SDGs and Finance – What’s to comeSDGs and Finance – What’s to comeSDGs and Finance – What’s to comeSDGs and Finance – What’s to come
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Adam Higgins
Sustainability Engagement Manager

SDGs and Finance
- What’s to come

 
 
SDGs and Finance – What’s to come
 
 

SDGs and Finance – What’s to come

What does the finance sector look like right now?

There is no doubt that the finance sector, being part of the services industry, has a significant impact on our economy. In 2019, the financial services sector contributed £132 billion to the UK economy, and today provides over 1.1 million jobs across the UK (1).

It has also been one of the most resilient sectors during the coronavirus pandemic with economic output being 3% below pre-pandemic levels, as of February 2020 (1). This presents an opportunity for companies in the sector to help support economic growth, rebuild communities and show innovation when developing new products.

For businesses to benefit from this opportunity, they will need to develop a strategy that is centred around sustainable development. This is where I believe, the UNs Sustainable Development Goals (SDGs) will play a pivotal role over the next decade.


What are the SDGs and how are they relevant to us?

The goals have been defined as ‘the blueprint to help achieve a better and more sustainable future for all’. There are a total of 17 goals, which are an urgent call for action by all countries - developed and developing - in a global partnership (2).

Having worked as a sustainability professional in the finance industry in 2018, I soon learnt that the sector lacked awareness of the SDGs. What is often overlooked is the opportunities that lie within the goals, where businesses could have the most impact. I first came across the goals when researching a competitors sustainability report, and I was gripped by the way they highlighted the relevant goals, defined the measures they have in place and monitored their progress. Such a simple and clear message that they have displayed to their stakeholders, recognising their contribution so far.

The goals can work as a guide, a great tool to identify the areas of sustainable development that are most relevant for any business, not just in finance. What makes them easy to use is that every goal has a specific agenda, with a set of targets and indicators that sit beneath them.

I personally believe that the SDGs are a great fit for the finance industry as it keeps the industry accountable for their actions, with a specific focus on their ‘Triple Bottom Line’, balancing People, the Planet and Profit.


But how can the finance industry support the goals?

I mentioned earlier the opportunities that could present themselves for the finance sector by aligning their strategy with the SDGs. From my experience and using the ‘Sustainable Development Goals Industry Matrix’ by KPMG(3), I have outlined the 4 key themes that group together market potential, societal demands and policy action, as well as giving some examples.

  • Access - Providing products and services that are accessible to individuals, small to medium sized enterprises and governments. Therefore, increasing financial inclusion. Some examples include access to secure payment and remittance facilities, savings and credit. Access alone, addresses targets for several of the SDGs. The likelihood is, that most consumer credit lenders are already addressing some of the targets set out in the SDGs but are yet to align their business strategy with this.

  • Investment - When it comes to investment - investing in, financing and insuring renewable energy and other infrastructure projects, contributes to several of the SDGs. Better yet, more and more people are starting to understand the impact on the environment through investments. One great example of this is the ‘Make money matter’ movement (4), which calls upon individuals, organisations and governments to utilise the money invested in our UK pensions to build a better world. They even highlight some of the things our pensions currently invest in, which includes fossil fuels, arms and gambling.

  • Risk – Influencing customer behaviour and creating more resilient nations by developing innovative pricing models which incentivize more sustainable living and production. As well as, sharing risk management expertise to support the introduction of risk reduction policies, risk analysis and more. Noticeably, more finance businesses are including climate change as a high-level risk when displaying their materiality assessments. This is great news, as climate action is one of the more immediate threats to society today and this has been recognised.

  • Cross-Cutting Issue - Positively influencing environmental, social and governance (ESG) practices of corporate clients and investee companies. Some examples of this would be the adoption of good practice principles for businesses, updating policies and introducing more rigid risk frameworks.


What I believe to be most relevant in the current climate is access to finance, tackling the barriers to financial inclusion and increasing efforts to support Goal 1 – No Poverty. This is important across the globe, but the aftereffects of COVID 19 will present a significant challenge in the UK. One example of these challenges would be the efforts to support rough sleepers, with councils and governments providing accommodation in hotels, but this is only a temporary fix. New innovative products and businesses in the finance industry taking responsibility of the challenge ahead needs to be at the forefront of their strategy, to make long lasting sustainable change.


What’s to come?

In the FTSE350, there are some positives in the movement towards aligning business strategy with the SDGs for finance companies. ‘Support the Goals’, an initiative that rates businesses that support the goals, revealed a significant improvement in the finance industry, where the proportion of stars awarded increased from 36.84% to 70% between 2018 and 2020 (5)

As awareness of the goals and sustainability in finance increases, integrating this into your business will no longer be a nice to have. We can already see that new regulations and external requirements are coming to surface, as well as rating platforms that can have a significant impact on your business reputation.

In my opinion, the finance sector is a key influencer in the world of sustainability. The industries and organisations that the finance sector is linked to is vast, and they could act as a catalyst to accelerate progress in making the SDGs 2030 agenda a reality. So, for those working in the finance sector, does your business strategy align with the UNs SDGs, or even sustainability in general? Are you doing enough?


References:
  1. https://commonslibrary.parliament.uk/research-briefings/sn06193/
  2. https://sdgs.un.org/goals
  3. https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/05/sdg-financial-services.pdf
  4. https://makemymoneymatter.co.uk
  5. Support the Goals - How are the UK’s largest companies supporting the
    UN Sustainable Development Goals? A study of public support for the SDGs in FTSE350 companies between 2018-2020
 
 
Support Global Goals and improve business performance
 

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      A circular economy model designs out waste from your business, keeping products and materials in use. Operating a circular economy model can cut costs. Many organisations are now using it to create entirely new revenue streams.

