priorities.
2. Map Business Activities to SDG Targets
Once the relevant SDGs are identified, companies should map their business activities and sustainability initiatives to specific SDG targets. This involves analyzing how current and planned operations contribute to or impact the achievement of these targets.
For instance, a manufacturing company may map its energy efficiency projects to SDG 7 (Affordable and Clean Energy) and its waste reduction efforts to SDG 12 (Responsible Consumption and Production).
3. Set Clear Objectives and KPIs
To effectively track and report progress, companies need to set clear objectives and key performance indicators (KPIs) aligned with the SDG targets. Objectives should be specific, measurable, achievable, relevant, and time-bound (SMART).
KPIs provide quantifiable metrics to assess performance against these objectives. For example, a company aiming to reduce carbon emissions may set a target of reducing emissions by 20% by 2025, with KPIs such as annual emissions in metric tons and percentage reduction year-over-year.
4. Integrate SDGs into Sustainability Reporting Frameworks
Several established frameworks guide sustainability reporting, including the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the International Integrated Reporting Council (IIRC).
Companies should integrate the SDGs into these frameworks to ensure comprehensive and standardized reporting. This can involve cross-referencing SDG targets with relevant GRI standards or SASB metrics, providing a clear and consistent narrative on how the organization contributes to the SDGs.
5. Communicate Progress and Impact
Transparent communication of progress and impact is important for effective sustainability reporting. Companies should provide regular updates on their performance against SDG targets, using both qualitative and quantitative data.
This can be done through annual sustainability reports, integrated reports, and dedicated sections on corporate websites. Visual tools such as infographics and dashboards can enhance the clarity and accessibility of the information.
Engaging narratives and case studies can illustrate real-world impacts and success stories, making the reporting more relatable and compelling.
The Role of Accounting Firms in Facilitating SDG Alignment
Accounting firms in Singapore and other regions play an important role in helping companies align their sustainability reporting with the SDGs. These firms offer expertise in ESG reporting, data management, and compliance with international standards. Their services include:
Advisory Services
Providing strategic advice on identifying relevant SDGs, mapping business activities, and setting objectives and KPIs.
Data Collection and Analysis
Assisting in the collection, analysis, and verification of sustainability data to ensure accuracy and reliability.
Framework Integration
Helping integrate SDG targets into established reporting frameworks and ensuring compliance with standards like GRI and SASB.
Reporting and Communication
Supporting the preparation and publication of sustainability reports, including narrative development and visual design.
In Summary
Aligning SDGs with sustainability reporting is necessary for companies committed to contributing to global sustainable development.
The process involves identifying relevant SDGs, mapping business activities to SDG targets, setting clear objectives and KPIs, integrating SDGs into established reporting frameworks, and transparently communicating progress and impact.
Accounting firms in Singapore and beyond provide valuable support in this journey and offer expertise in ESG reporting, data management, and compliance.
Through successful alignment of SDGs with sustainability reporting, companies can not only meet regulatory and stakeholder expectations but also drive meaningful change towards a sustainable future.
