Achieving Sustainability Development Goals Through Data and Analytics
If informed decision-making is the heart of data, transparency and accountability are its soul. Sustainability reflects how they can be holistically linked to drive business growth and address risks while enabling companies to find their place and purpose in the world.
The UN’s 17 Sustainable Development Goals (SDGs) are meant to embody that aspiration. Many global companies are pledging to do their part, but it takes more than signing a paper to enact change. Sustainability requires a new way of thinking that must be weaved into the business’s fabric — something that data and analytics can help with.
What the Sustainability Development Goals are
In September 2015, the United Nations led an initiative that laid out SDGs, which 193 member states adopted. SDGs cover far-reaching challenges that include economic inclusion, dwindling natural resources, geopolitics, environmental and social inequities and inequalities, and the multifaceted effects of climate change.
Here’s the list of SDGs outlined by the UN:
The SDGs define the agenda for inclusive growth through 2030 and were created with the involvement of the business sector, academia, and nonprofit organizations.
Why sustainability development goals makes good business sense
For businesses, the SDGs serve as guidelines to assess and manage economic, environmental, and social risks while improving their strategic position in their industry and market. It’s projected that business models related to SDGs can create market opportunities worth at least US$12 trillion and generate up to 380 million jobs by 2030.
In today’s ecosystem-driven world, inaction can be costly. Environmental and social problems, if left unchecked, can restrain an organization’s growth. They can result in operational and supply chain inefficiencies that will drive costs for businesses. Within the next five years, companies are expected to shoulder US$120 billion in direct costs from environmental risks in their supply chain, with manufacturing, food, beverage, agriculture, and power generation taking the brunt.
In a previous study of top 50 consumer-packaged-goods (CPG) companies, half of the present value of their cash flows depended on their expected growth, which can be directly undermined by unsustainable supply chains. In fact, 50% of the growth of CPG companies from 2013 to 2018 came directly from sustainability-marketed products.
Most of the environmental and social impact in CPG companies is embedded in their supply chains. Unilever, for example, estimated an annual loss of €300 million due to climate change hampering agricultural productivity, which, in turn, is driving up food costs.
Inaction also poses long-term regulatory risks as governments and investors move to incorporate the SDGs in their national policies. The EU’s European Parliament, for instance, has proposed a directive on corporate due diligence that will mandate member states to create laws that will identify and remediate abuses in human rights and the environment in a company’s operations and business relationships.
Conversely, accomplishing SDGs provides incentives. There’s a big boon for companies that incorporate sustainability in their strategies, especially for businesses that have the technologies and solutions to achieve them. Sustainability is a badge of honor that enables businesses to have a stronger license to operate and differentiate themselves from competitors. This doesn’t go unnoticed among consumers: More than 80% in the US and UK expect brands to be environment-friendly and socially responsible.
Sustainability also adds a new dynamic to business decision-making. By bringing transparency and governance into the equation, there’s more visibility to risks and their potential impact. For example, the EU’s Sustainable Finance Disclosure Regulation (SFDR) is requiring financial companies and advisors to disclose sustainability-related risks in their products and services. This helps weed out financial firms that use “greenwashing,” where they mislead clients by exaggerating or making unsubstantiated claims about their environmental or social commitments.
What data and analytics mean to sustainability
Today, data is used as a leverage to solve business problems: personalizing customer experiences, optimizing value chains and supply networks, forecasting demand, and detecting fraud, just to name a few.
The same principles can be applied to solve existential problems. Healthcare communities rely on accurate and real-time mobile data to track the global response to the pandemic. In London, experts are using machine learning to analyze live traffic statistics to gauge air pollution. In the US, data scientists used radar data to uncover patterns in avian migratory movements. This enabled them to create a forecasting model that they can use to choose safer airplane flight paths and help millions of birds avoid collisions with buildings, airplanes, wind turbines, and other industrial infrastructures.
By collecting and examining data on a wide range of sustainability-related issues — from energy use and carbon emissions to even mobile consumption habits — companies can generate insights that would drive their sustainability initiatives.
Data and sustainability are a potent combination. It was estimated that even a 1% improvement in efficiency in healthcare, power, rail, oil, and gas industries could save US$276 billion over the next 15 years.
Despite the tremendous opportunities, there is an overarching challenge for businesses: making sense of the deluge of data from different sources. Big data — comprising vast, diverse, and ever-increasing sets of information — can be difficult to process, track, and manage. Thankfully, today’s technologies are now better equipped at analyzing big data, often in real time. This makes analytics capabilities vital for companies.
