The Sustainable Development Goals

Industry Sector Approaches

Martin Wynn, Peter Jones

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781000760521
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

In 2015, the United Nations launched the Sustainable Development Goals (SDGs) to define and coordinate global priorities and aspirations up to 2030 in response to the economic, social and environmental challenges faced by the planet. Many governments across the world signed up to these goals. United Nations Secretary-General Ban Ki-Moon noted at the outset that business would be a vital partner in achieving the SDGs. This easy-to-digest book provides a critical evaluation of how a range of multinational companies from across different commercial sectors are currently addressing the SDGs and the challenges they are facing in contributing to them.

The private sector has thus been set the challenge of responding positively in support of the SDGs whilst at the same time acting in the shorter-term interests of its stakeholders. Using a wealth of illustrative materials drawn from company reports and other sources, this book looks at the response of 80 companies and organisations from eight different industry sectors. It examines the different approaches taken, discusses how far the SDGs are actively supported and reviews how progress is being assessed against related targets and objectives. In addition to an analysis of each industry sector, the book provides a summary overview of all industry sectors studied, identifying the most and least supported SDGs overall.

This book will be of interest to the fast-growing body of academics studying and researching sustainability, as well as to industry managers and public-sector operators involved in sustainability management and reporting. It provides detailed commentary and insights, and identifies both key themes from the research and critical issues for the successful implementation of the SDGs in the period up to 2030.

1
The financial services industry

Introduction

While large international companies dominate the financial services industry, it also includes a diverse range of smaller companies. The larger companies are located in major financial centres, including London, New York, Hong Kong, Shanghai and Zurich. Weber, Diaz and Schwegler (2014) have noted “financial sector performance is relatively low regarding corporate social responsibility” (p. 321), which accords with Scholtens (2006) earlier stated view that “there appears to be much more scope for finance to promote socially and environmentally desirable activities and to discourage detrimental activities than has been acknowledged in the academic literature so far” (p. 19). More recently, other authors have emphasised the central role that the financial services sector can play in promoting the SDGs. One Stone Advisors (2017), the international sustainability consultants, for example, argued that “financial institutions are vital in achieving the UN SDGs” and suggested “fuelling the transition to a sustainable and inclusive global economy by 2030 will require vast amounts of capital, estimated at $507 trillion each year-with up to $93 trillion for climate change solutions alone.” They concluded, “Most of this money must come from the private sector” and that “financial institutions therefore have a key role to play in redirecting mainstream funds to promote sustainable growth and improving access to financial services so no one is left behind” (p. 2). Similarly, Anjuli Pandit, primary sustainability manager at BNP Paribas Global Markets (BNP Paribas, 2019) notes,

The financial services industry has a central role to play. Its power to influence who gets the money is critical. We have to find the money to create solutions to these problems – and move money away from places that are causing them.

(para.12)

At the international level, the United Nations Environment Programme (UNEP) Finance Initiative (2018) announced plans agreed to by 26 banks from across 5 continents to work together to “redefine how the banking industry delivers a more sustainable future” and “to align the sector with the UN SDGs and the Paris Climate Agreement” (para.3). Although these plans are undoubtedly ambitious, and it remains to be seen how the principles will be developed in practice, they would seem to represent a clear notice of intention by some of the world’s major banks to address the SDGs. This chapter provides a review of how major financial services companies are responding to these challenges in addressing the SDGs. The companies included in this review are Citibank, the consumer division of international financial services company Citigroup, which has over 7,500 branches in some 20 countries; Barclays, a British multinational investment bank and financial services company, headquartered in London, with almost 80,000 employees operating in 50 countries; HSBC, a British multinational and one of the largest banking and financial services organisations in the world, with operations in 66 countries and territories; BNP Paribas, a French international banking group with both retail banking and investment banking operations, operating in 77 countries across five continents; Credit Suisse, a Swiss multinational investment bank and financial services company, based in Switzerland, with operations in 50 countries and over 46,000 employees; Standard Chartered, a British multinational banking and financial services company headquartered in London, employing 87,000 people in 70 countries; AXA, a French multinational insurance firm headquartered in Paris that engages in global insurance, investment management, and other financial services; Allianz, a German multinational financial services company headquartered in Munich, which was judged the world’s largest insurance company and the largest financial services group in 2014 by Forbes magazine; Crédit Agricole, the world’s largest cooperative financial institution, consisting of a network of Crédit Agricole local banks, the 39 Crédit Agricole regional banks and a central institute, the Crédit Agricole S.A; and Deloitte, the fourth-largest privately owned company in the United States, one of the “Big Four” accounting organisations and the largest professional services network in the world by revenue and number of professionals.

