Management And Accounting Web

Busco, C., G. Fiori, M. L. Frigo and A. Riccaboni. 2017. Sustainable Development Goals: Integrating sustainability initiatives with long-term value creation. Strategic Finance (September): 28-37

Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Social Accounting Main Page | Environmental Cost Main Page

In 2015 the U.N. General Assembly adopted a 2030 Agenda for Sustainable Development that included 17 sustainable development goals (SDGs) and 169 targets. The purpose of this paper is to briefly describe the evolution of sustainable development, whether companies are ready to engage with the goals that have been developed, what role management accountants can play in implementing the SDGs, and provide examples of organizations that are using these concepts when measuring and reporting their performance.

The Evolution of Sustainable Development

Sustainable development was defined in 1987 by the United Nations' Brundtland Report as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". Various institutions and international bodies have continued to identify related issues such as water emergency, health, climate change, pollution, social inequality, access to energy, poverty, and hunger. The Global Reporting Initiative was formed in 1997 by the U.S. based nonprofit Cenres and Tellus Institute with support from the U.N.'s Environment Programme (UNEP). The definition of Sustainable Development was extended by the World Summit in Johannesburg in 2002 to include environmental aspects, social inclusion, and economic development. The Sustainability Accounting Standards board was created in 2011 to develop sustainability accounting standards, and the International Integrated Reporting Council (IIRC) released a framework based on the concept of multicapitals to integrate financial and pre-financial data. Finally, the 2030 Agenda including 17 SDGs was adopted by the U.N. in 2015.

The 17 Sustainable Development Goals

Creating the Sustainable Development Goals

The original set of goals was referred to as Millennium Development Goals designed to reduce poverty, and to improve health and education in developing countries. Having success in these areas, the U.N. expanded the goals to a wider range of interconnected challenges related to economic, social and environmental issues. This lead to the identification and development of the SDGs with input from all sections of society and all parts of the world. This new set of goals recognizes the key role business organizations play in achieving sustainable development.

Integrating sustainability initiatives into an organization's business model can help companies in various ways, e.g., generate new revenue, increase supply chain resilience, help in recruiting and retaining talent, create investor interest, and assure license to operate. Many companies have adopted this approach. PepsiCo and Eni are provided as examples in the following section of the article.

PepsiCo: Governing Sustainability through Performance and Purpose

In 2006 PepsiCo developed a strategy referred to as "Performance with Purpose" that integrated sustainability into its business strategy and governance structure. The focus is on three key areas:

1. Governance and decision making - Teams including accountants set strategy.

2. Tracking and reporting metrics - Measurements are designed to track progress against performance targets.

3. Facilitating business integration - Each part of the sustainability agenda includes scorecards, checklists and timelines for measuring progress.

The focus is on creating and sustaining jobs, stimulating economic growth, protecting the planet, and enhancing people's lives around the world.

This section includes an illustration (Figure 1) showing how the SDGs are related to PepsiCo's performance in three areas including: Products, Planet, and People.

How Ini Pursues the SDGs

Eni's (Italian energy company) sustainability report shows how the 17 SDGs are used to guide project development over the long term. Its two main challenges are maximizing access to energy and combatting climate change. This initiative focuses on three levers:

1. A defined path to decarbonization.

2. An operating model that reduces risks and environmental and social impacts.

3. A model with hosting countries for a long-lasting partnership and cooperation.

Making Sustainability a Driver of the Business Model

By focusing on integrated thinking and reporting, Ini highlights the way in which sustainability initiatives contribute to achieving the strategic targets of the company. This section includes three illustrations including Eni's strategic guidelines as linked to the SDGs (Figure 2), their integrated performance dashboard (Figure 3), and the connectivity of performances map (Figure 4).

The Role of Management Accountants

Achievement of sustainable performance requires an integrated approach to planning, management, and reporting that considers the interest of heterogeneous stakeholders that are linked to the organization's models for long-term value creation. Management accountants can help implement SDGs in the following ways:

1. Work to get senior management commitment on the SDGs that the business organization can impact.

2. Learn how key sustainability drivers contribute to achieving the organization's goals and strategies.

3. Integrate sustainability drivers into the organization's goals and strategies.

4. Help insure that the integration of strategy and SDGs are understood across the organization.

5. Break down the SDG targets for individual subsidiaries, divisions, and departments.

6. Make SDGs a central part of the planning, budgeting, and performance measurement process.

7. Connect the SDGs and sustainability to day-to-day decisions.

8. Monitor and report in an integrated way focusing on sustainability and performance.


Related links:

For more on the SDGs see the United Nations web site at

For more on PepsiCo see

For more on Ini see

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