Sustainable Development Goals (SDGs) are a set of Environmental, Social and Governance targets that countries have committed to reach by 2030. They are gathered into 17 goals (No Poverty, Zero Hunger, Reduced Inequalities, Quality Education, Decent Work, and Economic Growth…) and 169 operational targets.
We already know that, according to Goodhart’s law, “When a measure becomes a target, it ceases to be a good measure” (and then a good target). Moreover, consistency and incompatibility between goals have already been discussed in these lines but investors also face challenges in their willingness to integrate them in an all-assets-class perspective. Indeed, all targets and indicators are defined at country level and the assessment of corporate consistency with SGDs is a terrible puzzle for the financial industry and investors.
In this context, the Natixis Green & Sustainable Hub (GSH) published a report that lists currently available approaches (including that of Beyond Ratings) to assess the contribution/impacts/exposures of corporate to SDGs. GSH proposes an analysis framework and a tool to measure the impact (“Solving Sustainable Development Goals Rubik’s Cube”). The 2-phase/10-step approach for an impact-based solution emphasizes key elements that should always be taken into account during an SDG evaluation:
- Geographical context does matter
- Relationships between goals are critical to integrate into the methodology
- Corporations whose products fill SDG gaps should be positively considered
Some hard work is still necessary to implement the approach in all sectors of the economy and worldwide, and the lack of relevant data (both at corporate and national level) remains a tough issue to be tackled.
Emeric Nicolas, Head of Data Science Dpt. - Sources: Beyond Ratings, Natixis