It is now widely accepted that the private sector, both companies and investors, is essential to accomplishing the 169 targets in the 17 Sustainable Development Goals (SDGs). Of course, there is a tension here. The SDGs are about making the world a better place. That is not the primary reason companies exist, although the state of the world matters to them. Thus, they should work to create a better world while still delivering the expected returns to their shareholders. This can be done by focusing on the material environmental, social, and governance (ESG) issues that matter for value creation and knowing which SDGs and their targets will benefit. Choices must be made. As shown in a study by Mozaffar Khan, George Serafeim, and Aaron Yoon, high performance on these material ESG issues improves financial performance. High performance on these ESG issues will also contribute to the SDGs.

Since the material ESG issues vary by industry (e.g., access to medicine is material for a pharmaceutical company but irrelevant to a chemical company where carbon emissions is material), it follows that any given industry will be more important to some SDGs than others. In a recent article in the MIT Sloan Management Review Professor Costanza Consolandi of the University of Siena and I have identified the three industries which are most important for each SDG based on an analysis at the SDG level. We have also shown that the healthcare sector is the single most important one for achieving the SDGs, followed by resource transformation, consumption, and non-renewable resources (all three of which are about the same).  We reach this conclusion using a methodology based on mapping the material ESG issues identified by the Sustainability Accounting Standards Board (SASB) for its 79 industries aggregated into 10 sectors to the SDGs. The SDG impact of an industry is a function of the number of its material issues (out of SASB’s universal list of 30) and which SDGs they are relevant to.

With Professor Gianni Betti, also of the University of Siena, we extended this analysis down to the target level of the SDGs. Through this detailed and somewhat complex analysis, we are able to show how each industry can contribute to which targets of the SDGs based on an index ranging from 0 to 100. We hope this will provide a useful narrative to companies, enabling them to explain to their shareholders and other stakeholders how they are both creating economic value and addressing pressing environmental and social challenges. We also hope it will help investors make decisions in their investment decisions and engagement activities in companies.

Source link for this article