Overview of the financial services industry and the SDGs

There are marked variations in the extent to which the leading financial services companies have responded to the challenges posed by the SDGs (Table 1.1). While some companies report on how they are addressing specific SDGs, others seem to have been more reluctant to make public commitments to these challenges. The banks, for example, vary in the extent to which they publicly report on their commitment to the SDGs. Barclays (2019), whilst expressing support for all the SDGs, noted that “Goal 8 – Decent Work and Economic Growth – is an area where Barclays can have substantial, first-hand impact” (para.3). To address this, Barclays CEO Jeff Staley highlighted Barclays’s “commitment is to upskill millions of people and help drive job creation.” He also maintained that the company was

helping people gain access to the vital skills they need to get into work. By addressing the challenges people have in finding employment, we believe that the individual’s social and economic prospects increase, which in turn creates broader opportunities for growth and helps build long-term demand for banking services.

(para.4)

In 2017, HSBC launched a new style of corporate sustainable bond based on the UN SDGs. HSBC intended to use the proceeds of the bond to partly, or wholly, finance businesses and projects that promote certain SDGs selected by HSBC. In launching this bond, HSBC (2017) recognised “we have responsibilities not only towards our customers, employees and shareholders, but also to the countries and communities in which we operate” (p. 2). The company also reported “as part of our legacy as a strong corporate citizen, HSBC recognises the catalysing role it can play through its lending activities and operations towards the achievement of the SDGs” (p. 2). HSBC committed itself to providing an annual progress report, which will include both allocation and impact reporting. The allocation report will focus on the aggregate amounts of funds allocated to each of the SDGs and a description of the types of businesses and projects financed, while the impact report will provide quantitative details, HSBC also commissioned an external assurance process to review its annual progress reports and reported that both the progress report and the external assurance statement would be available to the public via the Internet. In April 2019, HSBC (2019) issued “Environmental, Social and Governance Update,” in which they identified SDGs 4, 7, 8, 11, 12 and 13 as being “in close alignment to our strategy” and “we will contribute to these through our financing and investments, as well as how we conduct business and operate” (p. 35).

In their latest corporate social responsibility (CSR) report, BNP Paribas (2019) notes that “the Sustainable Development Goals aim to end poverty by 2030 while protecting our planet’s environment. As a global company and bank, BNP Paribas has a key role to play in this collective effort” (para.1). The company claim to “have mapped our entire business to the UN’s SDGs.” In the context of SDG12 and SDG13, the company claims “we are leaders in green bonds and are developing other products like positive incentive loans, which give corporates reduced rates if they exceed their sustainability targets, or charge more if they fall short” (BNP Paribas, 2018, para.8). In addition, “we have made decisions on our loan book to support the energy transition” and “have divested from areas we don’t believe will be productive in the future – such as new coal-fired power plants – and we have an active target of £15billion investment in renewable energy” (para.7). In addition, as regards their own company performance, “we have set science-based targets for ourselves to reduce our carbon footprint towards the 1.5C scenario – the globally agreed level at which to limit temperature rise to curb global warming” (para.7).

Table 1.1 SDGs addressed by financial services companies

Citibank (2017) claimed, “As a global bank Citi believes it is important for us to take a leading role in contributing to the UN’s SDGs.” Further, Citibank (2017) “identified seven goals on which we can have the greatest impact” (p. 2) – namely, SDGs 5, 7, 8, 9, 11, 13 and 17. The bank maintains that “the SDGs underscore a continuation of the work we’ve been doing for more than 200 years: innovating financing solutions to help clients meet the world’s toughest challenges.” They also note “through our core business, we have already helped to mobilize billions from the capital markets to support environmental and social progress, areas we have been publicly reporting on since 2000,” though the company reported “while we do not underestimate the challenge, we look forward to embracing it head on to do our part in contributing to this important global goal” (p. 7).

