Global Goals Yearbook 2023 makes SDG impact measurable

There has never been a better time to
seize the chance of owning businesses
that generate a constructive influence
on our environment or society within
public equity markets. It is crucial for
companies to redirect their investments
toward tackling environmental and societal
challenges. By aiming to align
ourselves with this inevitable shift, we
can uncover an authentic opportunity to
choose stocks that embody a beneficial
impact profile. Moreover, by doing so,
we unlock the potential for additional
returns.
Nevertheless, it is important to note
that pursuing these objectives does not
mean sacrificing financial gains in favor
of supporting socially responsible
organizations.
In financial theory, the sustainability of
returns has always been a crucial concern.
However, there is now an amplified
emphasis on evaluating a company’s
impact profile, which presents an enticing
opportunity to invest in enterprises
that may have novel sources of growth
through innovative or more environmentally
friendly practices. The values
attributed to stakeholders and shareholders
are closely linked together. By comprehending
and aligning the interests of
businesses, shareholders, and society as
a whole, we can unlock the potential for
superior risk management and bolster
a company’s competitive edge.
Impact materiality
The importance of measuring and reporting
sustainability is growing in the
business sector. Stakeholders are increasingly
seeking detailed, uniform,
brief, and comparable data regarding
companies’ sustainable practices. Various
organizations such as IFRS, ISSB, GRI, the
European Commission, SEC along with
others are working toward establishing a
universal set of reporting standards that
can be adapted to specific jurisdictions.
There is widespread uncertainty surrounding
the guidelines that companies
should adhere to when disclosing sustainability-related
data. Presently, businesses
are confronted with a disorganized assortment
of reporting frameworks (see
the diagram on the next page). Moreover,
they are compelled to furnish sustainability
information by completing surveys
and questionnaires from various entities
such as investors, data consolidators,
indices, and rating agencies. In fact, it is
not uncommon for larger corporations to
receive more than 100 inquiries of this
nature annually. Consequently, identical
sustainability matters can be evaluated
in numerous ways and communicated
through multiple channels based on the
chosen framework and specific questionnaire
format. This convoluted process
imposes unnecessary complexity and
reporting burdens upon companies.
Standard setters, especially those with a
double materiality lens, are encouraged
to adopt these metrics in their sectorspecific
standards. This facilitates the
standardized adoption of sector-specific
metrics at scale, which in turn increases
the value of this data to investors. The
majority of these metrics were adopted
from existing standards, in which case the
more defined methodological notes on
measurement already exist. The process
of measuring impact effectively breaks
down the barriers between conventional
financial data and non-financial information,
thereby providing a comprehensive
understanding of sustainability data for
corporate decision-makers. By assigning
monetary value to these impacts, companies
can vividly showcase the extent
of negative consequences that require
immediate attention as well as highlight
the positive effects they should strive to
enhance even further. Parallel to this,
efforts in the business community to
drive forward the holistic measurement
of corporate performance increased last
year. One example of this is the Value
Balancing Alliance initiative, in which
Various
organizations
such as IFRS,
ISSB, GRI,
the European
Commission,
SEC along
with others
are working
toward
establishing
a universal
set of
reporting
standards
that can be
adapted to
specific
jurisdictions.
14 Global Goals Yearbook 2023