«The USD12 trillion opportunity of the United Nations Sustainable Development Goals could provide critical focus to consider the positive impact of regenerative strategies, but current approaches to SDG alignment are creating blind spots».
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«Executive Summary
It has been four years since the 2030 Agenda for Sustainable Development with its 17 Sustainable Development Goals (SDGs) was adopted at the UN Sustainable Development Summit. During this time the SDGs have garnered widespread backing among companies and investors who have made modest progress towards aligning business strategies and capital allocation with the SDGs.
The private sector has begun to understand its role in contributing to the SDGs, as seen by increasing rates in corporate disclosure that describes company performance on the Goals. Investors have a growing appetite to benchmark companies against each other in terms of their SDG performance. Where disclosure is absent, other providers have built assessments, indexes and benchmarks to compare corporate action. Funding for SDG-related projects has also carried over to the private sector, as a rising number of pension funds and banks choose to allocate funds towards sustainable development priorities. While SDG-related financing is diverse, green building and renewable energy projects lead the bulk of private sector financing.
The SDGs are a way to communicate a company’s efforts. Businesses can provide informed reporting to potentially attract capital allocation and unlock innovation opportunities. There is a divergence, however, in what SDGs companies report on and where companies have the highest exposure to SDG-related risk. An analysis of the baseline risk exposure of all companies listed in the S&P 500 shows that issues related to financial secrecy (SDG 17), land pollution and deforestation (SDG 15), and water overconsumption and pollution (SDG 6) have the highest level of exposure. These topline SDGs differ significantly from the most common SDGs that are included and prioritized in the majority of company disclosures. There is a difference in what companies disclose on the SDGs versus what may be important SDG-related risks and responsibilities.
Pursuing data-driven analysis to gain an understanding of the full impact of a business across its value chain – where it sources its materials and sells its products – can be useful in learning where to minimize risks and maximize both SDG and financial returns. A brief comparison of the compound annual growth rate (CAGR) of SDG-aligned products against conventional products shows the potential for pursuing innovation and market opportunities in line with the SDGs. Leveraging the SDGs as not only a framework for sustainable development, but also for innovation towards generating new, more future-ready revenue streams can help identify business opportunities that simultaneously serve the needs of the SDGs».
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