The issue

A recent report published by the United Nations (UN) confirms that the coronavirus pandemic has put the initial aims of the Sustainable Development Goals (SDGs) out of reach. The SDGs Report 2020 explains that much of the work achieved since the launch of the goals in 2015 has now been eroded[i]. The worrying finding is confirmed by The 2020 Social Progress Index. It estimates that the world will not now achieve the SDGs until 2092, 62 years behind the 2030 schedule! [ii]

So why have the SDGs received so much attention post-COVID-19?

Despite the above findings, the pandemic and resulting crisis has exposed and intensified fundamental weakness in our global systems. Challenges such as weak health systems, accessing education and finding decent work, together with achieving economic growth, have, broadly, affected every citizen on the planet. [iii]

Ironically, the pandemic coincides with the fifth birthday of the SDGs, which were constructed to address such global sustainability issues and their inherent interconnectedness. And the problems we currently face within our global societies as a result of Covid-19 raise some probing questions about the UN’s global goals.

The lack of resilience from many of our institutions faced with a pandemic is surprising. At the same time, the frailty of the SDG framework to maintain the progress made thus far brings into question its future effectiveness to rally the global community in responding to challenging social and environmental issues.

Or are we being unfair?

Could the example of the international race to find Covid-19 vaccines actually be a harbinger of potential future global co-operation?

Is this actually a moment to celebrate the SDGs framework and intensify our efforts around it to identify risks, build resilience and devise strategies for companies, investors and stakeholders to help in solving complex societal ESG problems?


About the SDGs

Launched in 2015, 17 Goals (SDGs) form the basis for the 2030 Agenda for Sustainable Development adopted by all United Nations member states. Each of these goals has 169 targets covering a broad range of sustainable development issues. [iv]

How is progress on the SDGs going ?

Despite the breadth of action and initiatives that the 2030 Agenda has inspired, the shift in development pathways to generate the transformation required to meet the Sustainable Development Goals by 2030 is not yet advancing at the speed or scale required. Greenhouse gas emissions continue to increase as climate action rises up the agenda of companies and investors. Nearly all the goals have sparked minimal traction.  Eliminating preventable deaths among newborns and under-fives, and getting children into primary schools — are closest among all the goals to being achieved. By contrast, the goal to eliminate extreme poverty, for example, will not be met because some 430 million people are expected to still be living in poverty conditions in 2030.[v]

What are companies doing?

The inescapable prominence of the SDGs in corporate reporting discussions invites the question: what actually have companies been doing in terms of concrete actions? After five years, one would expect to see evidence of tangible, quantitative performance results.

PWC embarks on an annual exercise looking at the key trends around incorporation of the SDGs into corporate strategy and reporting. Its latest publication, The SDG Challenge 2019 report, which looked at over 1,000 global corporate reports, says companies generally acknowledge the goals, but show little real action in supporting them via their business activities. The report said that 72% of companies mentioned the SDGs in their reporting, while just 25% of companies included the SDGs in their published business strategy, and only 21% of CEO or Chair statements made reference to them.[vi]

Why isn’t there more real take up by companies? Our experience suggests that a combination of previously better understood concepts of sustainable development set against the structure of the SDGs and their accompanying disclosure framework could be part of the confusion and a potential barrier to progress.

Are there too many SDGs?

This question was posed in 2015 by Bjorn Lomborg, President of the think tank, Copenhagen Consensus Center. Together with a group of eminent scientists he argued that a reduced list from 169 targets to 19 targets would be more effective, as not all targets are equal. Some high performing SDGs are found to generate significant economic, social, and environmental benefits per dollar spent. Others generate only slightly more than a dollar per dollar spent. Some even generate a net loss, doing less than a dollar of good per dollar spent. Every dollar spent on the high performing SDGs will likely produce US$32 of social good – more than four times more effective than spending on all 169 targets, the report says.[vii]

Sustainable development though is hugely complicated and interconnected, so an argument for the large number of SDGs could be warranted as a useful upgrade to the eight previous Millennium Development Goals, which fell far short in outcome.

The visibility of the 17 SDG issues with their colourful iconic graphics that capture the full list of global social and environmental issues, already sends a powerful message of the full-scale work programme needed for success.

What is the SDG rationale for companies?

The SDGs include business at their core, citing potential for companies in new technologies, concepts of shared value and resource stewardship as catalysts to unlock potential new business models.

But is the political and economic landscape an enabler for this?

In 2015 when the SDGs were launched, the world was a different place: Barack Obama was the US President and China and the West enjoyed better relations. The Paris Agreement had been signed by 196 member states.

Today, global polarization has replaced the multilateralist backdrop against which the SDGs were conceived. International cooperation, essential for achievement of the goals has fallen away. This, coupled with a pandemic that has forced unprecedented government borrowing, rising unemployment and dislocation of supply chains has rendered the previous borderless world a feature of the past.

Globalised supply chains offer many benefits including lower costs, greater variety and wider access to customers. At the same time they can be the building blocks sustainable trade and development,[viii] But, in a world of increasing nationalism with less money around, who will fund the SDGs?

What are investors doing?

It is estimated that between US$ 5-7 trillion per year is needed to fund the SDGs to 2030.[ix] The remarkable rise of ESG investing since 2008 and the emerging focus on impact investing indicates that the capital markets are channelling funds into companies with good ESG profiles that are able to make positive effects on social and environmental issues and remain competitive.

Investors are also now more likely to avoid supporting damaging corporate policies which expose their investee companies to often costly ESG risks. Impact investments are gaining traction.   According to the Global Impact Investing Network, 1,700 impact investors now manage aggregate assets under management that have increased from US$502bn in 2019 to US$715bn in 2020.[x]

In addition, green bonds have been a feature of the market since 2008, and along with social bonds, and sustainability-linked loans have been growing in popularity over the last five years. In September this year, Enel, the Italian oil company created the world’s first SDG-linked bond; a milestone in the evolution of sustainable fixed-income investment.[xi]

So what does it all mean for companies?

Access to capital to fund the SDGs is available in the market if companies are able to meet the sustainability criteria required by shareholders and lenders. Other ESG financial instruments also offer various options to focus on particular sustainability project funding areas which may be more attractive to companies aligning their work with a limited number of SDGs.

According to PWC’s SDG Challenge Report, companies are currently slow to quantify their contribution to the SDGs, but the growing potential for access to capital outlined above may change that.

The SDGs are starting to become fit for purpose with the support of capital markets, but they will need much clearer policy backing, as well as global institutions for research and development that can help companies evolve the new business models and use-cases that will make them clearly relevant for sustainable, profitable business lines and products.

related webinars

Are the SDGs fit for purpose?

Jan. 2021 | The SDG Conundrum: Everyone talks about them. Most companies say they are doing something. The logos look great. But are they relevant to your company, or to investors, or not? What’s the use-case?
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