Investment bank Credit Suisse (2015) claimed, “As a global bank, identifying and responding to client demand and working with clients and partner organizations, Credit Suisse can contribute to a wide range of SDGs in a variety of ways” (p. 11). Some of the bank’s early endeavours have focussed on

raising awareness of the SDGs, of discussing the role and responsibility of the banking sector, and of identifying priorities for action as well as opportunities to organize and build partnerships to attain the SDGs. A key finding expressed by most participants was that banks are expected to embed the consideration of environmental and social matters into core financial products and services and to put greater emphasis on the development of innovative investment solutions.

(Credit Suisse, 2018, para.2)

More specifically, Credit Suisse have targeted SDGs 4, 5, 7, 8, 9, 11, 13 and 15 (Credit Suisse, 2019, p. 59). The bank argued, for example, that

by applying our expertise to capital market transactions and investment solutions to develop renewable energy technologies, we contribute to SDG7, sustainable energy, and by increasing energy efficiency in our operational premises and our real estate investment portfolio, we address SDG9, resilient infrastructure, and SDG11, sustainable cities.

(Credit Suisse, 2018, para.5)

Standard Chartered Bank (2019) reported, “Our sustainability aspirations build on our three sustainability pillars with measurable targets to demonstrate how we are achieving sustainable outcomes across our business” and that “these also allow us to measure our contribution to the United Nations Sustainable Development Goals” (p. 1). The company’s three pillars are “contributing to sustainable economic growth,” “being a responsible company” and “investing in communities.” For each of these, there is a range of aspirations linked to the SDGs with specific targets. For pillar three (investing in communities), community engagement is the main aspiration, being linked to SDGs 3, 4, 5, 10 and 17. The targets include, for example, as regards entrepreneurship, to “reach 50,000 micro and small businesses” between January 2019 and December 2023. The company links these aspirations in some regards to SDGs 1, 3–13, 16 and 17.

Within the insurance sector, AXA (2017) claimed that “through its activities, investments and strategic focus,” the company “is a responsible actor and attentive to its environment” and that all its “responsible actions are aligned with the UN SDGs” (p. 46). At the same time, the company claimed, “The value created by AXA cannot be measured simply in financial terms. Our approach to the insurance business is to use capital to generate not only financial wealth, but also human, social and societal benefits” (p. 41). More specifically, AXA reported on its commitment to all 17 SDGs but highlighted six of them – namely, SDGs 1, 3, 5, 9, 11 and 13.

Allianz, another leading international insurance company, claimed,

By the very nature of what we do – protecting people and businesses against risks – we contribute to our customers’ long-term financial well-being and stabilizing local economies. Insurance is one of the key ways by which we limit the impacts of climate risks and compensate for climate-related damages. The higher the level of insurance coverage a country has, the more resilient it is to extreme natural events. Furthermore, following an extreme weather event such as a flood or hurricane, insurance payments are often a fast and reliable solution to help victims recover quickly, preventing them from falling into, or deeper into, poverty.

Allianz also claimed, “We are focused on supporting low-income customers in Asia, Africa and South America to close the gap for people who need access to low cost financial services” and that “digitalization is enabling more and more people to access insurance” (Allianz, 2017, p. 10).

More specifically, Allianz (2017) mapped its key activities and targets to the SDGs, and this in turn led to the identification of “the four SDGs to which we currently contribute to, and impact on, the most” (p. 9) – namely, SDGs 1, 7, 8 and 13. However, while the company targeted “four priority SDGs, our actual contribution is much wider” (p. 8). Here Allianz suggested,

Given the nature and size of our business, we have the opportunity to impact many of the targets set by the SDGs. However, one of the complexities of the SDGs is their interconnectedness. You cannot s...