As we embark on the latter half of the SDG era, harnessing and accelerating private-sector contributions is imperative, propelling us towards achieving the 2030 goals.
FTA: Your study shows a mere 4 per cent of the total STOXX 600’s combined revenue has a positive contribution to the SDGs. What do you make of what you found?
VS & MB: It is definitely a low number, probably lower than one would expect, as we took a rigorous, non-complacent approach.
We think there is still a lot of confusion about what a positive contribution is as well, so companies may think they are creating positive impact when they are in fact mitigating their negative impacts.
If all companies mitigated their negative impacts we wouldn’t need them to create positive impacts in the first place, but that’s not the case yet, and companies are probably starting with the low hanging fruits, ie mitigating negative impacts first, as they should.
FTA: Two-thirds of companies are not mitigating all of their negative contributions, but they are mitigating problems in relation to climate, clean energy, gender equality and economic growth. Would you call this greenwashing?
VS & MB: Companies are not always competent at identifying their material impacts. This is why materiality assessment is a major component in regulatory discussions and efforts.
Sometimes impacts are located in a complex supply chain or outside of direct control by the company. Apart from the fact that some companies do not acknowledge it to be in the scope of their responsibilities, addressing it requires more means and effort.
It is also what’s called cherry-picking: companies choose SDG topics that suit their comfort zones and immediate profitability goals.
Greenwashing is the conscious or unconscious act of putting your company's environmental or social performance in a more favourable light than it actually is. When companies do not address their negative impacts correctly and claim to be sustainable, it could be considered as greenwashing.
FTA: Do businesses have a responsibility to work towards SDGs that do not present a business case for them for the greater good?
VS & MB: Not necessarily. Their responsibility lies first and foremost in addressing the SDGs for which they contribute negatively properly, which might not be all of them.
If all companies were addressing their negative consequences on all impacted SDGs, there wouldn’t be so much of a need for positive impact generation as explained earlier.
Regulations also nudge companies towards the most relevant activities: the EU taxonomy indicates which environmentally sustainable activities are expected in which sectors.
So naturally, it is not expected from a fishing company to address the issue of housing accessibility for example, although creativity in business modelling is always possible and wouldn’t be harmful.
