Corporate uptake of the Sustainable Development Goals: Mere greenwashing or an advent of institutional change?

Abstract

The United Nations' Sustainable Development Goals (SDGs) are increasingly used by corporations for benchmarking and communicating their sustainability performance. The SDGs have several features that make them attractive for this purpose, including their universality, specificity and, in many cases, direct linkage with corporate outcomes. Corporations typically disclose their engagement strategies and outcomes voluntarily without the aid of standardized and externally verified reports. This creates a risk of corporations misusing the SDGs for ''greenwashing'' and ''impact washing'' their activities, for example through selective reporting of favorable information. Inaccurate and non-transparent disclosure can also introduce information asymmetries that distort decision-making by investors and other stakeholders. Increasing institutional change towards new measurement frameworks (such as GRI and SASB standards) and regulatory oversight to monitor disclosure (e.g., the EU's Non-Financial Reporting Directive) is likely to improve transparency and reliability in sustainability reporting. This study critically examines the prospects of institutional changes that facilitate the integration, measurement, and reporting of corporate sustainability in general and the SDGs in particular. It also explores emerging innovations in corporate governance and regulation that seek to improve the integration of sustainability issues in corporations and financial markets.

How can international business research contribute towards the sustainable development goals?

“…However, the scientific and Petit, 2017;Hart and Sharfman, 2015). So far, however, little of these debates has diffused into IB publications, with some notable exceptions (Lashitew, 2021). Besides construct validity and related issues, the scope of the indicators is also key.…”

“…Engagement with the SDGs has also been limited in the sense that companies tend to "cherrypick" SDGs that already fit with their current business models (Van Tulder et al, 2021) and/or focus only on selected SDGs in their reporting (Lashitew, 2021). This is likely to provide an incomplete picture of companies' impact on the SDGs, given the holistic nature of the SDGs and the proposed complementarities or trade-offs between the goals.…”

“…However, while some front-runner companies have publicly embraced the SDGs, actual progress on implementation has been slower, and many companies have shown little interest (Sachs and Sachs, 2021). There have also been concerns about "SDG washing" (Lashitew, 2021;Van Zanten and Van Tulder, 2018). A more negative view on the role of large companies holds not only that they are part of the problem as well as part of the solution (Sachs and Sachs, 2021), but that they are even the main source of many of the critical issues (Whyte, 2020).…”

The UN’s Sustainable Development Goals: Can multinational enterprises lead the Decade of Action?

“…The bargaining arena also materializes in 'ecosystems' of collaborating and competition regulatory agencies, reporting and standard-setting bodies that create the metrics along which 'progress' can be measured. The papers by Lashitew (2021) and Eden and Wagstaff (2021) provide input for the latter. Most of the research papers deal with more qualitative aspects of the 'bargaining arena challenge', one way or another, for instance by referring to value chains (Sinkovics et al, 2021;Van Holt et al, 2021), production processes (Liou & Rao-Nicholson, 2021), or cross-sector partnerships (Ramirez, 2021;Lewis et al, 2021).…”

Determinants of Share Value Creation among Listed Companies in the Frankfurt Stock Exchange, Germany: Literature and Theoretical Examination

“…The main purpose of any firm is to enhance its shareholders' wealth. Investors, management and other stakeholders need to be aware of the company's performance to enable them make informed decisions about the future (Lashitew, 2021). Rational investors expect good long term return on their investment.…”