SMEs and UN Sustainable Development Goals (SDGs): Smaller companies can uncover competitive advantages by embracing the UN Sustainable Development Goals.
In 2015, the UK Government joined every other country worldwide and committed to transforming our world with the 2030 Agenda for Sustainable Development, and its 17 Sustainable Development Goals (SDGs). The Goals define global priorities and aspirations including ending extreme poverty, fighting inequality and injustice, and protecting our planet.
Achieving the Goals requires an unprecedented effort across all aspects of society – and business has a critical contribution to make. Fortunately, this agenda will also bring many benefits to business.
Companies, no matter how small, need to engage with the SDGs, and not just for sake of society and the planet – future success will be the reward for those who place sustainability at the core of their business model.
But what do we mean by this?
Environmental, Social, and Governance (ESG) criteria, along with the United Nations Sustainable Development Goals, have emerged as integral components shaping the new business normal.
Sustainability is no longer the preserve of a cohort of more progressive thinkers within an organisation, no longer merely an ethical consideration. It is a competitive necessity, a key indicator of management performance, and a driver for innovation and long-term success – essential elements defining the contemporary business landscape.
Seminal work by the British Academy, The Future of the Corporation, defined the purpose of business as “producing profitable solutions from the problems of people and planet … not profiting from creating problems”. Investors, employees, regulators, and consumers already understand this. Environmental impact, social responsibility, and strong governance are now fundamental considerations for C-suite executives.
We are already seeing companies penalised for failing to address the transition to a zero-carbon economy or ignoring the negative societal impacts within their organisations.
At the 2023 UN Global Compact UK Annual Summit, companies and investors were explicit about the need for businesses to have a robust and credible sustainability story, in order to raise capital. A sustainability strategy that is linked to a recognised framework such as the SDGs will be more credible.
Despite increasing investor pressure, SMEs find obstacles in balancing the potential benefits versus the operational costs that arise with implementing sustainability strategies.
This integration can seem daunting, and that’s why we developed the UN Global Compact Network UK SDG Playbook for SMEs – in partnership with law firm Irwin Mitchell – to help smaller companies unlock the competitive advantages associated with embracing the SDGs.
How can SMEs internalise the SDGs?
Businesses need to assess the positive and negative impacts they currently have on the SDGs throughout their entire value chain, to identify priority areas for action.
Through mapping impact, a business can demonstrate that it is aware and managing ESG-related risks and opportunities. This is essential for any future requests to report on progress and measure impact. It is crucial to use robust and credible data to identify and quantify all material impacts on the business.
Once SDG impacts have been mapped and priorities defined, the challenge is to internalise SDGs into the core governance of your company and embed them across relevant functions within your business – implementing them strategically is key to setting and achieving your sustainability objectives.
The UN Global Compact, in consultation with business leaders and partner organisations, has developed 13 SDG Ambition Benchmarks to simplify the task and translate ambition into action.
Accounting and sustainability disclosure standards are evolving rapidly, posing challenges for businesses to meet upcoming legislative changes. Reporting on your sustainability goals at the level of ambition required to achieve the SDGs in a comprehensive, transparent way, sets a baseline for organisations to build an authentic narrative on the value created for stakeholders.
SMEs with limited resources may lack established reporting and data collection mechanisms that align with the standards imposed on larger corporations. However, they might find themselves obliged to provide such information as part of a larger company’s scope 3 reporting requirements, Modern Slavery Statements, or terms of engagement.
Entering in partnerships can help SMEs decide on how to engage, as well as encourage a sense of shared responsibility across the business. SMEs can explore value chain, multi-stakeholder, and sector-specific partnerships to help build brand reputation, mitigate risk, reduce operational costs, and advance action for the SDGs.
The SDGs provide a framework for firms to become better at what they do. Now, more than ever, stakeholders not only expect, but demand that companies make a positive impact on society. Businesses that integrate the SDGs into their operating methods and culture are more equipped to create value and secure long-term success.
