Mar 17, 2022
Why Companies Need to Ditch the Sustainable Development Goals (SDGs)
Many companies are committed to the U.N. Sustainable Development Goals (SDGs), but what is the value of the SDGs in business? While the SDGs have been considered as a North Star and a strategic tool helping companies pursue a meaningful sustainability agenda, in reality, it seems like they fail to do so. Therefore, it is time to reconsider if and what role the SDGs should have in business.
Earlier this year the GRI published a study looking into business contributions to the U.N. Sustainable Development Goals (SDGs). Based on an analysis of over 200 GRI reports that were produced in 2020, this study found, among other things, that “83% of companies state that they support the SDGs, recognizing the value of aligning their reports with the Goals.”
Another interesting finding was that the three most common goals were 8 (Decent work and economic growth), 12 (Responsible consumption and production), and 13 (Climate action). “The SDGs that are prioritized reflect a strong understanding of economic growth, working conditions, the movement towards more responsible consumption and production, as well as the importance of climate action,” the report suggested.
A few weeks later, two other reports were published, suggesting that companies are not doing such a great job addressing the climate crisis. The CDP reported that only 1% of the 13,100 companies that disclosed information to the CDP had a credible climate transition plan, and As You Sow’s report found that the vast majority of the large U.S. corporations examined are not making progress aligned with a 1.5C warming target.
The CDP and As You Sow’s reports are just the latest indications that companies are not doing what is needed to meet the Paris Agreement goals. They are also an indication that the SDGs are not that helpful in supporting companies with their 1.5C journeys. After all, companies have been pursuing the SDGs for a number of years, while still failing to deliver meaningful progress. To some extent the SDGs have become even an obstacle as they provide companies with some cover, helping them make the case that they take their impacts seriously, while for the most part companies exercise what I call “sustainability-as-usual.”
In all, I want to suggest here that SDGs create little to no value for companies and even more so for their stakeholders. If anything, they are more of a window to yesterday’s thinking about corporate sustainability rather than a key to its future and therefore should be ditched.
There are two main ways to look at the SDGs — first as a North Star and second as a strategic tool. I’ll try to make the case here that the SDGs are neither a desired North Star nor an effective strategic tool.
SDGs as a North Star
The 17 SDGs are at the core of the 2030 Agenda for Sustainable Development, which was adopted by the U.N. in 2015. The SDGs and 169 targets they include were meant to lead an ambitious global agenda around the three dimensions of sustainable development: environmental, social, and economic. A useful metaphor would be to consider the SDGs as North Star — as van den Broek and Klingler-Vidra suggested in their study of the SDGs: “The SDGs serve as a guiding “North Star,” rather than a specific blueprint.” One of their interviewees, an executive director at EY further articulated this idea as follows: “The SDGs give you a great North Star. They are so comprehensive about what a better world looks like, that companies can say where they want to focus. It gives a sense of targets and ways to measure it. Then we help the company articulate its unique capabilities.”
One of the key points that van den Broek and Klingler-Vidra make is that the SDGs were easily integrated into the preexisting practices and organizational identities of different intermediaries, such as consulting firms, GRI, B Labs. As a result, the SDGs helped built collaborations between intermediaries and created opportunities for them to strengthen their capacities. Furthermore, the SDGs did not differ from the consensus thinking on corporate sustainability and thus everyone seemed to be pretty comfortable with them. As an interviewee from Volans told the researchers: “SDGs are just framing for CSR and allow firms to somewhat align with the global agenda. The fundamentals of the sustainability agenda are still the same as in the 87 Brundtland report. The SDGs are not a new concept but just a new framework on the same agenda.”
The idea that the SDGs easily and quickly became part of the corporate sustainability discourse is not problematic in itself. However, the successful diffusion of the SDGs into business may suggest that the SDGs do not go far enough to challenge the way businesses operate and therefore do not produce any significant resistance. This is evident, for example, in the internal tension in the SDGs between environmental sustainability and economic growth. Jason Hickel suggests this effort to have the cake and eat it too, which represents the belief in decoupling of GDP from environmental impacts, is just not feasible. “…in order to ensure that the SDGs’ sustainability objectives are not violated, any call for GDP growth in poorer nations would have to come along with an acknowledgment that rich nations need to make dramatic reductions to material throughput, which may require post‐growth or degrowth strategies,” Hickel writes.
Hickel is not alone in his critique. Eisenmenger et al. go further in their analysis to suggest that the SDGs not only include contradictions and trade-offs between economic growth and sustainable resource use but also prioritize “economic growth over ecological integrity” and “focus on efficiency improvements rather than absolute reductions in resource use.” Menton et al. point out that “environmental justice (EJ), and social justice more broadly, are not currently embedded within the language and spirit of the SDGs.” Finally, Joe Brewer notes in his book The Design Pathway for Regenerative Earth that the SDG framework “is a fragmented and internally inconsistent framework that places emphasis on conflicting goals like continued economic growth alongside the “alleviation” of poverty.” “For this reason alone,” he concludes, “the SDGs cannot serve as our North Star.”
I concur with Brewer’s conclusion. Furthermore, the SDGs have been constructed and developed a decade ago when the urgency of the climate crisis, the growing attention to social justice issues, and the discourse on degrowth were not as prominent as they are today. As the former UN Rapporteur on Extreme Poverty and Human Rights, Philip Alston notes, while the SDGs have been “valuable in contexts in which they provide the only available entry point for discussions of contentious issue,… the time has come for a re-evaluation in light of deeply disappointing results to date and a range of new challenges.”
