What is SDG and ESG?

It is likely that you have hearing the terms SDG and ESG for some time. That’s because the businesses community is beginning to recognize the importance of sustainable development goals (SDGs) and environmental, social, and corporate governance (ESG). Two concepts which organizations are dovetailing into their business to improve their operations. To stay ahead of the competition and succeed in any industry, it is essential for businesses to embrace these concepts. In this blog post we’ll take a closer look at both SDGs and ESG. You will learn what they mean, how organizations use them to support sustainability strategies, the benefits of doing so, and more. By the end of reading, you should have a better understanding of why SDGs and ESG matter to businesses today. And tomorrow!

In 1949, the United Nations Scientific Conferences on Conservation and Utilization of Resources took place in New York State. As it was the UN’s first attempt to address and prevent further damage from natural resource depletion caused by exploitation, this conference was a milestone for all mankind. After seventy years, we’re still trying to establish a lasting economy. It’s no small feat to change the behavior of seven billion people. But since 70% of all CO2 emissions come from industry, then it is a good place to force change. This is where the Sustainable Development Goals (SDG) Environmental Social Governance (ESG) elements come into play. They are the blueprints to a sustainable future.

So, what exactly are SDG and ESG?

The Sustainable Development Goals (SDGs) are a global call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. The 17 goals were set in 2015 by the United Nations General Assembly and are aimed at creating a better, more sustainable world for everyone by 2030. They cover environmental sustainability, social inclusion and economic growth. There is also a focus on health, education, gender equality and climate action. While meeting these ambitious targets will be no small feat, they could mean huge changes in achieving greater equality. This would lead to more stability and improved quality of life around the world. Considering the Pandemic, increasing billion dollar weather events and food insecurity for half the world, now is the time!

On the other hand, ESG stands for Environmental, Social, and Governance. It is a term that is often used in business and finance to refer to a company’s performance in three key factors. The first is its impacts on the environment, its treatment of employees and investors, and its overall good governance practices. ESG-focused investments place an importance not only on financial returns but also on ethical and sustainable operations. There is now pressure on companies to prioritize social good when making decisions about their operations. That is where ESG data can help them measure and monitor their sustainability KPIs. It has been well proven that the adoption of responsible environmental and social policies is key to succeeding in the long run. Until now, ESG reporting has been mandated for publicly traded companies. But if you are a middle market company, or a lower middle market company sustainability has not been on your radar. What used to be a “nice to have” is now a must have. It won’t be long before the SEC requires public companies to clean up their supply chains. Sustainability will also be tied to financing opportunities. But there is also a ground swell from consumers and stakeholders who are demanding transparency. So, now is a good time get started.

What are the benefits of the UN SDGs?

The Sustainable Development Goals (SDGs) are an initiative set forth by the United Nations to achieve a more sustainable future for everyone, everywhere. The implications of this effort are far-reaching and have numerous potential benefits. Most notably, SDGs can deliver on improved health and well-being. They also include quality education, protection of the environment and climate action, just to name a few. There is also an economic aspect. Using sustainable development approaches can create better job opportunities and decent work growth. This not only builds economic stability but also provides hope for future generations. Furthermore, SDGs offer an effective way to address global challenges through international cooperation. Ultimately, the SDG goals provide us with tangible steps to ensure a sustainable future for all mankind.

What are the benefits of ESG?

Environmental, social, and corporate governance (ESG) is a set of principles adopted by organizations to promote a long-term sustainable approach to conducting business. The ESG framework provides powerful benefits for businesses, investors, stakeholders and the environment. First, ESG forces business to look at their operations more holistically. By embracing resource management procedures that prioritize sustainability, organizations can gain a competitive edge in the modern marketplace. Second, investors and stakeholders benefit from ESG practices as these businesses tend to be better governed. That is because they have an increased level of transparency and accountability. Finally, with the events of the last few years, ESG has become an essential tool for combating climate change. The invasion of Ukraine has accelerated the shift to green energy investments and conservation practices. In short, ESG is puts the onus of sustainability on industry and makes them accountable. In short, SDG and ESG provide a roadmap for a sustainable future.

So, what can you do as an individual?

Supporting the Sustainable Development Goals (SDGs) and Environmental, Social and Governance (ESG) initiatives is an important part of becoming a responsible global citizen. Individuals can make a big difference in this area by taking small steps each day. Every purchase decision provides an opportunity to evaluate whether or not it supports sustainable outcomes. Checking labels for SDG or ESG certifications when shopping for clothes, electronics, household items and food highlights any products that are making a positive contribution in these areas. Consumers can also research companies’ corporate social responsibility policies to determine whether they align with their own personal values. Additionally, individuals can become actively involved in local sustainability efforts such as beach cleanups. Every little bit helps, because fixing the future is contagious.

