This September marks the two-year anniversary of the UN Sustainable Development Goals (SDGs). A timely opportunity to review the newly released 2016 sustainability reports to gain an understanding of how companies in Greater China responded to the goals in the year following their adoption.
The SDG Compass – developed by GRI, UN Global Compact and WBCSD – provides businesses with a guide to the SDGs and sets out a five-step approach for aligning business strategies with the SDGs. The advocated approach emphasises the need for companies to:
- Assess their current and potential, positive and negative impacts on the SDGs throughout their value chains. This will allow businesses to identify where positive impacts can be scaled up and where negative impacts can be reduced or avoided.
- Prioritise SDGs that reflect their most material issues. This can be based on stakeholder expectations and relevance to the business, i.e. the issues that represent significant business opportunities or risks.
- Set specific, measurable and time-bound targets that describe how a company plans to make positive contributions to the SDGs, as well as reduce current and potential negative impacts.
Of the 50 largest listed companies in China and Hong Kong only around one fifth have included SDG commitments in their 2016 sustainability reports. In Taiwan, more than half of the 50 largest listed companies have made such commitments. Quality of disclosure on strategic approaches to SDG alignment varies:
- Many companies with SDG commitments state that they have mapped their business operations or sustainability strategies against the SDGs and prioritised those of greatest relevance. In prioritising SDGs, most companies focussed on those where they see the biggest opportunity to make positive contributions.
- Several companies have failed to translate their SDG commitments into tangible practices and programmes that are relevant within the context of the global issues set out in the SDGs. For example, existing efforts to increase energy efficiency and reduce carbon emissions from direct business operations are described as contributions towards SDG 13: Climate Action (e.g. using renewable energy sources for selected operations without a company-wide strategy on low-carbon energy use). Other examples include scattered employee volunteering initiatives, donations or employee healthcare services that are described as contributions to SDG 1: No Poverty or SDG 3: Good Health and Well-being. It is unclear how these fragmented efforts are part of a bigger strategy to make the company more sustainable overall and how they help address development priorities beyond business boundaries.
- What is lacking across most sustainability reports with SDG commitments is a transparent discussion of the business’ negative impacts on the SDGs and a clear translation of SDG commitments into measurable and time-bound targets.
Some companies operating in Greater China are taking a more strategic approach to contributing to the SDGs that allows for scale and impact by aligning their contributions with business priorities:
- In its 2016 Sustainability Report, Taiwan Semiconductor Manufacturing Company reports to have mapped the company’s sustainability strategy Vision 2020 against the SDGs to identify goals of greatest relevance. The company describes business activities in support of each of the prioritised SDGs and, for some of these goals, sets measurable and time-bound targets. In support of SDG 12: Responsible Consumption and Production. For example, the company aims for a waste recycling rate higher than 95% and a waste-to-landfill rate lower than 1% by 2020.
- Far Eastern New Century is committed to leveraging its core competencies to help achieve the SDGs through product and process innovations. In support of SDG 6: Clean Water and Sanitation, FENC cooperates with Nike and Dutch waterless dyeing developer DyeCoo to realise waterless dyeing. The new process not only drastically reduces the amount of water consumption but also of chemical additives discharged and petrochemical energy used. In support of SDG 14: Life below Water, the company works with partner organisations to recycle PET bottles from oceans to produce yarn. To date, the yarn has been used in the production of limited edition running shoes and jerseys by Adidas.
- In its effort to increase gender diversity, CLP has prioritised three areas of action that were chosen as they reflect business needs, align with the SDGs, and support the social and economic empowerment of women. In support of SDG 5: Gender Equality, CLP aims to increase the number of women in leadership positions, ensure gender pay equity, and increase the number of female engineers employed by supporting initiatives that encourage girls to study engineering in schools and attracting female graduates to join the company.
Companies are expected to adopt the SDGs as a framework to drive and measure their contributions in addressing the world’s most pressing social, economic, and environmental challenges in the lead-up to 2030. It is widely understood that business as usual will not achieve the SDGs. If the SDGs are to be achieved, companies need to go beyond isolated actions and one-off initiatives, and – as advocated by Oxfam – “identify key areas of tension between commercial practices and the SDGs, and work to find ways to realign them”.
As companies have only started integrating the SDGs into their sustainability strategies, we are not yet seeing this deeper form of SDG engagement in Greater China. Few companies demonstrate a more transparent disclosure on challenges faced in SDG alignment due to the nature of their business. These are promising examples of companies coming to grips with the level of transformation needed to achieve the SDGs.
- In its 2016 Sustainability Report, ASUS recognises that the rapid introduction of new consumer electronic products and the high frequency of product replacement result in tremendous amounts of electronic waste that cause great harm to human health and the environment. As a leading company in the information technology industry, ASUS is committed to a lifecycle approach to help achieve a circular economy. This includes the replacement of hazardous substances, extending product life through refurbishment, and improving product design to enable easy repair and upgrade by customers as well as providing recycling services to customers.
- CLP makes extensive use of contracted labour in India, Hong Kong, and Mainland China and acknowledges that they have a limited understanding of their contractual terms and working conditions. To mitigate the risk of potential human rights abuse in its contract workforce, CLP has commenced its first Human Rights due diligence exercise with the Danish Institute for Human Rights.
As the last quarter of the year draws closer and companies start working on their 2017 Sustainability Reports, they can draw from a broader pool of resources and tools to guide them in the integration of the SDGs into business strategy including sector guides and business indicators. Hopefully, this will enable more companies explore the complexities of their SDG impacts and take bold steps towards business growth that aligns with global development priorities for 2030.