      Our experts will show you how, by adapting your processes, you can be part of the circular economy – and do it in a way that’s the right ‘fit’ for your organisation.

      Talk to a TBL expert

      Sustainable Materials

      Increasingly, your clients and customers demand sustainability not just from the way you operate but from the materials you use.

      Our experts in materials and packaging help you understand how sustainable your existing products are. Then we recommend alternatives that deliver improved sustainability whilst protecting production costs and product quality, and keeping customers happy.

      Talk to a TBL expert

      Science-based Targets

      Setting science-based emissions reduction targets consistent with Paris agreement-aligned pathways is how your organisation moves closer to net zero. We’ll help you establish your current baseline, then help you set the targets (including Scope 3) that give your actions direction and purpose.

      And as always with our experts, we’ll make the journey easy.

      Talk to a TBL expert

      Carbon Reporting

      For any large organisation, reporting your Scope 1 & 2 emissions is a regulatory requirement. You meet that requirement by making a Streamlined Energy & Carbon Reporting (SECR) statement part of your annual report.

      Our experts can help you with that – and they can help you go further. Our simple, powerful dashboards will make understanding your carbon footprint easy (whether you’re required to report on it or not). And when you want to take the next step in understanding your indirect (Scope 3) emissions, we’ll help you do that too.

      Talk to a TBL expert

      Reporting & Frameworks

      Reporting the environmental and social impact of your business is an essential part of governance, openness and transparency, but with so many frameworks, it can be difficult to know which should demand your focus.

      Our experts will help you meet the mandatory requirements of regulatory frameworks like SECR. They’ll help you prepare for soon-to-be-mandatory frameworks such as the Task Force on Climate-related Finance Disclosure (TCFD).

      And when you’re exploring new, voluntary accreditations with ESG, DJSI or Sustainalytics, or want to improve your ranking with a supply chain framework such as EcoVadis or Support the Goals, they’ll help you choose the framework best suited to your business, boost your rating and gain the badges.

      Talk to a TBL expert

      Training

      If we’re to create a more sustainable world, everyone needs the skills and understanding to be able to play their part.

      Every day, our advisers are helping senior teams understand sustainability within their organisation. They’re teaching suppliers to buy more sustainably or building the skills of new in-house sustainability managers. And they’re helping your employees become more carbon literate so they understand what carbon is and the personal difference they can make in work and at home.

      Build the skills and understanding of your people.

      Talk to a TBL expert

       

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      You know you need a sustainability strategy – but what next? What’s right for the size and nature of your business? And how can you ensure it drives the right actions?

      We’ll help you set a strategy that’s robust and comprehensive because it uses the Global Goals as a framework. And we’ll ensure it’s a good ‘fit’ for your organisation, helping you align people, planet and profit.

      Talk to a TBL expert

       

      Policies & Standards

      For compliance. To meet the standards of a ratings agency. Or simply to show you’re a responsible business. When you need the right sustainability policies and standards, we’ll help you develop ones that are engaging, easy to understand and relevant to your business.

      Talk to a TBL expert

       

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      Talk to a TBL expert

       

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      • Help you understand more about your supply chain and the risks and opportunities it presents
      • Profile and assess suppliers so you have a baseline from which to work and can measure improvement
      • Work with you to develop supplier codes of conduct to compel your supply chain to support your sustainability efforts
      • Educate your suppliers on ways to improve

      Talk to a TBL expert

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      You’ve done great things. Now you need to share them. Communicating your successes is a powerful PR boost for your brand. It’s often a simple way to improve your ratings framework score. And it can help others to understand the importance of the work you’re doing and inspire them to get involved.

      Our brand, marketing and communications specialists will help you spread the word with a standalone sustainability report that brings all your ESG efforts together in one document. In addition, we can help you with:

      • Formal sustainability reporting
      • Video content
      • Dedicated web page development
      • Social media
      • Building sustainability into your brand

      Talk to a TBL expert

       

      Strategy Development

      You know you need a sustainability strategy – but what next? What’s right for the size and nature of your business? And how can you ensure it drives the right actions?

      We’ll help you set a strategy that’s robust and comprehensive because it uses the Global Goals as a framework. And we’ll ensure it’s a good ‘fit’ for your organisation, helping you align people, planet and profit.

      Talk to a TBL expert

       

      Social Impact

      Your social impact is the effect your organisation has on people and communities as a result of its activities and policies.

      You’ll already be doing good things in your community. Measuring the effect of your charitable work, volunteering, community outreach projects and more is important because it’s how you explain the difference you’ve made to your employees, customers and investors.

      We help you understand how to measure and improve your social impact.

      Talk to a TBL expert

       

      Supply Chain

      Almost 90% of your environmental and social impact exists not in your operations, but in the goods and services you buy from your suppliers. So if you want to make a real impact with your sustainability efforts, your supply chain needs to be involved. Our advisers can help. They will:

      • Help you understand more about your supply chain and the risks and opportunities it presents
      • Profile and assess suppliers so you have a baseline from which to work and can measure improvement
      • Work with you to develop supplier codes of conduct to compel your supply chain to support your sustainability efforts
      • Educate your suppliers on ways to improve

      Talk to a TBL expert

       

      Marketing & Communications

      You’ve done great things. Now you need to share them. Communicating your successes is a powerful PR boost for your brand. It’s often a simple way to improve your ratings framework score. And it can help others to understand the importance of the work you’re doing and inspire them to get involved.

      Our brand, marketing and communications specialists will help you spread the word with a standalone sustainability report that brings all your ESG efforts together in one document. In addition, we can help you with:

      • Formal sustainability reporting
      • Video content
      • Dedicated web page development
      • Social media
      • Building sustainability into your brand

      Talk to a TBL expert