What can business do?

Since over 70% of CO2 comes from industry, businesses have a responsibility to get their house in order. The have a responsibility to their employees, customers, the environment, and society at large to do what they can to support these goals. It is also in their best interest. To do this, businesses should focus on developing sustainability strategies that redefine operations. This includes green initiatives or socially responsible activities in order to reduce their carbon footprints. They should also get involved in community projects that align with their values. Finally, this commitment can be further emphasized by communicating publicly about the company’s goals and progress. This will help build trust among all stakeholders. The odds are that most companies are making some effort, but not consistently. Today there are easy, affordable tools that make it easy for companies to be transparent. Get the Checklist! ⬆️

What are the 17 UN SDGs?

The UN Sustainable Development Goals (SDGs) are a comprehensive guide to what needs to be done by 2030 to improve the world for all people. They include 17 goals with 169 associated targets designed to end poverty, fight inequality and stop climate change. And achieving these requires more efficient labour markets, greater financial stability and a more capable state. The 17 UN SDGs are:

1. No Poverty

2. Zero Hunger

3. Good Health and Well-Being

4. Quality Education

5. Gender Equality

6. Clean Water and Sanitation

7. Affordable and Clean Energy

8. Decent Work and Economic Growth

9. Industry, Innovation and Infrastructure

10. Reduced Inequalities

11. Sustainable Cities and Communities

12. Responsible Consumption and Production

13. Climate Action

14. Life Below Water

15 Life on Land

16. Peace, Justice and Strong Institutions

17. Partnerships for the Goals

What is the difference between ESG and SDGs?

The main differences are as follows:

  • SDGs are global goals set out by the United Nations, whereas ESG is a rating system used by companies to measure their environmental and social credentials.
  • ESG measures how well a company is performing in terms of its social and environmental responsibilities throughout its supply chain and operations – as opposed to looking at the wider context of human rights.
  • SDGs are time bound i.e. they have to be achieved by 2030. Whereas, ESG focuses on long-term solutions and is more high level. The Sustainable Development Goals focus on specific targets around the world.

Why aren’t SDGs enough?

SDGs are not sufficient in themselves to achieve sustainable development. There are many problems that we will need to solve, including:

  • Working conditions in the supply chain – working hours, wages etc.
  • Corruption and bribery issues – workers’ rights can be suppressed by corrupt governments or other organisations.
  • Child labour issues.
  • Water shortages – due to drought, climate change or other factors.
  • Corruption in the management of natural resources – such as forests, minerals etc.

Without solving these problems it is impossible for any company to achieve Sustainable Development Goals. For example, if a company is buying from suppliers who use child labour, then that company is complicit in the exploitation of children. ESG aims to solve these problems by holding companies accountable for their actions and ensuring that they are adhering to best practices.

What should middle market companies be doing to support SDGs?

To ensure success, begin with the basics – measuring your progress. Without tracking key performance indicators (KPIs) that are aligned to your company’s mission and values, it is impossible to manage progress effectively. Unsure of where to start? Get the Checklist! ⬆️

After you have a plan, middle market companies have significant potential to support the United Nations’ Sustainable Development Goals (SDGs). Leveraging their size, agility and innovative spirit can support these global goals through grassroots initiatives. They can empower local communities, minimize their environmental impact, or contribute to reducing socio-economic inequality. Through integration of social responsibility into their corporate strategies, mid-market companies can help create a world that works for everyone. With the right initiatives in place and appropriate guidance from experts, middle market companies have the opportunity to lead inspiring progress. Since middle and lower middle markets represent 90% of the business community, they can set a precedent for long-term success. Want to get started? Get the Checklist! ⬆️

What can SMBs do to support SDGs?

There are many things that small and medium businesses (SMBs) can do to support the Sustainable Development Goals. Here are some examples:

1. Review your operations and supply chain – identify where you can make changes to reduce your environmental and social impact.

2. Set up a monitoring system – make sure that your suppliers are adhering to your code of conduct and that working conditions are improve.

3. Use sustainable materials – look for opportunities to use sustainable materials in your products or packaging.

4. Educate your employees and customers – raise awareness of the Sustainable Development Goals and how your company is supporting them.

