How to use risk management and SDGs to achieve purposeful objectives
Businesses around the world face many challenges today. The COVID-19 pandemic, the urgent need to address climate change – as emphasised in the first part release on 9 August 2021 of The Sixth Assessment Report (AR6) of the United Nations Intergovernmental Panel on Climate Change (IPCC) – and the recognition that we need to be more sustainable in the way we live, are resulting in dynamic and far-reaching changes in the operating environments of all businesses.
Opportunities to help make a positive change exist for those who have the mindset and commitment to do so. Sustainability is intertwined with all aspects of business, and risk management can help businesses to make risk-informed decisions that lead to good sustainability outcomes in an uncertain and fast-changing environment.
In 1987, the United Nations Brundtland Commission defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs”. It remains one of the best definitions we have of this essential goal.
The Sustainable Development Goals (the SDGs) are a blueprint set out by the United Nations, and launched in 2015, to achieve a better and more sustainable future for the planet. They have been designed to address the global challenges we face today and for our future, through the 17 interconnected goals outlined in figure one.
As a global agenda for the sustainable development of our societies, the SDGs provide a framework for businesses of all types and sizes to provide services and products that maximise positive impacts on people and the planet and minimise negative impacts.
There are less than ten years left to achieve the targets set for the SDGs, by 2030, and The Sustainable Development Goals Report 2021 has outlined major challenges that exist to achieving them. Strong commitment is required by governments, cities, industries and businesses to ensure we reduce carbon emissions, conserve natural resources, create better jobs, advance gender equality and tackle growing poverty and inequalities.
More and more businesses – and their investors, for whom sustainable investing is an increasingly influential factor in deciding where to invest their funds – are seeing that incorporating sustainability into their objectives is good business, for them and their stakeholders. Many are using the SDGs as guidance.
Being set up to report progress against defined SDGs (ie those that best fit our context) helps to provide a consistent view of performance across industries and sectors around the world.
Some businesses include the SDGs as part of their approach to Environment, Social and Governance (ESG) and frameworks such as the TCFD (the Task Force on Climate-Related Financial Disclosures).
Sustainability and risk management
Do you have sustainability and risk management functional teams in your organisation (the answer to this question will depend on the size and context of your organisation)?
If you do, how well are they working together, and linking up with all other functions and operational teams in your business to drive sustainability actions that are tied to your overall objectives? If you do not have such teams, do you have people responsible for these areas within your business?
Whether risk and sustainability are formally established and linked in an organisational structure or whether they are incorporated into other roles, there are many opportunities for businesses to use risk management and sustainability planning to achieve purposeful objectives.
Using practical frameworks for risk and sustainability and practices such as horizon scanning, What if? analysis, value chain analysis, supply chain analysis, business process improvement and business resilience can help you to define and deliver value for yourselves and your broader ecosystem.
Advice from various think tanks and institutes is also available. At a global level, the World Business Council for Sustainable Development is a network of businesses working together to accelerate the transition to a sustainable world.
The United Nations makes “The SDG Compass” available to all businesses. Launched in 2015, the compass provides guidance on how businesses can align their strategy to the SDGs, and how to measure and manage their contribution to them.
Advice includes how to define a business case for using the SDGs, how to define priorities in your value chain, and how to set integrated goals and monitor progress.
A high-level example from The SDG Compass of mapping the SDGs against a business value chain is described below.
The more businesses adopt the SDGs as part of their business strategy, and report on their progress to helping to realise them, the more chance we all have of achieving these global goals. Trade-offs in business are a fact of life, and decision-making needs to weigh up many factors.
Considering the appropriate SDGs in strategy and embedding them into operations with the help of risk-informed decision-making can help businesses to achieve their objectives and make the world a better and more sustainable place.