Analytics can help businesses understand the cost, impact, and performance of their initiatives while anticipating future requirements and adapting to evolving market conditions. Pirelli, for instance, uses data gathered from sensors they’ve embedded onto their tires. This was designed not only to improve vehicle performance, but also monitor roads and ensure driving safety while keeping the tires themselves out of landfills through recycling and upcycling.
Analytics also helps filter big data, sift through unstructured and nontraditional information like social media conversations and external reports, and consolidate them into actionable insights. This helps businesses assess their more intangible facets, such as their human capital and brand value.
Deutsche Bank, for example, used natural language processing (NLP) to create its α-DIG system, which analyzed the environmental, social, and governance (ESG) reports of 1,000 enterprises and uncovered a great deal of greenwashing. It’s also worth noting that over 40% of eco-friendly consumers head to social media channels to find out more about a brand’s products or services. How and where a company communicates its sustainability initiatives can also affect their implementation.
How Sustainability Development Goals can be part of business strategy
There’s a clear business case to achieve SDGs as they help address challenges that affect an organization’s growth, the risks it can mitigate, and its overall purpose in the world. Beyond having the tools and technologies needed to properly analyze big data, there are some actionable items that businesses can already enact as they embark on their journey towards sustainability.
Identify sustainability goals that relate to the business. Before implementing any sustainability measures, organizations should first identify the SDGs with the most far-reaching impact and relevance to the company. This helps identify where the organization can have the biggest capability to contribute to the SDGs, enabling decision-makers to see which parts of their business can be changed, modernized, or scaled.
Netherlands-based financial institute Van Lanschot Kempen, for example, set out to commit to five SDGs to which they can contribute through their core business. This enabled them to redefine its business strategy and corporate structure so they can integrate the SDGs into their operations.
Establish KPIs and define how they will be calculated. The 17 SDGs outline 169 multidimensional, time-bound, and universal targets for sustainability, with at least 232 indicators or performance metrics from different countries from which companies can monitor their progress on achieving SDGs.
Businesses need to set their own clear SDG targets and define key performance indicators (KPIs) to monitor their own progress. Existing targets and measurement methodologies need to be closely aligned with these KPIs. The UN has a global indicator framework to get organizations started.
Align business strategies to established targets. By identifying the most relevant SDGs and defining the KPIs, organizations can reexamine how well the existing business processes and operations are aligned to these new goals.
Companies can reassess their business models, redevelop products or services, transform supply chains, and recalibrate innovation and R&D activities. Danish pharmaceutical company Novo Nordisk, for instance, partnered with Washington and Lee University to visualize and analyze how some of their existing programs are affecting SDGs and set out focus areas to reprioritize.
Create opportunities. By adjusting business models, companies can create opportunities and serve niche or new markets. CPG companies, for example, can develop greener, eco-friendly products, or partner with agricultural companies to develop farm-to-table products created from sustainable food chains.
Many technology-driven food companies are using the circular economy as the foundation of their business. This is echoed by 73% of global consumers who said that they’re willing change their consumption habits to do their part.
Collaborate with customers and other enterprises. SDGs are a shared aspiration, and it’s important for businesses to collaborate across different sectors and industries.
For example, the GSMA (Global System for Mobile Communications Association), made up of over 750 mobile network operators, has its “Big Data for Social Good” initiative that leverages anonymized metadata to support humanitarian causes. Key insights derived from mobile big data are shared to international government and humanitarian agencies to help in their response to unprecedented events like epidemics and disasters.
Measure, assess, and integrate. SDGs are driven by transparency and accountability. Businesses must be able to communicate their progress and performance and align their disclosures with the SDG’s language to facilitate common dialogue with other companies, customers, and other stakeholders.
For example, three accounting associations jointly published disclosure recommendations that align widely used reporting frameworks with how companies are communicating their progress on achieving SDGs. Other companies are using cloud-based analytics solutions to capture, track, and visualize their sustainability data.
Indeed, SDGs are a paradigm shift for many organizations. The path to sustainability is complex and interconnected, and requires going outside the box and working with others to make a significant impact. Data analytics helps create road maps for businesses to engage and develop viable and meaningful ways to transform communities where they operate.
Data science is the heart of business transformation. Lingaro’s deep expertise in data science helps businesses make sense of vast amounts of variables to clearly define outcomes and drive better business decision-making. Lingaro uses modern cloud platforms, AI (artificial intelligence), and machine learning to improve efficiencies, maximize values, and unlock new opportunities. Lingaro also helps organizations set up and reengineer scalable yet bespoke business intelligence systems to empower organizations with actionable information so they can enact transformative change and gain competitive advantage.
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