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SDG alignment shields companies from scandals, study reveals

SDG alignment
New research from analysts at the University of Zurich has revealed that businesses that focus on SDG alignment in their business sustainability strategies are less likely to face scandals on ESG issues.  The study assessed data from over 77,000 companies across an 11-year period starting in 2010 to reach this conclusion. This research was released to coincide with the UN’s annual general assembly in New York last month (September) whereby the new ‘Pact for the Future’ would be signed off. 

How the study worked and its findings

The researchers leveraged Robeco’s SDG score methodology to assess whether each business was aligning its activities with the UN SDG agenda. Robeco’s SDG Score measures corporate alignment with each of the 17 SDGs on a scale from -2 (high negative impact) to +3 (high positive impact).  The research team analysed publicly made commitments as well as annual filings to regulators and investors. They concluded that a one percent increase in alignment with just one SDG is associated with an 11 percent decrease in the number of scandals a company faced within one year.  The decrease was even more significant – 17 percent – for severe scandals. Moreover, three of the seventeen individual SDGs show a statistically pronounced negative association with future scandal – SDG 1 (No Poverty), SDG 7 (Affordable and Clean Energy for All) and SDG 13 (Climate Action).  The first SDG can shield companies from scandals relating to forced labour and the mistreatment of local communities across supply chains and corporate operations. SDG 7 and SDG 13 help companies comply with climate-related legislation and regulation, preventing scandals such as fossil fuel pollution or automotive emissions cheating.  The researchers also highlighted how investors are increasingly requesting more details from companies on their ESG-related risks, including legal and reputational risks. They concluded that SDG alignment is a more accurate predictor of future scandals than alignment with traditional ESG ranking metrics. 

Final thoughts

In light of these findings, businesses should take proactive steps to align their strategies and actions to the UN SDGs. It’s clear that prioritising SDG alignment is pivotal to mitigating potential risks and scandals and enhancing brand image and reputation. However, the path to achieving this requires a business sustainability education. If you’re unfamiliar with the UN SDGs, our Certificate in Business Sustainability course is a great place to begin. This CPD-certified, self-paced online course provides a comprehensive overview of the UN Sustainable Development Goals and other concepts like the Global Compact and the Triple Bottom Line Approach. Take action today by enrolling in our course and future-proof your business! 

Explore the UN SDGs and learn to align them with actionable business practices in our sustainability course

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About The Author

Ryan

Ryan Weston

Ryan is an experienced sales professional with a Bachelor’s Degree in Accounting from Rathmines College and a qualification in Social Studies and Psychology. Before joining ISS, he worked with major companies like Permanent TSB and PrepayPower.

Passionate about promoting sustainability through education, Ryan is dedicated to guiding individuals on their learning journeys. As a key member of our team, he provides valuable support to current and prospective participants in achieving their educational goals.

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