Link to the Report La contribución de las empresas españolas a los ODS [Spanish Companies' Contribution to Reaching Sustainable Development Goals] (only available in Spanish)

The UN's Sustainable Development Goals (SDG) — approved in 2015 for 2030 and signed by 193 nations — open up business opportunities for Spanish companies. Yet SDG are hard to find in the Annual Reports of publicly-quoted companies, even though the firms consider these goals to be an important part of their respective strategies. In the first Report published by ESADE within the framework of ‘la Caixa’ Banking Foundation" Observatory on SDG, only a little over half (50.3%) of the surveyed companies gave information that was not merely financial.

The sectors providing the least non-financial information were:  (1) Consumer Products and Services; (2) Industry; (3) Real Estate Services. Here, only a third of companies provided non-financial information in their Annual Reports. These were followed by: (4) Engineering, Financial Services, and Tourism sectors, in which 50-60% provided non-financial information; (5) the Construction and Energy sectors (70%). Technology and Communication sectors came sixth in the list, turning in the best performance. Here, no less than 90% of such companies furnished non-financial information in their annual reports in addition to the usual Accounts.

Leadership and Private Sector involvement

SDG show us an alternative strategy for long-term growth. This alternative is only feasible if companies fully commit themselves to it and take the lead in drawing up a new economic development model that allows firms to do much more with fewer resources.

“I must stress the importance of SDG for the world agenda. Many experts consider that these goals are the best answer to today's challenges and that we should take them as our guide in drawing up company strategies and a new model for economic growth. This model should ensure that nobody is left behind. Indeed, this is ‘la Caixa’ Banking Foundation's guiding principle", stated Jaume Giró, the entity's Director-General.

“SDG constitute a plan for shifting towards a much more socially-inclusive and environmentally responsible world economy. They enshrine the belief that Mankind can advance towards sustainable development because it has the innovativeness and the institutions to make it happen”, argued Àngel Pes, Director of the Observatory (OSDG) and President of Red Española del Pacto Mundial [Spanish association pursuing UN Global Compact goals].

The biggest challenge is to strike a balance that delivers economic growth and boosts production. “SDG provide alluring opportunities for growth, which will ensure that innovative companies will also raise their returns on investment and create value for their shareholders”, stated Àngel Castiñeira, Professor of ESADE's Department of Social Sciences. He considered that “The most successful companies will be those that make the leap from commitment to leadership in the SDG field”.

The commonest measures are recycling and re-use

Of the 143 companies analysed, over 40 explicitly mentioned SDG in their annual reports. The most salient SDG were: No. 8 (Decent Job and Economic Growth); No. 13 ('Climate Action'); No. 9 (Industry, Innovation and Infrastructure). The corporate sectors including SDG in their Annual Reports were: Technology (62.5%), Energy and Construction (60% in both cases).

Analysis of the companies revealed that firms linked to promotional bodies (such as Red Española del Pacto Mundial) yielded better results in terms of transparency and were more likely to incorporate SDG in their annual reports (67% of members, compared with 48% of signatories and 5% of non-members).

With regard to Decent Work and Human Rights (SDG 8), remuneration policies are opaque, as is the distribution of the economic value created (especially in terms of taxation and returns to the community). With regard to Equity and Equality, only 22% of women occupied Senior Management posts, while the proportion of female Board Members was even lower (16.8%). In no case were the minimum proportions established by Spain's Sex Equality Act reached.

The adoption of the principles underlying the so-called 'circular economy' is still very limited and is a long way from charting a course towards a new model to replace today's linear economy. The commonest measures are recycling and re-use. Disruptive changes — such as re-manufacturing — are still a long way off. In this respect, 22% of the companies studied did not mention any of the foregoing policies.

Inspiring cases

Despite the presence of SDG in Spanish companies (including some of the most advanced firms), Sustainable Development Goals do not yet shape firms' business strategies. Eleven of the companies (CaixaBank, Colonial, DKV, Ferrovial, Gas Natural, Iberdrola, Inditex, Meliá Hotels International, REPSOL, Suez España, Telefónica) had all made major advances in this direction. Their example may inspire and help other Spanish companies take the same path.

In this respect, 75% of these companies were changing their practices in the light of SDG, extending their application to the whole firm. Cases in which companies anticipated SDG or simply reacted to them were very much the exception. “We consider that companies' commitment to SDG should gradually turn Sustainable Development Goals into a key plank in corporate strategy. A good moment to introduce SDG is when a new corporate strategic plan is drawn up” said Castiñeira. That said, one should note the risk of SDG becoming just a PR exercise. “For SDG to be adopted within the company as a whole, it is vital that they are not relegated to a unit or department that is far removed from the firm's business areas”.

Business and innovation opportunities

According to Liliana Arroyo, co-author of the Report, “Companies that take the risk of implementing SDG may find new business opportunities and ways to cut costs. At the same time, SDG will enhance firms' reputations and strengthen links with customers, staff, and regulators”.

Companies not only share new opportunities but also face common barriers (both internal and external) that hinder the adoption and exploitation of SDG. These barriers include: lack of support and knowledge on Management's part; difficulties in turning SDG into strategic decision-making tools; measuring intangibles or using different, non-comparable metrics. Yet there are also things that facilitate the adoption of SDG in companies, such as: the credibility conferred by SDG; a Senior Management team that is convinced of the need for SDG and able to 'sell the vision'; drawing up standardised protocols and methods.

Putting SDG contributions and impact measurement first

Identifying the positive impact of SDG means: (1) being able to scale up; (2) identifying and minimising/eliminating those factors leading to bad outcomes. Here, the Report recommends pinning down those SDG that directly affect each area of the business and evaluating their impact throughout the value chain. Accordingly, SDG must operate throughout the company and tie in with the corporate culture.

Links between the various parts, communication policies, and measurement and evaluation indicators are equally important when it comes to applying SDG in firms. According to the Report, the companies surveyed all agreed that evaluation is a prerequisite for improvement. That is why some of the firms have begun drawing up their own yardsticks and indicators. This raises the possibility of coming up with sectoral indicators as an alternative to general ones.

Furthermore, measurement and reporting are key to stop SDG adding to the tide of corporate ‘green-washing’. To this end, companies must undertake integrated quantification of impacts and the setting of targets. This needs to be rounded off with effective verification and certification by Third Parties so that proper SDG Reports can be drawn up and become part and parcel of internal decision-making processes.