Multiple crises around the globe slow down Agenda 2030 implementation and reduce overarching presence of SDG in businesses

Systemic approach to drive sustainability

According to the report by the Esade SDG Observatory and Social Observatory of the “la Caixa” Foundation, the energy transition is crucial for creating a new growth and energy model and achieving a low-emission economy. It is, however, also important to adopt a systemic approach that enables a comprehensive analysis of the links between different areas and avoids unwanted impacts. Furthermore, the EU is in a difficult position in today’s global energy crisis, due to its reliance on energy from third countries such as Russia, and the war in Ukraine. The study highlights the private sector’s increased commitment to the green transition, although it does warn about the lack of specifics in the plans and methodology employed.

The report also says that for the green transition to be effective, economic and demographic growth must be uncoupled from the increase in emissions, energy efficiency must be boosted, and technologies allowing CO2 must be deployed in order to drive circularity. But it warns of the difficult access to the raw materials and minerals critical for the transition because most of them are not found in Europe. In this respect, Ferran Curtó, deputy director of the Esade LeadershipS and Sustainability Chair, points out that “we must embrace the Do No Significant Harm (DNSH) tenet envisaged in the European Green Pact. If, for example, to obtain the minerals necessary for the electrification of the automobile industry we start mining seabeds in an uncontrolled manner – as is beginning to happen – we would reduce greenhouse gases but damage marine biodiversity. This would affect the ocean’s ability to act as a carbon sink and thus compromise the goal of limiting global warming. The short-term mitigation of the impact of global warming must not negatively impact our ability to adapt to an increasingly uncertain future.”

More SDGs in companies but little detail of actions

The upward trend in non-financial reporting is redoubling. According to the SDG Observatory Report, which measures the contribution of 101 Spanish listed companies to the 2030 Agenda, the percentage of companies publishing non-financial reports has climbed from 50% in 2017 to 87% in 2022, i.e., a 37-point increase.

In their reports, companies highlight mainly SDG 8 (Work) and SDG 13 (Climate), both mentioned by 63% of companies, followed by SDG 9 (Industry) and SDG 7 (Energy), mentioned by 56% and 55% of companies respectively. SDG 1 (Poverty) continues to be delayed by 28%, SDG 2 (Hunger) by 22%, whilst SDG 14 (Undersea life) is only mentioned by 16% of companies.

Although the commitment of companies has not fallen, 85% of the references to SDGs give no details about the activities carried out to achieve them. To be precise, ambitious references have fallen in 15 of the 17 SDGs since 2020.

Environmental criteria and gender parity not yet resolved

The report prepared by the Esade Chair of LeadershipS and Sustainability also defines five major dimensions in the realm of sustainability. As regards governance, i.e., how a company manages its operations, decisions and risks, the percentage of companies that include social (32%) or environmental (18%) criteria in their business mission has fallen. Likewise, gender parity has yet to be achieved. Despite slightly higher numbers of women on boards of directors (31%) and company management (24%), the percentage of women on the payroll has stagnated at around 36% since 2017.

The report reveals that 90% of companies have conducted a materiality analysis, i.e., the reflection and analysis driven by a company together with all its stakeholders. However, although most companies mention environmental, social and governance (ESG) risks in their reports, they do not always approach risk management from the perspective of dual materiality, i.e., taking into account both the company’s impact on the environment and environment’s impact on the company.

Decrease in digitalization and increase in circular economy

In the realm of prosperity, which includes non-financial economic considerations linked to a company’s impact on its environment, the circular economy is gaining ground. Eight out of ten companies define their circular economy strategy and half do so in a far-reaching way and reveal how they incorporate it into their business strategy. In this respect, recycling continues to be the circular economy measure reported most often (82%), followed by reuse (55%) and reduction (55%). On the other hand, companies mention fewer improvements in digitization. The report indicates an increase in the digital divide between sectors, with digital maturity improving amongst traditional leaders (financial services, technology and consumer services) and declining amongst less advanced industries (energy, industry, construction, real estate and consumer goods).

As regards people, respondents do not provide enough information to assess the management of their human capital. Although 4 out of every 10 companies mention the existence of policies designed to eliminate the wage gap, only 1 out of every 10 specifies them in their report. Likewise, although 85% of companies mention their gender diversity policies, few describe them in detail. Work-life balance policies are mentioned less, falling from 25% to 18%, and likewise protocols to prevent workplace harassment, falling from 10% 1n 2021 to 3% last year.

Finally, as regards the planet, fewer companies reported lower electricity consumption and lower CO2 emissions, but more companies reported lower water consumption.

SMEs committed to sustainability

The report features an analysis of 43 Spanish SMEs and the challenges of sustainable development. When asked about the key factors regarding the integration of sustainability, small and medium-sized enterprises showed themselves to be more familiar with sustainable consumer practices, resulting in the development of new business projects. 

But implementing sustainability involves considerable challenges. Financial survival is still a priority for such companies, particularly against a backdrop of rising prices and constant change. Building sustainability into the entire value chain is another of the challenges they face. In addition, current legislation does not cater well for their needs, making it difficult to incorporate sustainable practices and strategies. SMEs say that recruiting talent and competing with big companies is very challenging for them due to their lack of resources and, occasionally, growth opportunities.

Despite these obstacles, the survey points to a promising outlook in the future. It is envisaged that business organizations will become more committed to sustainability and that interactions with PMEs will improve. Sustainable leadership will be increasingly important and will give the companies incorporating it a competitive edge.