Supporting Sustainable Development Goals Is Easier Than You Might Think

It is possible for business to be both sustainable and profitable — but some sectors have a smoother path than others.

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Corporate adoption of sustainable business practices is essential to a strong market environment and an enduring society. What does it mean to become a sustainable business and what steps must leaders take to integrate sustainability into their organization?
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Companies and investors are being asked to support the 17 Sustainable Development Goals (SDGs) for 2030 — what some have described as “the closest thing the Earth has to a strategy”— since the public sector alone does not have the resources to do so. At the same time, companies must create value for their shareholders to create the returns they need for their ultimate beneficiaries. In essence, both are being asked to do good and do well at the same time. This raises a number of obvious challenges:

  1. Unlike with financial performance, there are no universal standards for how to measure a company’s environmental, social, and governance (ESG) performance.
  2. As a result, there is a large ecosystem of nongovernmental organizations (NGOs) and data vendors attempting to solve this problem—so many that both companies and investors struggle with which ones to use.
  3. Companies remain skeptical about whether their shareholders will reward them for ESG performance over the long term.
  4. The 17 SDGs, which have 169 targets, are about improving the planet, whereas ESG metrics are about a company’s performance. What is missing is a way to show how these are related to each other.
  5. Investors remain frustrated with companies that do a poor job of explaining how their ESG performance contributes to financial performance.
  6. Without strong support from the investment community, the corporate community cannot make the contributions necessary to achieve the 2030 goals.

These challenges are surprisingly manageable. The key lies in leveraging the work of the Sustainability Accounting Standards Board (SASB) in the context of the SDGs.


The concept of “materiality” is central to linking ESG outcomes to their impact on SDGs. In financial reporting, material issues are those that are important to investors. Increasingly, these material issues include ESG issues. SASB has identified the material ESG issues in 10 sectors (subdivided into 79 industries) and, through its “Provisional Standards,” has recommended key performance indicators (KPIs) for reporting on them.

While SASB’s industry-level KPIs represent a company’s ESG outcomes, these outcomes also have an impact on organizations and people outside the company, which to varying extents contribute to SDGs. Thus, a relationship between ESG outcomes and SDG impacts exists via the concept of materiality.

The central idea is that we can advance the achievement of SDGs by improving ESG outcomes through this three-step process:

  1. Understand which ESG outcomes are material for a company.
  2. Determine how performance on these outcomes contributes to one or more SDGs.
  3. Track improvements in performance on these ESG outcomes that impact the SDGs.

For example, job creation by a company is an ESG outcome, and the SDG impact would include greater literacy (SDG No. 4 on quality education), since more children can finish school instead of working to support their families. A company’s carbon emissions are relevant to SDG No. 13 on climate action. In what follows, we analyze the relationship between material ESG issues and the SDGs, but we first examine the relationship between all ESG issues and the SDGs.

Material ESG Issues and the SDGs

In order to understand the relationship between ESG outcomes and SDG impacts, we first did a high-level mapping of SASB’s 30 generic ESG issues to the SDGs using a model developed by Himani Phadke and Lauren DeMates of TruValue Labs. We then mapped the material issues identified for each of the 79 industries to each of the 16 SDGs (excluding SDG No. 17). This is the specific guidance corporate leaders will need to understand how they can create value for shareholders and contribute to the SDGs. We computed an Industry SDG Impact Index (ISII) using the ratio between the number of industry-specific material ESG issues relevant to that SDG and the number of all material issues relevant for that SDG times 100. We then calculated a Sector SDG Impact Score (SSII) by averaging all of the industries in that sector. We also calculated this index for all 16 SDGs as the average for each of them (ASSII). In essence, the SSII measures the extent to which a company doing well on the material issues for its sector is doing good by contributing to each SDG.

These calculations showed that for each sector, there are particular SDGs where it has high impact; for each SDG, there are particular sectors that have a high impact on it; and some sectors are more important to the SDGs in aggregate than others. As an example for the first point, the Consumption sector has a particularly large impact on SDG No. 2 (end hunger), No. 4 (inclusive and equitable quality education), No. 13 (combat climate change), and No. 15 (sustainable ecosystems). “The Three Most Important SDGs for Each Sector” shows for this sector the top three SDGs for which it will have the most impact. For point 2, Consumption and Resource Transformation are particularly important to SDG 13. “The Three Most Important Sectors for Each SDG” shows which sector has the most impact on each SDG.

None of these findings is surprising, since it would be expected that some sectors would be more relevant to some SDGs than others and, following from this, some sectors are more relevant to a particular SDG than others. What is more surprising is that a few sectors really stand out in terms of their impact on the SDGs and that some ESG KPIs have a larger impact on certain SDGs than others. The former means that the success of a few sectors will largely determine whether the SDG goals are met. The latter means that while some SDGs will substantially benefit from the private sector “doing well,” others will benefit to a lesser extent.

As shown in “Top-Ranking Sectors for SDGs,” the sectors that are particularly important to the SDGs are health care and consumption, followed by resource transformation and nonrenewable resources. Transportation, services, and financials are less important, although in the case of the latter, our methodology does not capture their role in financing companies and projects that support the SDGs.

We hope this analysis is helpful for two broad audiences. The first is the corporate community, which can use SASB ESG key performance indicators to determine how to do well and good at the same time. The second is investors and NGOs, those focused on a particular SDG or group of SDGs. This analysis will enable both audiences to identify which sectors are most important for investment and collaboration through Public-Private Partnerships, the focus of SDG No. 17.


Leading Sustainable Organizations

Corporate adoption of sustainable business practices is essential to a strong market environment and an enduring society. What does it mean to become a sustainable business and what steps must leaders take to integrate sustainability into their organization?
See All Articles in This Section

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