2.1. The Sustainable Development Goals
The new global development framework for the period 2015–2030 called “Transforming Our World: The 2030 Agenda for Sustainable Development” (hereinafter referred to as “Agenda 2030”) was adopted in 2015 and is anchored around 17 Sustainable Development Goals (SDGs). The operationalization of the objectives is supported by 169 targets, including deadlines for them, and 230 indicators. The 17 SDGs [11
] are classified in accordance with the tripartite nested model of Rockström and Sukhdev (2016):
Biosphere: SDG 6, Clean Water and Sanitation; SDG 13, Climate Action; SDG 14, Life Below Water; SDG 15, Life On Land
Society: SDG 1, No Poverty; SDG 2, Zero Hunger; SDG 3, Good Health and Well-Being; SDG 4, Quality Education; SDG 5, Gender Equality; SDG 7, Affordable and Clean Energy; SDG 11, Sustainable Cities and Communities; SDG 16, Peace and Justice, Strong Institutions;
Economy: SDG 8, Decent Work and Economic Growth; SDG 9, Industry, Innovation, and Infrastructure; SDG 10, Reduced Inequality; SDG 12, Responsible Consumption and Production;
SDG 17: Partnerships to Achieve the Goal.
The 17 Goals are ultimately aimed at achieving an “ultimate end”, a fair and prosperous, high quality of life that is equitably shared and sustainable [5
]. The 17 SDGs can be assigned to the three elements of ecological economics proposed by Daly [5
Efficient allocation: SDGs 7–9; SDGs 11–12;
Fair distribution: SDGs 1–5; SDG 10; SDGs 16–17;
Sustainable scale: SDG 6; SDGs 13–15.
During the development of the SDGs, the integration of the goals was explicitly demanded. Because of the integration, the relationship between the goals and the targets can be described as an n:n-type relationship, i.e., a target can be linked to several goals. The relationship between the goals can be used as a basis for the examination as follows: the goals as peaks of a graph, and the targets associated with one or more goals as the edges of the graph. The analysis of the graph shows that the degree of integration between goals varies considerably; while, the most integrated objectives (Responsible Production and Consumption (SDG 12) and Reduced inequalities (SDG 10)) are connected to 14 and 12 other goals based on their targets. Affordable and Clean Energy (SDG 7) and Industry, Innovation, and Infrastructure (SDG 9) are both connected to three other ones, while Life Below Water (SDG 14) is connected to only two other goals. On the basis of the analysis, the core and the extended targets can be distinguished for all the goals [13
Interviewing a small group of experts, the International Council for Science (ICSU) and the International Social Science Council (ISSC) [14
] analyzed the relationships between different goals. Based on their results, the network they found was denser than the one identified by Le Blanc [13
Bergman et al. [2
] analyzed the contribution of UNESCO Chairs from seven countries of the Northern Hemisphere toward achieving SDGs. SDG 4 (Quality Education) and SDG 7 (Affordable and Clean Energy) were excluded from the analysis because these goals are part of the core framework of the United Nations Educational, Scientific and Cultural Organization (UNESCO) Chairs. The authors concluded, that on the basis of their interviews, four SDG clusters (social, political, technology, integrated) can be created.
Whereas graph-based models analyze the number of relationships among SDGs, Guijarro and Poyatos [15
] formed SDG indices of EU states on the basis of Eurostat sustainable development indices. The authors find that (1) most of the pairwise correlations are not significant; (2) some SDGs are positively correlated to others (for example SDG 8, Decent Work and Economic Growth, and SDG 9, Industry, Innovation, and Infrastructure); (3) some correlation is negative (SDG 3 Good health and Well-Being and SDG 6 Clean Water and Sanitation).
According to the results of Muff et al. [16
], at the beginning of the Agenda 2030, in 2015, 70 percent of the goals’ criteria were already met by the developed countries, and in some cases, even more of them, which suggests that it is necessary to work to satisfy the requirements of the goals primarily in the developing world. However, it is important to point out that this is also the result of outsourcing socially or environmentally objectionable activities partly or wholly to the developing world [17
In terms of sustainable development, the results and challenges of each country or region differ, so the range of interventions that may be proposed is necessarily different. The most effective intervention(s) can be determined by the Gap Frame, compiled by Muff et al. [16
]. According to the results gathered by using the Gap Frame, in the Organisation for Economic Co-operation and Development (OECD) countries, climate change is by far the biggest challenge posed by the protection of the marine ecosystem and gender equality. In developing countries, the biggest gaps can be found in terms of social inclusion, peace, and cooperation. Waste management, however, is a serious problem in both groups of countries.
