The goal is to guide companies on how to benchmark their impact thesis against best practices and to ensure that it addresses both the positive and the negative aspects of their contribution to the SDGs, for the entire value chain.
Attributes of a Credible SDG Impact Thesis
The following are important attributes to consider when creating a credible SDG impact theory:
- Measurable. Targets and indicators should be developed to measure and track progress over time.
- Intentional. A proactive and decisive approach: how and to what extent a company will contribute to the SDGs should be defined at the onset of the investment (ex ante).
- Specific. Describe the specific way in which a company contributes to the SDG, in addition to the impact already associated with the company’s usual assets or activities.
- Relevant. Focus on investments that are most needed (to fill a gap), where they can be most effective in providing solutions for the SDGs, and where the regulatory environment is less supportive.(For example, the relevance of providing low-income access to medicine will depend on the incidence of a certain disease among under privileged populations in the specific country targeted.)
- Effective. Consider the efficacy of a proposed solution: Is it the best way to contribute to the specific SDG gap (impact per dollar invested)?
- Balanced. Address not only the positive contribution of an SDG investment but also potential negative environmental and social impacts.
- Comparable. Allow comparisons with the impacts, both positive and negative, generally associated with similar types of assets or activities.
- Integrated. The SDG impact theory should be integrated into a company’s strategic management and governance procedures.
Impact along the Value Chain
At a broad level, a company’s SDG impact thesis should focus on the specific sustainability attributes of its products and services and the environmental and social footprint of their sourcing and production. It should also focus on what companies can control—and therefore, what they can invest in.
Companies can contribute to the SDGs through their own operations, for example: by minimizing the consumption of energy and reducing waste or improving working conditions, fairness, and diversity for employees and contract workers. Companies can also contribute to the SDGs by maximizing the inherent environmental or social benefits of products and services, improving their environmental footprint during the use-phase of products (energy, packaging, waste), and expanding equitable access to essential products or services. Lastly, companies can manage their indirect impact on the supply chain by imposing minimum standards for their environmental footprint and working conditions.
It is likely that SDG impact theses will have elements all along the value chain:
- Common elements associated with operations (e.g., GHG emissions, waste, workforce diversity, and safety)
- Industry-specific elements that are associated with products and services (e.g., maximizing health benefits of food, access to essential products and services, product safety)
- Elements that are specific to a company’s value chain. For example, while GHG emissions are likely to be relevant in most industries, they can impact various links in the value chain, including operations, supply chain, use-phase of products, or investments.
