The pandemic bolsters the 2030 Agenda and the role of SMEs as a driving force for sustainability

07.07.2021

SME business associations see Next Generation EU funds as a historic opportunity for kick-starting and transforming the economy

The 2030 Agenda is becoming increasingly important in the post-pandemic landscape as a cohesive factor for global policies about social and environmental sustainability. Governments are called to play a leading role in recovery by establishing new rules to enable SMEs to contribute to the creation of wealth and take joint responsibility for the shift towards a sustainable economic model. This is one of the main findings of the fourth report by the Sustainable Development Goals (SDG) Observatory entitled La relevancia de la Agenda 2030 en el escenario post-COVID (The importance of the 2030 Agenda in the post-coronavirus landscape) by the Esade Leadership Chair in conjunction with La Caixa Foundation, presented today at CaixaForum in Madrid.

This report weighs up the main progress made towards the 2030 Agenda, with particular emphasis on the potential of SMEs to benefit from Next Generation EU funds and deal with ecological change, digital transformation and social unity. Although SMEs are still dealing with the fallout of the coronavirus crisis, the study highlights opportunities for sustainability in healthcare, digitalisation, working from home and work-life balance: priority spheres of action for companies in the short and medium term. The report was produced with help from CEPYME nationwide, and from AMEC, CEA, Cepyme Aragón, Confebask and PIMEC by region and industry. The UN Global Compact in Spain also collaborated.

In the words of Àngel Castiñeira, director of the Esade Leadership Chair and co-author of the report, “Governments now have a unique opportunity for implementing a new form of governance that gives SMEs the priority they deserve and introduces the incentives necessary to fully incorporate sustainability”.

Àngel Pes, director of the SDG Observatory, highlighted the leadership of the public authorities in dealing with the fallout of the pandemic: “Unlike what happened after the Great Recession of 2008, the present-day scenario is increasingly regarded as a point of no return for undertaking far-reaching reforms and paving the way for a new paradigm of generating sustainable wealth”.

Opportunity for modernising the economy

As regards the impact of the crisis, the report reveals the great ability of some SMEs to adapt their business to the coronavirus landscape. Closer links have been forged between companies and local distribution networks, and greater commitment has been made to digitalisation and incorporation of new technologies. Finally, working from home has proven to be an effective mechanism for enabling companies to remain in business and safeguard jobs.

In Spain, 99.8% of companies are SMEs and they account for 64% of the country’s employment. This makes them a cornerstone of the economy and a key agent in building a more sustainable economic model. According to the study, business associations regard the Next Generation EU funds as a historic opportunity for kick-starting the economy, transforming business in Spain and bringing business into line with SDGs in the coming years.

The report also reveals that there is still some way to go regarding the 2030 Agenda. Some 78% of the SMEs surveyed are aware of SDGs, as opposed to 97% of large companies. Key factors in facilitating SDG implementation include the conviction of CEOs, the development of regulations in line with sustainability, the traction effect of big companies and the adoption of more sustainable habits by consumers.

More references to SDGs, but few far-reaching plans

The SDG Observatory report measures the contribution of Spanish listed companies to the 2030 Agenda and analyses the implementation of the provisions of Law 11/2018 governing diversity and non-financial reporting. In 2020, 106 of the 134 listed companies based in Spain presented non-financial information about the 2019 tax year, i.e. 79% of companies, up 9 points over the previous year (70%).

Some 73% of companies mention SDGs in their non-financial reporting, i.e. 7% more. However, only a few also mention far-reaching plans for contributing to the 2030 Agenda. In this respect, fewer companies mention measures concerning digitalisation (71%) and the circular economy, which still focus mainly on recycling and re-use. There has, however, been an increase in the number of companies (89%) who say they have developed gender equality policies. The most noteworthy increases occurred recruitment and salary policies, 52% and 55%, respectively.

SDGs are now found in all sectors, the leaders still being energy and IT companies, followed to a lesser extent by companies in manufacturing, construction, financial services and consumer goods. Property services lag the furthest behind regarding the inclusion of SDGs in their non-financial reporting.

Quality education increasingly important, end of poverty delayed

In 2019, the SDGs highlighted most in companies’ financial reports were: SDG 8 (decent work and economic growth); 13 (climate action); and 9 (industry, innovation and infrastructure). These three SDGs have established themselves in the last three years as the ones mentioned most by companies, and now account for more than 45% of those mentioned.

The SDGs that have increased the most are SDG 4 (quality education), 10 (reduction of inequalities) and 17 (alliances for achieving the goals). But SDG 1 (end of poverty), 2 (zero hunger) and 14 (underwater life) are still being postponed, with fewer than 20% of companies reporting measures related to these goals.

Material analyses will be crucial

The SDG Observatory’s report examines the annual reports of listed Spanish companies and points out the four dimensions of sustainability: governance, prosperity, people and planet. This edition also features a fifth key aspect, materiality, in the sense of the analysis enabling a company to redirect its strategy towards sustainability.

According to Ferran Curtó, co-author of the report, materiality analysis will play a key role in non-financial reporting. In addition to helping non-financial reporting focus on sustainability factors of key importance for the company, such analysis will enable different stakeholders to take part in strategic thinking about sustainability, thereby incorporating viewpoints that extend beyond the company itself. But Spanish companies still have considerable room for improvement in this area.

Some 80% of the companies surveyed mention the sustainability factors most important for their business, but only 60% state the environmental, economic and social opportunities and threats arising from these matters. Just over a half of the companies (55%) provide information about how they handle risks related to the value chain.

Regarding governance, the number of companies reporting policies to protect human rights increased (83%). In the sphere of economics and prosperity, 71% of companies mentioned digitalisation although it is more widespread amongst IT, energy and consumer goods companies. As regards staff, 82% of companies have implemented measures to facilitate work-life balance, although not many explain what these measures involve. As for the environment and the planet, the number of companies applying circular economy measures increased by 5% over the previous year to 85%. Likewise the number of companies that say they have adopted waste management measures increased by 5% to 89%.