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Greater effort needs to be put into achieving a sustainable economy by 2030

The new report warns that incorporation of Sustainable Development Goals (SDG) in Spanish companies’ strategies is going too slowly to hit the 2030 target date for a sustainable economy

Greater efforts need to be made to meet the UN’s Sustainable Development Goals (SDG) if targets are to be reached. The SDG were passed by The United Nations in 2015 by no fewer than 193 countries, which committed themselves to attaining the goals by 2030. This was one of the main findings of The Second Report by the ESADE and Fundació Bancària ”la Caixa” Observatory on Sustainable Development Goals. The Report highlights the fact that the incorporation of SDG in Spanish companies’ strategies is progressing too slowly to deliver a sustainable economy by 2030.

To mark Agenda 2030’s tenth anniversary, ESADE and Fundació Bancària ”la Caixa” have presented their new study on the business world’s incorporation of sustainability.

The SDG Observatory [Observatorio de los ODS] is an analytical centre set up by Fundació Bancària "la Caixa" and the academic managers of ESADE’s Chair of Leadership and Democratic Governance (CLGD), which — among other things — gauges Spanish companies’ progress and contributions towards attaining SDG, as well the fostering of synergy, discussion, forums, and best practices among companies.

The Observatory finds that Spanish publicly-quoted companies are far from meeting the requirements for non-financial reporting. Only 55% of these firms publish reports on sustainability, Corporate Social Responsibility (CSR) and the like — a proportion similar to that found in the first edition of the Report. Technology and Communication companies, together with those in the Energy and Construction sectors do best in this respect — between 70% and 80% of such firms publish non-financial information. These are followed by companies in the following sectors: Engineering; Consumer Goods; Financial Services; Tourism; Industry. Here, between 50% and 60% publish information on non-financial matters. The companies bringing up the rear are those in Real Estate, and Mass Consumption, where the figures fall to under 40%.

Despite showing a rise of 8% compared with the year before, only 37% of Spanish companies mention SDG in their reports. Apart from mentioning SDG in their annual reports, one of the recommendations is that firms should show whether they really have sustainability management models. In this respect, only 24 of the 169 firms analysed in the ESADE-“la Caixa” report (which make up 14% of Spain’s publicly-quoted companies) provide enough information to show that they have such models.

Ángel Castiñeira, ESADE professor and Academic Director for Research, noted that “A lot of progress has been made in the institutional sphere but the incorporation of SDG in these companies’ strategies has been too slow to meet the targets for a sustainable economy by 2030".

According to Àngel Pes, Director of the SDG Observatory, “Companies’ future will rest on undertaking two transformations. The first is the digital transformation and the second is commitment to society that ties in with the value of intangibles in the digital economy — for instance, customer trust and reputation. The link with SDG strengthens these intangibles.”

General progress towards all SDG

There has been a general rise in efforts towards all SDG compared with the results for 2016 company reports. This rise is much greater in the cases of: SDG 13 (Climate Change), with an 11.6 per cent leap over the previous year; SDG 8 (A decent job and economic growth), up 10.2 per cent; SDG 9 (Industry, Innovation, Infrastructure), up 8 per cent; SDG 12 (Responsible Productions & Consumption), up 6.6 per cent. The remainder of the Sustainable Development Goals (with the sole exception of SDG 2 (No Famine) — which fell — show rises of under 6% in the Observatory’s latest report.

The ESADE-“la Caixa” publication analyses the annual reports of publicly-quoted Spanish companies in relation to four strands of sustainability, namely: Governance; Society; Economy; The Environment. Here, the commitment to the new circular economy paradigm is still very weak. This is especially important given that the circular economy’s vast transformational potential for changing the production model (and not only in connection with recycling). One should note here that no less than 46.1% of the companies surveyed failed to provide any information on this issue.

With regard to gender balance, and Equal Opportunity and Inclusion policies, the Report warned of the urgent need to boost the number of women in management posts. Only six companies among those sampled reached a 40% share of women on their Boards of Directors, while 60% of the firms analysed did not reach 20%.

On the environment, the Study revealed progress in the use of renewable energy sources. In 2017, roughly a third of the companies studied (34% of the sample) reported the use of renewable energies. This shows a rise from the figure in the previous edition of the Report (26%). There has also been a reduction in emissions. No less than 35% of the companies studied in 2017 (49 out of 141) reported a reduction in atmospheric emissions (up from just 20% of firms in 2016).

Alliances as a key element

This second Report highlights the importance of SDG 17 (Alliances), noting that companies’ involvement is vital to the success of Agenda 2030. Firms must incorporate SDG in their strategies and help fund Agenda 2030 by including the real costs of sustainability and the new opportunities for sustainable investment in their business models.

The Report concludes that the many initiatives linked with Agenda 2030 would enjoy greater success if they were carried out within the framework of multi-level, inter-sectoral collaboration. It further stresses the need for collaboration among the various social agents (companies, public administrations, the Third Sector, and so on) in tackling SDG and in facilitating international co-operation with developing countries. To these ends, the Report suggests taking part in the World Alliance for Sustainable Development so that companies can direct their collaborative efforts and investments to the poorest countries. It also recommends participation in multi-sectoral alliances to contribute to SDG from the governance perspective. In this case, regardless of their size or the sector or region they operate in, companies have a great deal to offer in any collaborative venture, given their production, technology, and innovation capabilities and their financial clout.

SMEs, key players for the success of Agenda 2030

The United Nations’ activities bearing on SMEs and SDG focus on fostering governmental mechanisms for boosting development and maximising the potential of these companies. This stress stems from the fact that SMEs are key players for the success of Agenda 2030. In fact, they make up over 99% of Spain’s business fabric, account for 63% of the country’s GDP, and create 74% of jobs.

The Study presents SDG as business opportunities for SMEs that would help meet Agenda 2030 targets. This is why it is vital that SMEs see SDG not just as a tool for measuring and boosting their impact but also as a golden chance to develop new products and innovations within an SDG-defined framework. Hence the need for SMEs to draw up sustainability reports in the medium-term to manifest their commitment to SDG.