Impact on the SDGs

Companies should communicate how their SDG-aligned strategy and investments contribute to positive social and environmental impacts in line with the global goals. The value creation model of the International <IR> Framework (see figure below) provides a good framework to describe how the company is contributing to the SDGs through its business model.

Aligning the SDGs with the value creation process

Companies should also report the outcome – or performance –of their strategy and investments, using key performance indicators (KPIs) and targets that are aligned to the broader sustainable-development agenda. This includes the 17 SDGs and 169 targets themselves, as well as other societal goals and planetary boundaries (e.g., goals of the Paris Agreement).

Having a set of SDG-level targets directly applicable at the company level is quite helpful. Energy companies use guidance on science-based targets developed by the Science Based Targets initiative (SBTi). Companies in other industries create direct and indirect links to SDG targets and KPIs that pass review by external assurers.
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Ideally, companies can identify a set of SDG-level targets with impacts directly linked to their business or where there is a strong potential for action (based on ananalysis of local priorities and industry-based impacts) and match them with their inputs, outputs, and outcomes.

The list of Relevant SDGs, Targets, and Indicators for Companies (see resource) shows how some of the SDG targets and KPIs are directly applicable to businesses.

When it is not possible to use actual SDG targets and indicators, companies should select KPIs that are suitable for their business and location and demonstrate a link to the SDG. The relationship of the SDG to these business specific KPIs and targets can be validated through external assurance.

Acquiring comprehensive knowledge and understanding of the content of the SDGs and the 169 underlying targets, as well as the identification of those SDGs that have a significant impact on value creation, is a fundamental and challenging first step that needs to be undertaken by companies.
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