Return on investment for sustainability reporting: A few important aspects to consider

A large number of leading companies and investors from the health, extraction, food, chemical and other sectors exchanged and discussed experiences, approaches, best practices and the return on investment of reporting into the Sustainable Development Goals (SDGs) at the Innovation Forum Conference last week in London, UK.

GCP Program Manager Lars Kahnert, who is leading the development of the Delta Project, a multi-sector initiative developed by GCP, the Better Cotton Initiative, the International Coffee Organization and the International Cotton Advisory Committee, is happy to provide a few insights into the conference, titled “How business can measure the impact – and ROI – of corporate sustainability: Tools, techniques and strategies for understanding, measuring and communicating business impacts”.

SDGs help business thrive

There was consensus on how being a modern sustainable business encompasses not only the provision of value to customers and the ability to anticipate and continuously adapt to changes, but also to demonstrate responsibility for society, the environment, and to report on it. This requires a transition towards long-term thinking, an understanding of the change and the potential impact a company has on the world, a more holistic self-conception as a changemaker, and committed leadership buy-in.

The SDGs play a pivotal role in enabling businesses to demonstrate impact by using the same language but also to mitigate risks to society and environment. SDGs provide the context to establish a credible link between business and sustainability. Applying a forward-looking approach, SDG data can play a vital role in informing business decisions.

Promisingly, an astonishing 6 out of 10 large companies already report into the SDGs in one way or another. Possibly depending on the sector, some SDGs seem to be comparatively underexposed, including SDG 2 (Poverty) and 15 (Life on Land). Facing the question whether to connect one’s own goals to SDGs or derive goals from SDGs, which data points to collect, or resolve potential conflicts between science-based targets and stakeholder needs etc., businesses are confronted with a variety of different reporting mechanisms, guidance tools, technologies and facilitators to operationalize reporting.

Data itself doesn’t tell a story

One participant stated: “You can’t drive change without the narrative behind data”. Pre-processing data for efficient and meaningful communication to different audiences is a key challenge, considering that issues that matter most are not necessarily of interest to consumers. While data transparency seems to be a journey that different companies have progressed on at varying degrees, some stakeholders advocate for a forward approach. This could mean pro-actively communicating performance challenges, in order to maintain sovereignty of interpretation before critical parties do, or to publicly commit to timed targets and thereby putting oneself under pressure to achieve them.

Challenges ahead

Global private sector SDG reporting is still confronted with several shortcomings. First, the relative impact of individual businesses to the SDGs is hardly quantifiable and there is no transparent and comparable data now. Unfortunately, there is not a transparent benchmark either. Second, credibility of impact data is a major concern. Most of the information is self-reported and lacks a reliable validation mechanism. Finally, scalability and cost-efficiency of reporting will need to be improved for a broader adoption of reporting mechanisms.

The Delta Project: Aligned SDG reporting for the coffee and cotton sector

In order to facilitate cotton and coffee sector SDG reporting, the Global Coffee Platform joined forces with the Better Cotton Initiative, the International Coffee Organization and the International Cotton Advisory Committee to carry out the Delta Project. Supported by the ISEAL Innovation Fund, the Delta Project aims at operationalizing SDG reporting for agricultural supply chain businesses and governments through a cross-sectoral Sustainability Performance Framework linked to the SDGs and by elaborating sector guidance for businesses’ sustainability reporting. The project will also look into the generation of added value for farmers deriving from sustainability performance data.

This project is currently in inception phase, but it is expected to be released during the 4th quarter of 2018.

If you want more information on the Delta Project, please contact Lars Kahnert