5. Advocate for change – use your platform to call for change at the policy level.

Since SMBs employ at least 50% of the American workforce, and over 200 million SMB’s worldwide, they play a vital role in supporting the Sustainable Development Goals. By working together, we can ensure that these goals are achieved by 2030.

How does ESG work with SDGs?

ESG is a rating system used by companies to measure their environmental and social credentials. This means that businesses can rate themselves on criteria such as:

E: Their environmental policies and practices.

S: Their social policies and practice.

G: Their governance policies and practices.

The aim of ESG is to encourage businesses to improve their environmental and social credentials in order to attract investment. And when we say investment, this includes their stakeholders which includes not only shareholders but also employees, customers, suppliers, and the communities in which they operate. A company’s success is not only measured by its financial performance but also by how it treats its people and the planet.

  • Environmental footprint: greenhouse gas emissions, waste water and energy usage
  • Social impact: labour standards, pay equality and diversity in the workforce
  • Financial performance: financial stability, shareholder returns etc.
  • Community contribution: charity work, local employment and local environmental projects
  • Governance: board structure, leadership, risk management and internal controls

Stakeholders and investors search out these factors for companies which have strong social and environmental policies in place. Companies with good ESG scores can rewarded with investment, improved reputation and access to new markets. But the data also provides a yardstick by which they can measure progress. This will help to identify companies that are not making efforts to be sustainable and bring change or something more permanent.

What is the next step in responsible investment?

The Sustainable Development Goals are part of a long process to create lasting change. They will only be achieved with the help of other global compacts, such as the COP 21 Paris Climate Agreement and COP26 in 2021, which was recently ratified by scores of countries around the world. However it’s clear that without the Sustainable Development Goals, the other compacts will be fruitless.

For business, the next step in socially responsible ESG investment is to develop a strategic plan that aligns with your company’s mission, vision and values. A good place for you start would be by answering these three questions: 

  1. What do we want our sustainability efforts look like?
  2. What are some specific actions or changes that will help us achieve this goal over time?
  3. And finally how can stakeholders engaged around these issues benefit from such plans as well being put into place?”

Get a head start on your critics by investing in alternative options while you begin the ESG process.

For investors, ESG investment has been on the rise for years now and is seen as a key to sustainable economic development. The next logical step in socially responsible investing includes increasing your risk awareness. Because the field is changing at lightning speed, it is will be difficult for most of us to keep up with the fluctuations in the sustainability sector. But the first step is to invest in educating yourself about the markets, and working with others who are already having success.

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What are the SDGs ESG trying to achieve?

The Sustainable Development goals are not just an idealistic idea, they were established by the UN as a way of re-framing our view on development. The 17 goals cover such issues as poverty, equality and climate change – all considered key threats to humanity in the 21st century. These goals also encompass such issues as promoting peaceful and inclusive societies, building sustainable infrastructure and creating sustainable cities – ensuring that they can be free of poverty. Sustainable Development Goals are an integrated approach to combating the complex nature of these problems.

How do ESG and SDGs work together?

ESG and SDGs work together to determine how a company or any business for that matter can achieve sustainable development. There are currently 17 SDGs which have been established by the United Nations to help guide companies and organizations through achieving sustainable development practices.

The ESG factors are guidelines in helping determine whether a product is contributing positively (positive production externalities) to the environment, society, and governance of an organization. These factors are also used to measure general results in the organization.

SDGs work together with ESG factors by providing guidelines on how an organization can achieve sustainable development goals within their company, products, and services.

Is ESG part of SDG?

Yes and no. ESG is a subset of SDGs. ESG is used to measure environmental, social and governance practices within an organization. By incorporating sustainable development practices into daily business operations and products and services, organizations can achieve success through the use of ESG factors which will eventually integrate with SDGs.

What is ESG UN?

ESG in relation to the UN is a subset of goals developed by the UN to help guide companies and organizations through achieving sustainable development practices. There are currently 17 goals which have been established, but as time goes on there may be more added or removed to form a better path for companies and stakeholders to follow in terms of sustainability. The UN has no power over enforcing these goals; however they do have a large platform to promote these goals and encourage companies to follow them along with different countries around the world.

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What is the difference between CSR and ESG?

The difference between CSR and ESG is that CSR stands for Corporate Social Responsibility. ESG stands for Environmental, Social, Governance. These two words are sometimes confused because they have paralleles. But both stand for a company’s commitment to social responsibility which is a key factor in sustainable development.

CSR sets a guideline for companies on how they can achieve social responsibility within their products and services while ESG sets a guideline for companies on how they can achieve environmental and social goals within their products and services.

