Maybe the pandemic has got us all thinking more about ethical purchasing choices and community spirit. Maybe heatwaves and changing weather have brought climate change and environmental sustainability to the front of mind. Perhaps ‘the great resignation’ has got us considering how to attract and retain the best people. Whatever the reason, there is no denying that everyone seems to be talking about environmental, social and governance matters (or ESG for short) – how a business can measure its impact on society and the environment, as well as how transparent and accountable it is.
Right at the heart of this sits the question of how to decide what your business should focus on. And, once you’ve done that, how to report on your ESG objectives and results. There are global frameworks like B Corp, third-party standards like ISO 26000, sector-specific frameworks like the Sustainability Accounting Standards Board or location-based frameworks such as SECR in the UK or Energy Star in North America. It’s easy to understand why some businesses struggle to see the wood for the replanted trees.
One of the most easily recognisable ways of responding to ESG matters, however, is to base activity around the United Nations Sustainable Development Goals (UN SDGs).
Before we can look at how lawyers and general counsel can support businesses with encouraging and embedding sustainable practices, it helps to first understand how the UN SDGs work.
In 2015, 193 United Nations member states set out 17 goals designed to serve ‘as a blueprint to build a better world for people and our planet by 2030’. The aim of these Sustainable Development Goals (SDGs) is to end poverty, protect the planet and ensure all people enjoy peace and prosperity by 2030.
The best way to understand how they work is to view them as a cake with three tiers (as suggested by the Stockholm Resilience Centre). The bottom tier relates to ‘biosphere’ and contains the goals that relate to this: Clean Water (6), Climate Action (13), Life on Land (15) and Life below Water (14). The next layer focuses on ‘society’ and includes eight SDGs: No Poverty (1), Zero Hunger (2), Good Health and Wellbeing (3), Quality Education (4), Gender Equality (5), Affordable and Clean energy (7), Sustainable Cities and Communities (11), as well as Peace, Justice and Strong Institutions (16). The top tier relates to ‘economy’ and includes: Decent Work and Economic Growth (8), Industry, Innovation and Infrastructure (9), Reduced Inequalities (10) and Responsible Consumption and Production (12). Finally, like all good cakes, the cherry on the top is SDG (17), Partnerships for the Goals.
The idea behind this cake approach is that you can’t have society without having a firm ‘biosphere’ foundation and likewise, you can’t have ‘economic’ development without ‘society’. The final ‘cherry’ points out that all of this requires partnership and working together with other organisations and firms, using a collective voice to ignite further action, if they are to succeed.
The world of ESG can be a minefield of terminology and the fact that many businesses have signed up to something called the UN Global Compact, as well as structuring their own activities around the UN SDGs can be confusing.
The UN SDGs are an ideology and framework for achieving a better future for all: business, civil society and citizens. The UN Global Compact, however, focuses on businesses exclusively. This recognises that all businesses – however large or small – can contribute to achieving the SDGs. In short, ‘the UN Global Compact asks companies to first do business responsibly and then pursue opportunities to solve societal challenges through business innovation and collaboration’.
Put simply, the SDGs are a great way for organisations to draw a direct line between ESG activities and strategic direction. Businesses can use this framework to set targets for activity, communicate performance, engage with stakeholders (internal, customers, suppliers and investors) and, importantly, underpin growth. What makes the UN Sustainable Development Goals so relevant to businesses is the fact that they are a universal framework that is widely recognised and respected. The 2017 Better Business, Better World report, by the Business and Sustainable Development Commission, shows how the next decade will be critical for businesses. In it, the report revealed that the business models related to the SDGs could open opportunities worth up to US$12 trillion and increase employment by up to 380 million jobs by 2030.
If companies want to contribute to achieving the SDGs, one of the best ways they can do this is by incorporating the Ten Principles of the UN Global Compact into their operations. The Making Global Goals Local Business campaign has been set out to highlight the ways in which organisations that ‘do business responsibly and find opportunities to innovate around sustainability will be the business leaders of tomorrow’.
With changes in legislation designed to press the matter, such as the Environment Act 2021 and the Competitions and Markets Authority Green Claims Code checklist, as well as increasing pressure on lawyers to contribute to corporate horizon-scanning, risk management and innovation projects it’s clear that the SDGs intersect with the law at each step.
There is a wealth of resources available for lawyers at businesses that think they might want to embed the SDGs and UN Global Compact into their strategic activities. These include:
At Arbor Law, our experienced, senior team of lawyers work with small businesses and legal teams as outsourced general counsel. Drawing on our team-wide experience as senior in-house lawyers in global businesses and fast growth start-ups, we’re perfectly placed to provide advice on strategic development, investment and other management issues. If you would like to discuss how this could work for you, contact kate.bennett@arbor.law.