ESG to SDG – The Roadmap for a Sustainable World

The practice of aligning investment decision making with the societal and environmental aspects were initiated way back in the 1960s with investors excluding stocks or entire industries from their portfolios based on business activities such as tobacco production or involvement in the South African apartheid regime. The practice gained momentum and in October 2005, the United Nations Environment Program Initiative in the Freshfields Report coined the acronym ESG where E stood for Environmental (Climate Change, Natural Resources, Pollution & Waste, and Environmental Opportunities), S stood for Social (Human Capital, Product Liability, Stakeholder Opposition, and Social Opportunities) and G stood for Governance (Corporate Governance and Corporate Behavior). Subsequently, it became a sustainable finance and responsible investment framework in the ECOSOC Chamber at UNHQ. The ambit gradually widened over the later years and all United Nations Member States in 2015, adopted the 2030 Agenda for Sustainable Development which provided a shared blueprint for peace and prosperity for people and the planet, not only for the present but also into the future. At the heart of the blueprint, are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries in a global partnership.

The goals require contribution from all stakeholders of the planet including the world of business. Though among the collective of 17 global goals quite a few are specifically relevant to bodies corporate, the realization of SDG is largely dependent on governmental and intergovernmental processes. Alongside SDG, the idea of ESG (Environment, Society, Governance) has been gaining ground being directly relevant to business and industry. SDG and ESG of course overlap and each of the global goals under SDG can be mapped with one or more of the three components of ESG.

The entire gamut of ESG and SDG is obviously overwhelming. Spread over multiple days including a pre-seminar workshop, the deliberations of the 6^th International Vision Seminar 2022 based on the theme of ‘ESG to SDG – The Roadmap for a Sustainable World’, therefore focused on certain aspects of direct relevance to business and industry through the following four dedicated sub-themes:

• Reducing Disparities and Ensuring Equity – The People Agenda

Disparities in income and discrimination on the basis of ethnicity, religion and gender are blotches on the canvas of human civilization. The 17 UNDP Sustainable Development Goals, as mutually agreed upon by 193 nations in 2015, stress on eradication of this menace by including Primary Education, Gender Equality and Reduced Inequalities as Goal Nos. 4, 5 & 10 respectively. From the ESG point of view, these goals relate to the human capital, social aspect of employee diversity and Management Structure and Executive Compensation from the Governance angle.  Of all forms of inequalities, those relating to gender are more severe because they cut across the divides of economic wellbeing and social standing. These disparities that exist in the society at large are carried over to business organizations where they translate to lack of diversity in the staff pool, poor representation of marginalized groups in top echelons and disproportionate variance in pay prospects. Rather than succumbing to such societal disparities, business leaders and leading business organizations must work towards removing or reducing them.

• Mitigating Climate Change and Maintaining Biodiversity – The Planet Agenda

It must be remembered that life on earth is dependent on the planet and not the other way round.  Creation and consumption of energy which is essential to foster material wellbeing has been taken to a stage where it is causing such damage to the planet which the human race itself will not be able to sustain.  Signs of adverse impact on biodiversity are starkly evident. The world-wide call for climate action and governmental and inter-governmental efforts requires due response from business organizations. The UNDP Goal No. 7 emphasizes on affordable and clean energy and the Goal No. 13 hinges on the importance of Climate Action to achieve Zero Emission. The environmental aspect of climate change as well as bio-diversity along with the social effect of impact on local communities constitute the ESG point of view towards the planet agenda. The need is thus to adopt alternate sources of energy which are clean, factoring in their affordability and impact on local communities.

• Promoting Responsible Industrialization – The Prosperity Agenda

In addition to energy related aspects, there are many other areas where irresponsible industrialization has led to unsustainable ends. These include mindless exploitation of resources and gross use and re-use of hazardous material. Business organizations have to meet challenges in this aspect by fostering innovation that create alternative paths to reach the goals of industrialization. The UNDP Goal No. 9 thus identifies Industrialization, Innovation and Infrastructure to be an essential aspect of sustainable development. The need for responsible consumption and production by industries to ensure sustainable development is authenticated by including Responsible consumption and production as UNDP Goal No. 12. The Natural resource depletion, waste and pollution, hazardous materials, coming under the ambit of environment and consumer protection as well as data protection constituting the social aspect, are the corresponding ESG angles to these goals. Large organizations must also help smaller businesses to move in the desired direction through financial and technological support. They must also integrate sustainability into production processes, sourcing avenues and consumer offerings.

• Ensuring Decent Growth and Societal Wellbeing – The Peace Agenda

Ensuring primary education to children who have been deprived of the same across the globe due to poverty, armed conflict or any other emergency, is a must for achieving social peace and harmony. The UNDP Goal No. 16 underlines this need. Business organizations have emerged as the most prominent growth engine for human civilization. As such, they are responsible not only to enable financial growth of its investors but also to ensure decent growth for all stakeholders including employees, vendors, customers and the community. This calls for efforts on multiple fronts. They should strive to create congenial employee relations and hospitable work environment, promote consumer awareness on its products and contribute to creating public awareness on sustainable development and healthy lifestyles. They must also stand guard against all forms of corruption in the interface with vendors, customers and the government. However, this herculean task can be expedited by the cooperation among the nations, which has become a lot convenient in the present digital era. The corresponding ESG concerns to these goals from the social angle are social opportunities whereas from the governance angle, bribery, corruption, political lobbying & donations with vested interests along with evasion of tax liabilities are the prominent issues. This essential requirement has been mentioned as the Goal No. 17 by UNDP.