CIMA® members and other accountants have an important role to play in helping organisations address the issues that led to the development of the United Nations’ Sustainable Development Goals (SDGs).
The 17 Goals were the result of extensive global consultation and consensus regarding the key sustainable development risks facing the planet and its people. While these risks also threaten organisations, companies such as Siemens and Unilever are developing innovative products and services that help themselves and their customers contribute to achieving the SDGs.
Recent research I conducted with Subhash Abhayawansa ACMA, CGMA, shows that, among global organisations, the consideration of sustainable development risks and mitigation strategies remain at very low levels. This is true even on issues that may significantly impact organisations in the short-, medium- and long-term.
Even companies that are considered to be leading the way on integrating the SDGs have considerable work to do when it comes to incorporating appropriate information into decision-making. Part of the problem is that the accounting and finance function is not usually involved in SDG-related planning despite information analysis and risk assessment being areas of expertise for many finance professionals.
Involvement in integrating the SDGs into strategy is no less important for accountants working in the public sector, where decision-making has long been scrutinised for long-term social and environmental consequences. Those involved in determining how executives and organisations are measured and rewarded also have a role to play.
The ongoing undervaluation of the SDGs also extends to universities. These institutions are typically acknowledged for the research income they generate and the number of publications in quality journals, not whether that research is addressing global challenges.
The Sustainable Development Goals Disclosure (SDGD) Recommendations calls on organisations to address these issues and more. Published by leading global accounting bodies, the international Integrated Reporting Council and others, this report urges companies to disclose their management approach to the SDGs — how have sustainable development risks and opportunities influenced strategy, performance against targets and governance oversight?
Built upon a suggested five-step approach for keeping the SDGs aligned with long-term value creation, the SDGD Recommendations also provide a framework for organisations to focus on the major integration and accountability mechanisms.
Key to driving change is the requirement for a statement from the Board Chair that the Board accepts responsibility for the SDG Disclosures in the annual report. To support this, annual reports should provide the Board with detailed evidence that their organisation is following the SDGD Recommendations.
To further help organisations meet their obligations, the United Nation Development Program’s SDG Impact Team has developed the SDG Impact Standards for Private Equity, Bonds and Enterprises. The Standards aim to change investment practices so that organisations make decisions that contribute to the health and well-being of people, societies and the planet. With a focus on internal controls, rigorous KPIs, providing information for decision-making and effective governance oversight, CIMA members are well-placed to help.
The Standards’ purpose is to drive a change in capital investment towards achieving the SDGs. The SDG Impact Team ‘envisions a world in which all capital flows to advance the SDGs’.
If the world is going to meet the 2030 target for the SDGs, business professionals will have to do their part — especially accountants. The key actions they can take today include:
- Expanding the breadth of information decision makers receive regarding sustainable development risks and opportunities.
- Enhancing the robustness of non-financial data collection processes and protocols.
- Reviewing approaches for capital investment decision-making to incorporate longer-term social and environmental consequences.
- Reviewing budget provisions for innovation in products and services that contribute to sustainable development.
- Expanding the scope of internal audit to management processes for determining sustainable development risks and non-financial data measurement and management.
About the author: Carol Adams, Ph.D., CA, FAICD, is Professor of Accounting at Durham University UK and Swinburne University Australia. She is technical expert on the UNDP’s SDG Impact Team, and writes about sustainable development and corporate reporting on her website.