The SDG Compass urges businesses to reinvent their strategies and shift focus towards the global agenda set by the United Nations General Assembly, namely the Sustainable Development Goals (SDGs). The successful fulfilment of the SDGs calls for the action and collaboration of all parties and stakeholders. With governments agreeing to the SDGs, now businesses must integrate the SDGs as an overarching framework to formulate, communicate and measure strategies that address sustainable development issues such as climate change, poverty, education and environmental degradation.

The SDG Compass outlines five steps on how a business, particularly large multinational enterprises, can go about complying with legislation, upholding international minimum standards and addressing all negative human rights impacts.

Understanding the SDGs

The SDGs encourage companies to reduce their negative impact while making positive contributions to the sustainable development agenda. In developing strategies and solutions in accordance with the SDGs, businesses can gain new growth opportunities and lower risk profiles. Businesses can also capitalise on benefits such as the identification of future business opportunities, strengthening stakeholder relations and keeping pace with policy developments. Integrally, all companies must prioritise addressing adverse human rights impacts, beginning with the most severe impacts, since human rights risks converge with risks to the business itself.

Defining priorities

This involves conducting an assessment of the current and potential impacts of the company’s activities on the SDGs, identifying areas of improvement, and ways in which the company can positively contribute to the SDGs. In identifying these high impact areas, the SDG Compass recommends that businesses account for the entire value chain, including the supply base and inbound logistics, as the environmental and social impacts of the company are likely to be outsourced.

Setting goals

This step builds upon the previous step as organisations choose measurable and specific indicators to monitor and drive performance in an array of areas. Businesses are also encouraged to set targets in a bid to make a more positive contribution to the SDGs and reduce negative impacts.

Integrating

The next step is to embed sustainability goals in all aspects of business operations, including product and service provision, supply chain management, distribution and raw materials use, solidifying the company’s commitment to sustainability. This commitment should then spill over into the other functions of the business, i.e. human resources, finance, marketing, research and development, etc. The SDG Compass also suggests that businesses engage in partnerships to combine expertise, experience and form synergies which sum to greater outcomes.

Reporting and communicating

Social media channels, events, corporate websites, product and service labelling, and marketing and advertising are all effective ways of communicating progress and provide many benefits such as reputation improvement and trust-building with external stakeholders. In reporting progress, it is essential that companies identify which SDGs are the most relevant in aligning their sustainability goals with standards that are communicated through a common framework. Frameworks include the United Nations Guiding Principles Reporting Framework and the Climate Disclosure Standards Board Framework.

1. As governments have already agreed to the SDGs, the SDG Compass shines the spotlight on companies and provides advice and guidance to transform their systems and reinvent their strategies to address the current global agenda.
2. Companies that align with the idea of systems transformation and contribute positively to the SDGs will gain benefits, particularly future business opportunities and strengthening stakeholder relations - whether it be stronger customer relations, employee relations, and so forth - thus leading to greater financial outcomes and overall performance.
3. Understanding and targeting specific SDGs and aligning the company's sustainability goals with those SDGs provides a clear vision for external stakeholders and the business itself of what it is actually achieving, making it a more compelling venture to customers, investors and suppliers.
4. Communicating and being transparent about the company's progress towards sustainable development is critical, and is of specific importance to investors, particularly responsible and ethical investors, who take into account environmental, social and governance (ESG) factors when developing their portfolio.
5. Engaging in partnerships with organisations that share the same goals can lead to greater cost savings and synergies, boosting the company's ability to achieve its sustainability goals and positively contribute to the SDGs.
6. Decades of collaboration between businesses, governments and society has led to the formulation of a list of principles that apply universally to all companies which direct them to respect universal rights and uphold certain minimum standards. Among these include the United Nations Global Compact Principles and the United Nations Guiding Principles on Business and Human Rights.
7. There are a variety of tools and methodologies to assist companies in mapping high impact areas, such as Life Cycle Assessment (LCA) methodologies and environmentally-extended input-output (EEIO) models. The Logic model can be utilised to measure a company's social and environmental impacts by tracing the path from inputs through activities, outputs, outcomes and impacts.
8. The guide also provides many resources and initiatives that guide companies on how to adopt an 'outside-in' approach to goal setting. One such initiative is the Science Based Targets Initiative, developed by CDP, the World Resources Institute, WWF and the United Nations Global Compact. Another is the Future-Fit Benchmarks by Natural Step which identifies a set of absolute goals for companies to ultimately achieve, regardless of the products and services they offer.