These results are partly consistent with the corporate priorities identified by KPMG [18
], where the greatest emphasis was placed on fighting climate change, while half of the companies emphasized the importance of gender equality as well. Nevertheless, it is an inconsistency that companies consider the oceans’ wildlife (Life Below Water, SDG 14) to be the least important one, as well as the fact, that waste management alone is not included in the SDGs. The latter can be interpreted in two ways: (1) waste management has been classified as an environmental goal and is, therefore, less pronounced from a corporate point of view; (2) waste management is not independent of responsible production and consumption (SDG 12), which is the fourth most important SDG for companies.
When researching sustainable development and the ability to maintain the planet’s capacities, Kerekes et al. [19
] emphasize two crucial works: the first is the 1972 report of the Rome Club, i.e., The Limits to Growth, in which researchers supported the zero growth concept. Public thinking on sustainability has been altered to a similar extent by the model of planetary boundaries of Johan Rockström and his colleagues [20
]. The model determines the Earth’s load capacity, i.e., ecosystem services, in nine areas: (1) climate change; (2) the acidification of the oceans; (3) the thinning of the ozone layer; (4) nitrogen and phosphorus cycles; (5) water use; (6) change of land use; (7) biodiversity loss; (8) atmospheric aerosol loading; (9) chemical pollution. Researchers could quantify seven of the nine areas. The essence of the concept is that if the annual use of individual services is at most equal to the annual production, mankind will be sustainable, otherwise, it will deplete the planet’s reserves.
The model was developed by Johan Rockström’s work-group at several points [21
Authors proposed a hierarchy of ecosystem services. In this context, core services include climate change and biosphere integrity;
the definitions of ecosystem services were clarified;
the model treats territorial differences differentially where it’s relevant and can be calculated;
based on recent model calculations, the annual production of ecological services was updated;
In the case of biosphere integrity and biochemical flows, the authors proposed a two-tiered approach, whereby services were broken down into several interconnected parts.
According to the model, the most serious ecological problem is the decline of biodiversity, the eradication of species, while the most “popular” one, i.e., climate change is only the third in the row. However, it is important to point out that there are many connections between services, for example, the increase in land use contributes significantly to biodiversity loss, caused by agricultural production, mining, and construction [22
]. The basics of the concept alone were not, but its details were subject to many criticisms. The main issue is the number of services that should be considered, which necessarily has implications for the conclusions. According to the typology of the TEEB, ecological services can be divided into four categories [23
]: Provisioning services; regulating services; support services; and cultural services. Going beyond the simple quantification of ecological services, Raworth [24
] outlined a safe operating range, where the value of a service can be regarded as sustainable. According to the model, the role of society and politics is twofold: it must help reduce social and/or economic shortcomings while preventing excessive use of ecological services.
It is an external assumption of the models of Gap Frame [16
] and Raworth [24
] that a strong definition of sustainability prevails, that is, natural capital cannot be replaced with artificial capital at all [25
]. In other words, due to their special contribution to human well-being, some elements of natural capital can be considered as critical since their degradation beyond a certain tolerance can cause irreversible damage [26
]. Accordingly, sustainable development can only be achieved by decoupling economic growth, as well as human well-being from the use of resources [27
]. Under the SDG framework, this requirement is explicitly defined in section 8.2.
Using expert questionnaires, Wood et al. [28
] examined the relationship between the SDG targets and the ecological services used by TEEB [23
]. In their research, the environmental aspects of both SDGs and ecological services were studied. Thus, SDGs that did not have direct environmental linkages or the ones that were related to public policy issues were omitted, while from the range of ecosystem services, cultural services were left out (Ornamental resources, maintenance of genetic diversity, aesthetic information, an inspiration for art, culture, design, information, cognitive development) (see Table 1
). Based on the results of the authors, only five of the 12 SDGs were heavily associated with ecosystem services.
The SDG concept is based on the fact that “stable functioning of the Earth system is a prerequisite for thriving societies around the world” [21
]. In an optimal framework, implementation of this goal can only be achieved through global coordination and co-operation—for which the SDGs framework can be an appropriate tool. It is important to emphasize that there is no general solution for each country or region—it can be achieved by using regional-specific interventions based on different ecological service approaches.
