Bhavya Pathak

Loyola University Chicago School of Law, JD 2024

On September 13, 2022, the United Nations General Assembly “UNGA” opened its 77th session in New York City. The UNGA is an international policy making organization made up of several Member States. Businesses and companies look towards developments from UNGA to implement procedures for sustainable practices that ensure their companies contribute to a  healthy and sustainable environment and development. Part of UNGA’s goals is to have corporations follow their suggested guidelines and make changes to contribute to the goals. This article analyzes why and how companies need to emphasize the UN’s Sustainable Development Goals “SDGs” and how the compliance industry can hold companies accountable for the environmental degradation that companies have contributed to.

What are SDGs?  

In 2015, the General Assembly established 17 Sustainable Development Goals after years of negotiations and an urgent call for action by UN Member States who recognized the economic and social justice gap between developing and developed countries. The purpose of these goals is to address the most urgent problems of the world in a universal manner. In 2015, Member States adopted The 2030 Agenda for Sustainable Development “the Agenda” to create an action plan to eradicate poverty and work on social justice issues like gender equality and environmental sustainability. The goal of the Agenda, outlined in subsection three of the Declaration, is to resolve these issues between now and 2030 through 169 targets related to these 17 goals. The 17 sustainable development goals are highlighted below:

  • No poverty
  • Zero hunger
  • Good health and well-being
  • Quality education
  • Gender equality
  • Clean water and sanitation
  • Affordable and clean energy
  • Decent work and economic growth
  • Industry, innovation and infrastructure
  • Reduced inequalities
  • Sustainable cities and communities
  • Responsible consumption and production
  • Climate action
  • Life below water
  • Life on land
  • Peace, justice and strong institutions
  • Partnerships for the goals

Today, the Division for Sustainable Development Goals (DSDG) in the United Nations Department of Economic and Social Affairs (UNDESA) provides substantive support and capacity-building support for the various goals. DSDG evaluates how these SDG implementation is fairing. They create yearly implementation progress reports and monitor how various industries are implementing SDG’s. The Agenda specifically has a committee focused on how companies and businesses can work towards implementing these SDG’s.

Why SDGs should matter to corporations 

Corporations are some of the biggest contributors to inequalities faced in the world, as many of their current practices lead to environmental damage and human rights violations. Various industries are associated with contributing to waste and excessive production and consumption. Several companies based in developed countries outsource labor to developing countries because of their cheap labor, which results in human rights violations, land use issues, and contamination of local resources.

As a result of these abuses, it is important for these corporations to pivot their business models to ensure they combat their contributions to such inequalities through the SDG model set out by the UN. However, a major challenge for corporations, according to Forbes and other business pundits, is that corporations need to move the needle faster to ensure change actually happens. As of now, corporations are heavily focused on “avoiding harm” by attempting to limit waste and reduce pollution. As a result, governments relay a lot of the burden to mitigate impacts of inequalities on corporations. Unfortunately, continuing business as usual will not result in achieving the goals set out by the Agenda by 2030. An article by the Harvard Business Review states that although 27 of the 50 largest U.S. companies explicitly claim to work on advancing SDGs, few of them are actually doing anything differently to advance the goals of the SDGs. Given how much corporations are contributing to global inequality, if no substantial changes are made, the state of our global economy and environment will continue to digress.

Companies today also heavily focus on corporate social responsibility because of public perception. Showing a commitment to SDG’s can bolster a companies public image. In an article published by the Multidisciplinary Digital Publishing Institute, (MDPI) titled, Sustainable Development Goals (SDGs) as a Framework for Corporate Social Responsibility (CSR), the authors argue that SDGs can help set up the guidelines for companies and their CSR goals. Although CSR is a concept that all companies are moving towards, several still lack a solid framework to base their practices on. In the wake of the COVID-19 pandemic, it is evident that companies need to think about their global impact and look beyond just their domestic borders. Supply chain issues that resulted from pandemic may have been prevented if companies already had implemented SDG’s into their compliance and CSR practices.

How the compliance industry can hold companies accountable

 

International corporations are the key to bridging the gap between developed and developing countries. Because many corporations operate globally and play a prominent role in our society today, these multinational enterprises need to step up their efforts towards reducing inequalities and environmental degradation. These multinational enterprises’ corporate compliance teams can help hold these corporations accountable.

Compliance teams can help corporations select a few SDGs to target rather than approaching all of them at once. Starting small and targeting certain goals will ensure that changes will be enacted. For example, companies that produce significant plastic waste can focus on SDG six, clean water and sanitation, with specific goals like changing the types of materials they use or by creating more sustainable systems of waste destruction over a span of a few months. Some may argue that these changes may result in time, effort, and money that companies do not have. However, it is important for companies to realize that these changes actually profit them more than the concerns cynics argue. Paul Polman, former CEO of Unilever, reported that meeting the SDGs offers a $12 trillion business opportunity. Consumers and employeesalso demand for changes in corporate responsibility. The impact corporations have on human rights violations and environmental degradation affects everyone directly or indirectly.

The compliance industry has already started to implement some efforts towards working on SDGs by looking at their supply chains and finding ways to reduce waste and human trafficking. They are also seeking advice from outside counsel or consulting companies to report initiatives and monitor the changes over time. Incentive programs within companies have also proven successful at moving the needle. However, corporations need to do more to ensure that they are held accountable by listening to compliance officers and implementing suggested changes. Overall, it is the compliance industry that holds corporations accountable from the inside to ensure these goals are met to further the betterment of global society.