When reviewing the core food and agricultural indicators for measuring the private sector’s contribution to the achievement of the Sustainable Development Goals I noticed that it heavily relies on the established set of social, environmental and governance (ESG) indicators that have been developed prior to the UN SDGs. However, the UN SDGs stand for a paradigm shift in the sense that they do not just recognize corporate efforts to minimize their negative externalities (social and ecological footprint) but also the potential of companies to create positive externalities for society and the environment through their responsible and innovative core business (also known as the 'handprint'). Such positive externalities must not necessarily be deliberate but are often 'unintended side' effects resulting from long-term investments and the development and commercialization of sustainable scalable innovations.
For example, a multinational company that invests in low-income countries and encourages its subsidiaries to embed themselves in a principled way into the local economy is unlikely to get rewarded for these efforts in the conventional sustainability ratings. In fact, often they score worse than multinational companies, which only operate in high-income countries where they are less exposed to risk. However, the contribution of embedded multinational companies to sustainable change in general and to UN SDG 8 (and its targets) in particular, are potentially huge (see https://www.springer.com/gp/book/9783030037970).
These contributions may manifest themselves through
- the creation of new decent jobs in the formal economy
- the reduction (directly or indirectly via local companies that obtain contracts) of youth unemployment
- the upgrade of local businesses to become sustainable suppliers in an integrated global value chain (contribution to inclusive and sustainable growth),
- the tranfer of technology and capacity development into the local economic ecosystem
- the economic empowerment of local entrepreneurial women
- investments in innovative local solutions that make use of external knowledge and know-how to enhance the value and sustainability of local products
However, I do not see how the set of indicators is capable of calculating a potential net impact of companies for all UN SDGs (discounting the assessed negative impact from the assessed positive impact in all areas of concern). It would also be hugely burdensome forcing companies to allocate more resources to monitoring, reporting and verification - often at the expense of investment in innovation and the local economy).
Even though it is commendable to focus on quantitative indicators it is far from clear to me how they promote the measurability and comparability of the sustainability performance of companies within their particular industry. For that purpose, a set of indicators (based on raw data) would have to be captured in form of key performance indicators that enable an appropriate benchmarking based on a score function.
Since doing this for every UN SDGs and respective selected targets would be too burdensome why not focusing instead on UN SDG 8 and its targets? In our research we noticed that UN SDG 8 and its focus on 'inclusive growth and decent work' directly or indirectly impacts all other SDGs, because companies that contribute substantially to UN SDG 8 become drivers of inclusive and sustainable change in the respective region in which they invest.
We discuss these issues in our forthcoming book on UN SDG 8: https://www.mdpi.com/books/pdfview/edition/1227.
Dr. Philipp Aerni