‘Companies that ignore sustainability face additional risks’

The Sustainable Development Goals (SDGs) are a series of targets aimed at creating a better and more sustainable world by 2030. ‘They were launched in 2015, with the backing of the entire United Nations. The framework comprises a set of 17 goals, 169 targets and 231 indicators.’

Companies that can demonstrate that their activities contribute to these goals face no legitimacy issues. ‘Companies are not islands. They operate within wider society. The larger your company, the greater your impact on society. Society recognises this and will respond accordingly.’ Consequently, companies are not only economic players but also political players. ‘Do you add value to society? If so, the likelihood of society reacting against you is much smaller. You cannot express this purely in financial terms. See it primarily as a measure of your company’s risk profile.’

‘We are now halfway through this process, but it will not disappear once it is over. We will continue to seek a common consensus on where we want to go with our economic and social system.’ That is the essence of the SDGs. Companies operate within a social and political context that they cannot ignore. ‘If they do ignore it, they run additional risks. Take Volkswagen, for example, which is now facing costs of 35 billion euros because it rigged the emissions tests on its diesel cars.’

From theory to practice

Van Liedekerke has worked extensively with companies such as BNP and KBC. Recently, a collaboration with the Province of Antwerp was added to this. ‘The province wanted to incorporate the SDGs into all its policy and management tools. That is far more ambitious than a general sustainability report, or focusing on just a few targets. The province’s departments have their own internal targets. You then add the SDGs as external targets on top of these. That is why we refer to this as an ‘outside-in’ approach.’

Consequently, projects of this kind require a period of adjustment. ‘We initially thought that a number of SDGs would be given priority. But we saw that they all came to the fore, for example in the development of cycle paths. These have an impact on mobility, but equally on health and other areas. So you see the SDG targets emerging there.’

To make this project a success, various departments had to work together. ‘That’s often a challenge, even in private companies. You see a great deal of silo mentality. Because every part of the organisation has its own goals and operates independently, separate from other departments. You can’t do that with an objective like the SDGs. You have to get those different groups to communicate and work together.’ That’s how you break down the silos within companies and organisations. ‘That was one of the most striking results of this project.’

Private versus public

Are there differences in how public and private companies approach this? ‘It’s more a question of the size of a company or organisation that’s decisive. Take BNP, for example: it’s a global player with just under 200,000 employees. It’s a much greater challenge to get such a large company moving than, say, a small SME.’ It’s also essential to get the top management on board. ‘Otherwise, you shouldn’t even start, because it’ll just be a waste of time. The people at the top need to understand why this is important and they need to want it. That applies to both public and private organisations.’

In practice, however, many people still see this kind of reporting as yet another piece of red tape that affects them. ‘You need to make it clear to them that this is about new opportunities and risks. We are undergoing a transition in our society and economy, and as an organisation you need to be aware of that. In this context, it is crucial to assess what added value your organisation can bring to society.’

Here to stay

Moreover, this trend continues to expand. Alongside the SDGs, there is a broad wave of sustainability initiatives. ‘At the moment, the focus is often still on larger companies. But that pressure is set to trickle down, as it is necessary to gain an understanding of sustainability throughout the entire supply chain. This will therefore also affect SMEs, although they are often not yet aware of it.’

For example, banks are increasingly analysing the carbon intensity of their portfolios and taking this into account when granting loans. Sustainability is also becoming an increasingly important factor for investors. ‘This issue is not going to go away. It will only become more dominant globally and permeate our society and economy ever further. Companies simply cannot afford to ignore sustainability,’ concludes Van Liedekerke.

Finance professionals can therefore no longer ignore the issue of sustainability, and it will only grow in importance in the future. That is why they need to closely monitor and properly understand developments in the field of sustainability.