2.2. The Role of Companies in Achieving Sustainable Development Goals
In the age of globalization, transnational corporations (TNCs) and multinational corporations (MNCs) often have a measurable turnover to the GDP of the states and, in parallel, they not only affect the societies of states belonging to their area of operation but they have a significant impact on the whole ecosystem of the planet. One of the most common criticisms of these companies is that their operation goes beyond the regulatory and sanctioning frameworks of individual nation-states [29
In the changing environment, “the former division between the state and the economy, or the division of political/social and economic responsibility does not work anymore, so companies are no longer depoliticized but politicized” [29
]. This means that instead of their former passive social (and environmental) engagements, large corporations must act as active actors. It is important to point out that the increase in engagement can be confined only to the activities of the company and to its narrower environment since the assessment of the wider environmental and global impacts of activities requires a systemic approach [30
According to Harangozó [30
], the performance of a company is determined by its efficiency, long-term success, and adaptability. Effectiveness means setting and achieving the right goals, while efficiency is realized by the achievement of the goals by using an optimal array of resources. Given that SDGs reflect a system-wide approach and through setting the goals, they can contribute to effectiveness, they can both be used to bridge the gap between corporate and global levels and can support the efficient use of resources of enterprises.
The idea of partnerships between different sectors has become increasingly popular since the United Nations’ Conference on Environment and Development (UNCED) held in 1992 [31
]. Agenda 2030 can be a good example of this, which also calls on business actors to contribute to addressing the challenges posed by sustainable development with their creativity and innovation [1
], however, the document underlines the heterogeneity of the corporate sector by size, responsibility-related measures, communication, and activities that legitimize their operation primarily concern large-scale business actors.
The sustainable and transparent operation, however, is not only important for sustainable development but based on the extensive literature on corporate social responsibility (CSR), it also generates benefits to the company. Such positive effects include, for example, that (1) continuous monitoring of environmental impacts will contribute to avoiding environmental fines and preventing environmental damage; (2) grants to subsidized organizations or received from subsidized organizations may reduce the risk of corruption, thus protecting the company’s reputation; (3) quality management systems can help to eliminate consumer-damaging products, thereby they can increase customer satisfaction and reduce the losses resulting from compensation cases; (4) greater transparency can reduce agency costs.
According to the survey of PwC [10
], 71% of the companies are planning to respond in some way to the challenges posed by SDGs, of which only 44% are planning to evaluate the impact of their activities on company-relevant goal. Managing SDGs from the company’s point of view can be problematic for two reasons; on the one hand, due to the number, the complexity and interconnection of the SDGs, the framework is difficult to review, on the other hand, it is advisable to choose the goals that affect the company and/or can really contribute to the given goal [32
]. For example, for an agricultural enterprise, the impact of the (excessive) use of fertilizer on the oceans’ life (Life below water) may not necessarily be considered as self-explanatory.
Based on a detailed, content-driven review of the sustainability reports of the 250 largest corporation (G250), KPMG [18
] found, that only 40 percent of companies deal with SDGs in their reports. Mentioned by more than half of the companies, the most prioritized SDGs, were Climate Action (SDG 13), Decent Work and Economic Growth (SDG 8), and Good Health and Well-Being (SDG 3). Interestingly, the popularity of the ecosystem goals (Life Below Water (SDG 14), Life on Land (SDG 15)) and Zero Hunger (SDG 2) did not reach half of these goals from above.
The survey of PwC [10
] examined the companies by industries. It focused on the questions of, according to the companies, which of their activities have the greatest impact on their goals. Their results can be regarded as consistent with the findings of KPMG [18
], but based on the evaluation of chemical and retail firms, the elimination of starvation (Zero Hunger, SDG 2) became one of the five most important goals of their activities.
According to an analysis of 37 non-financial reports, Zsóka and Vajkai [9
] suggest that although some of the activities of the companies may have both a positive and negative impact on sustainable development, the reports show almost exclusively positive aspects of their operations, i.e., the principle of balance is compromised. KPMG [18
] came to a similar conclusion in their research involving the G250 companies for SDGs.
According to Géring [29
], the counterpoint of the re-politicized company is considered as the concept expressed by Milton Friedman [33
]. According to that, since the company itself is an artificial (i.e., legal) person, its responsibilities are also artificial. In other words, the responsibility attributed to the company is, in fact, the responsibility of the manager. Since the manager is an employee of the owner, he or she must follow the owner’s choice of values, so his or her responsibility can only extend to the maximization of the shareholders’ assets.
The shareholder value maximization and issues related to responsibility were incorporated into the framework by Archie B. Carroll [34
]. Carroll argues that ownership can contribute to profitable growth, suggesting that there are projects with at least zero net present value. Since managers decide on these projects, the behavior of the company is ultimately influenced by the personality and the attitudes of the managers. These values appear in the leader’s messages at the beginning of company reports, which aim to share the major leadership priorities, goals, and experiences with the stakeholders. According to the research of KPMG [18
], SDGs were mentioned by the chief executive officers (CEO) in 39 percent of the companies reports mentioning SDGs, meaning that only 16 percent of the 250 studied companies have leadership engagement in this field.