This is certainly true when it comes to the use of SDGs as a North Star in business — in a way, even though the SDGs are the core of an agenda for the future, their thinking represents the past, where the fundamental tensions between the dominant economic system and the Earth system were not truly addressed. A transformative change in the world in general and in business, in particular, requires transformative guiding principles, not a recipe “to lock in the global development agenda .. around a failing economic model that requires urgent and deep structural changes.”
SDGs as a Strategic tool
“The United Nations’ 17 sustainable development goals (SDGs) were explicitly designed to engage the private sector in addressing the world’s most pressing challenges. Four years into the UN’s 15-year timeline, the question is whether companies are advancing serious solutions or are simply embarking on a massive global public relations charade. Unfortunately, our internal research points to the latter. A dramatic and immediate change in direction by both companies and the UN will be essential if there is to be any chance of avoiding an embarrassing failure.”
These are the opening lines of an article published on HBR in 2019. The authors, Mark Kramer, Rishi Agarwal, and Aditi Srinivas, were spot on here, pointing out that the SDGs were meant to engage with business but eventually tbecame for the most part a PR tool. Beberman and Unerman echo the latter point in their research, suggesting that the SDGs can be used “to camouflage business-as-usual by disguising it using SDG-related sustainability rhetoric.” Another study of sustainability reports of the 2,000 largest stock market-listed companies worldwide by van der Waal and Thijssens found that companies’ involvement in SDGs “is largely symbolic and intentional, rather than substantive.” Finally, Heras-Saizarbitoria et al. who conducted a qualitative analysis of 1370 sustainability reports explicitly linked to SDGs found “a superficial engagement with the SDGs for the vast majority of organizations, which suggests a process of “SDG-washing.”
Overall, these studies suggest the SDGs don’t work well as a strategic tool. To some extent, the SDGs suffer from many of the problems of sustainability reporting, which, as Ken Parker suggests, could often offer an incomplete, imprecise, and even misleading picture of a company’s progress. Furthermore, the SDGs' vast scope and lack of clear accountability mechanisms allow for companies to ‘ cherry-pick’ “only the SDGs that fall within their comfort zones”, without applying the necessary rigor and considerations of what they actually need to do into the process of deciding which SDGs to prioritize. Last but not least, companies, as Oxfam’s Mhlanga et al. reported, seem to have difficulties “translating their recognition of global challenges, such as inequality and democratic governance, into a priority by addressing their own broader influence on these issues.”
So what do we do about the use of SDGs in business?
Oxfam’s Mhlanga et al. suggest that “for SDG engagement to be more than window dressing, companies need to integrate SDG engagement into their core business and sustainability practices.” Kramer et al. also have some practical advice for companies that want to be serious about the SDGs: Choose fewer and more specific goals, focus on the most promising business opportunities, adopt meaningful near-term targets, reallocate resources, etc. Other researchers have similar recommendations in hope that SDGs can drive or at least support a more ambitious sustainability agenda in business.
My perspective is somewhat different. Taking a more systemic approach I see SDGs (similarly to sustainability reporting in general) reflecting sustainability-as-usual and of the mental model dominating it. In other words, understanding the ineffectiveness of the SDGs requires a consideration of the broader environment in which they take place, including the mental model manifested in the practice of the SDGs. Fixing the SDGs requires first and foremost changing the mental model of the system that they are part of. Additionally, the SDGs are not truly business-oriented in nature, which makes it even more difficult to use them meaningfully but easier to use them for SDG-washing.
Given the little to no value the SDGs provide in most cases and their proven ability to create a smokescreen that helps companies ‘hide’ their incremental progress on sustainability, I would suggest that it is time for companies to abandon them. It is time to acknowledge that in their current form the SDGs are not useful for companies and their stakeholders, neither as a North Star nor as a strategic tool.
At the same time, it does not mean that they cannot have some value — for that we will need to reframe them in a way that is more accessible for business and most importantly ground them in a more ambitious way of thinking about sustainability in business.
One example is the Future-Fit Business Benchmark, which is “designed to help any company play its part in our transition to an environmentally restorative, socially just and economically inclusive future.” The tool offers a clear systems-based approach that has translated the rigorous work of the Natural Step on sustainability “into a form which helps any business to chart a path to a just and regenerative future.” Each of the goals and pursuits that are included in the tool are aligned with the relevant SDGs. This way “all businesses can make credible positive contributions to the SDGs, while simultaneously working to ensure that they aren’t inadvertently undermining progress elsewhere.” While this example is not necessarily the most optimal one, it demonstrates how SDGs can still have a supportive role within system-based tools that companies use to pursue sustainability meaningfully.
Raz Godelnik is an Assistant Professor of Strategic Design and Management at Parsons School of Design — The New School in NY, where he serves as an Associate Director of the Strategic Design & Management BBA Program. He is the author of Rethinking Corporate Sustainability in the Era of Climate Crisis — A Strategic Design Approach, which was published by Palgrave Macmillan in July 2021. For more information on his work see Sandbox Zero. Feel free to connect on Twitter and LinkedIn.