Does ESG make a company look good?

Yes, but this is not the sole purpose of having an ESG plan in place at a company or organization. When it comes to sustainable development there are many factors that go into measuring how well an organization is doing. ESG factors are just another factor that add to the overall success of sustainable development practices.

How can you measure ESG?

ESG can be measured in many ways. One is through using social responsibility indicators which provide information on how an organization can improve their ESG factors. These provide information on many KPIs. Some of these include labour practices, waste management, and environmental management. All are important factors within an organization to measure.

In conclusion on sustainable development goals

To summarize this article, we looked at what SDG and ESG stand for as well as the difference between them. We also discussed how they work together as a whole to achieve sustainable development goals. The next step is for organizations to incorporate these factors into their daily business operations. ESG is not part of SDGs, but it is a subset of goals developed by the UN to guide companies. You will hearing a lot more about these two as we move into becoming a carbon free society.

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What does the UN mean by decent work?

Decent work is a key part of any successful society according to the UN. “Decent work” is a term that the UN uses to refer to work that does not infringe on human dignity. This can be employment in dangerous or exploitative conditions, for example. It can also mean a job that doesn’t offer workers enough hours, or a living wage.

The UN’s Sustainable Development Goals are a set of 17 goals that were adopted by all United Nations Member States in 2015. They are a universal call to action to end poverty, protect the planet and ensure equality. The challenge is that 7 out of 10 jobs in developing countries are in vulnerable forms of employment. And those challenges are not only in the developing world. In the United States, for instance, many jobs are low-wage and offer few benefits or protections.

The UN’s International Labour Organization (ILO) has been working to promote decent work around the world since 1919. The ILO defines “decent work” as having a fair income, security in the workplace and social protection for families. It might also include better prospects for personal development and social integration.

FAQ

What is a low middle markets company?

A low middle markets company is an organization with annual revenues of $10 million to $500 million.

What is ESG reporting data?

ESG reporting data includes metrics and information related to environmental, social, and governance issues.

What is sustainability reporting data?

Sustainability reporting data includes metrics such as carbon emissions, energy consumption, and waste generation.

What are benefits of ESG for business?

The benefits of implementing ESG standards include improved risk management and increased customer loyalty. It also includes better access to capital markets, enhanced brand reputation, and more efficient resource use.

Caveats, disclaimers & economic growth

At ESG | The Report, we believe that we can help make the world a more sustainable place through the power of education. The contents on The Report, which may contain terminology like inclusive and sustainable industrialization, sustainable development investments, sustainable economic growth. It also inludes un sustainable development goals, united nations, corporate governance, global partnership, peaceful and inclusive societies are intended for informational purposes only. That includes the use of terms like esg performance, full and productive employment, achieve food security, explore investment opportunities, environmental social and governance, but are not to be used as financial insight for investing.

We cannot promise that the information related to promote sustainable, environmental challenges, gender equality, responsible consumption, sovereign wealth funds, sustainable consumption, waste management or achieve gender equality which is shared on posts is appropriate for you or anyone, and is intended to be educational. By writing about global partnerships, world economic forum, human settlements inclusive, supply chain, new business models, corporate performance, business models, sustainability factors, please be clear that it is never intended as criticism or investment advice. Any mention of extreme poverty, halt biodiversity loss, well being, inclusive institutions, land degradation, human settlements, terrestrial ecosystems, global compact, production patterns, climate action, ensure access or investment portfolios is completely coincidental and meant a educational.

Conclusion

While the website contains all kinds of newsworthy developments that may mention long term financial value, institutional investors, financial services, sustainable industrialization, sustainable development goals sdgs, millennium development goals, reverse land degradation, existing environmental, build resilient infrastructure in the sustainability vertical, The Report is NOT a registered investment, legal entity, or a broker-dealer. Our information is researched and gathered from many public sources and may include phrases like foster innovation for a sustainable society, marine resources to combat climate change, resilient infrastructure for food security, modern energy equals productive employment for local governments, governance aspects which  promote sustained development, company asset managers who promote inclusive peaceful investment decisions, but it is not to be misconstrued as investment advice. Thank you for reading, and we hope that you found this article useful in your quest to understand ESG and sustainable business practices.

Author Bio

Research & Curation

Dean Emerick is a curator on sustainability issues with ESG The Report, an online resource for professionals focusing on ESG principles. Their primary goal is to provide resources to help middle market companies, SMEs and SMBs transition to a more sustainable future.