2.3. The GRI
There are a number of instruments available for companies to report their commitments towards sustainability. Siew [35
] distinguished three tools of formal reporting on three ways of corporate sustainability:
standardizing reporting systems of non-financial (or otherwise sustainability) reporting,
certifications according to different standards, and
rating systems and indexes.
Strategy can be mentioned as a fourth tool, including, for example, the eco-efficiency approach developed by World Business Council of Sustainable Development (WBCSD) and the Sustainability Balanced Scorecard (SBC) [36
Although “such reporting has to highlight firms’ “commitment” to the environment and social responsiveness, even covering the respect for human rights, anti-corruption, and bribery issues, and diversity on the boards of directors” [37
], critics say these are not necessarily accomplished in practice. The main problem of reporting lies in its voluntary nature, which provides the opportunity to cover essential things, such as greenwashing [38
]. Fortune 500 companies often engage in strategies and counter-strategies which are capable of interfering with the company’s goals, thereby undermining their credibility [39
Ninety-two percent of the G250 companies report on their sustainability performance, while 74 percent are reporting according to the Global Reporting Initiative (GRI). Although the proportion of companies using GRI has decreased slightly since 2013, it remains the most widely used framework [8
GRI is a framework that can be applied to any organization around the world, whether it is a small or a large company. GRI reporting principles can be divided into two groups, the content of the report and the principles of reporting quality [40
]. The methodology of the framework is constantly evolving, though many companies are reporting according to the previous methodology (e.g., GRI G3 or G3.1), while GRI G4 was replaced by GRI Standards in July 2018 [41
Transparency and accountability of organizations can contribute to sustainable development, and sustainability reporting can be considered as a resource for this. Implementing joint projects with NGOs can be an obvious way of achieving accountability and credibility [31
], but any such cooperation will also help to improve a corporation’s reputation [39
]. With the help of the Sustainability Report, an organization can explore its essential social, environmental, corporate governance and economic aspects of its activities, which will enable the organization to consciously seek sustainable development [42
]. This activity does not require the organization to act altruistically: by supporting competitiveness the pursuit of sustainable development reduces the risks of the company and promotes its positioning in the global market in a favorable direction [42
GRI divides its indicators into social, economic, and environmental dimensions accordingly to the so-called Triple Bottom Line (TBL). General indicators for the company as a whole can be regarded as the fourth dimension.
Although GRI is now considered as a “global standard” for sustainability reporting, both GRI and the underlying TBL concept are subjects of criticisms. According to Shridhar and Jones, the three main criticisms of TBL are as follows [43
The performance of different dimensions can only be compared with compromises, because, while economic performance can be expressed in monetary terms, for the environment, and for the social dimension, there are only naturally occurring units (e.g., CO2
equivalent emission) or various indicators (such as gender, training expenditure) available. This phenomenon is exacerbated by the fact that social aspects in the indicators of GRI are overrepresented [44
], which is also the case with the GRI G4. Due to the different units used for the measurement, organizational performance can be determined either by index calculations or by the expression of various indicators in monetary terms [45
], however, all of these can cause significant distortions;
The TBL concept treats its three dimensions separately, which encourages the organization to strive for balance. Sridhar and Jones [43
] recognize that some interventions may have an opposite effect on the performance achieved in different dimensions, but since the focus of sustainability has been precisely on the integration between different impacts, the Authors urge the conceptualization of IBL (integrated bottom-line). This problem can be overlooked by the concept used by Raworth [24
], which compares the performance to the target values of the indicators or to a predetermined interval of these indicators, thus performance trade-offs, measured in different dimensions can be displayed explicitly;
Since governments, international organizations, and organizations that are developing standards for sustainability reporting are employing the TBL, there is a strong incentive for organizations to focus on compliance with standards alone, instead of a real commitment to sustainable development.
A further criticism is that GRI offers a “menu” of environmental and social performance indicators, from which the choice is made to companies “a la carte”— i.e., the selected indicators do not necessarily reflect a holistic approach to sustainable development [46
]. As a result, Garcia-Torres et al. [47
] emphasize, that within the framework of their Fast-Fashion Sustainability Scorecard, companies should be required to report at least the level of compliance with all SDGs, with which “the possibility of orphan issues or easy-to-solve problem biases” could be avoided. The veracity of reporting according to the selected indicators is typically not controlled by independent external actors [39
In addition to these issues, it is important to emphasize that voluntary reporting and the freedom to compile reports can also lead to a process, in which companies share and more and more data about their activities [39