Tim Phillips:
Welcome to the latest episode of A Just Transition, brought to you by RBS International. My name's Tim Phillips, and welcome to my co-host Bradley Davidson, ESG Lead, RBS International. Bradley, hello.
Bradley Davidson:
Hi, Tim.
Tim Phillips:
It's great to be talking to you again, Bradley, and great to be talking about an entirely new topic today, not something that we've covered at all on these podcasts. The Sustainable Development Goals, SDGs. What are they? And who's our guest? Who's going to be helping us talk about them?
Bradley Davidson:
Yes, I'm excited about this one. We often see industry splitting ESG into its component parts, particularly with environmental and social factors. But it's important to remember that delivering a just transition, as we cover on this podcast, must avoid undue social harm to communities and individuals as we aim to maximise climate action. In 2015, the UK government joined every other country in the world and committed to the SDGs, 17 global goals which are designed to be a shared blueprint for peace and prosperity for people and the planet. The SDGs cover topics from hunger to marine life and challenge nations and businesses to accelerate action before 2030. The UN Global Compact Network UK recently published the Measuring Up 2.0 report, analysing UK performance towards the goals. And I'm pleased to welcome one of the project leads, and Global Goals and Climate Programme Manager, Jessica Lobo. Welcome to the podcast, Jessica.
Jessica Lobo:
Hi, Bradley. And hi, Tim.
Bradley Davidson:
Great to have you with us. Could you tell us about the UN Global Compact and the aims of the report?
Jessica Lobo:
Yeah, absolutely. So, as you mentioned, I work at the UN Global Compact Network UK, which is part of the world's largest responsible business initiative. And so, we connect UK companies and lots of other organisations really in a global movement to drive sustainable growth. So, a lot of what we do is promoting practical sustainability leadership, convening businesses and other organisations to share knowledge across sectors, and actively shaping the responsible business environment to create a world that we want to live and do business in. And of course, that last aim is really what we think the SDGs are all about, creating a world that we want to live and do business in. This report is the second in a series. It looks at how the UK is performing on the SDGs. What we've done is assess the targets that sit underneath those goals and assess the ones that are relevant to the UK's domestic delivery of this agenda.
And then we provided a red, amber, green rating of how the UK is performing on them, whether we are on track to achieve those targets or whether we're not, and whether we've got the necessary policy in place to address it. And the aim of the report really is to provide a snapshot of where we're at, at the moment and identify what we need to be doing to move this forward. So there's over 120 individual recommendations in the report, both for government but also for business and other stakeholders across the individual SDGs and across that entire framework to identify what we need to do here in the UK to make those goals a reality.
Tim Phillips:
Jessica, it's great to have you on, but usually when I'm talking about SDGs, I'm talking with NGOs in a developing country context or with policy makers, civil servants from those countries. Why are the SDGs relevant to our audience?
Jessica Lobo:
I mean, it's really common to think of goals such as no poverty or decent work as things which are more relevant in developing countries. But the truth is, those are very real issues that we're facing here in the UK too. I think roughly 13.4 million people are in poverty in the UK and that's something like one in five.
Tim Phillips:
Yeah.
Jessica Lobo:
And it's estimated that workers on the national minimum wage this year will need an extra £800, which is equivalent to 13 weeks of food, just to cope with rising costs. One of the dangers that we're finding is that the UK government only really considers the SDGs relevant to its foreign and international development work, so it's not surprising that we often do the same. But really, that's the point of our report, to shed the light on just how relevant these goals are for us to achieve both at home as well as abroad.
I think you mentioned NGOs and civil servants. I guess at the Global Combat, some of our largest work is around engaging business with this agenda. And that's not just because we need business to help us achieve the goals. That is of course really critical. But I think also because the SDGs are really important for business to understand the larger social, environmental context that they're operating in and to build resilience to those areas that are reflected by the goals that we're likely to see the greatest shocks. So working through the lens of the SDGs can be a way to assess for business what is material both now, but also consider how those global issues which are indirectly relevant, might pose major risks in the future. And in those cases, identify what a business can do to ensure that they're taking action on those big issues and engaging their stakeholders along the way.
Tim Phillips:
We should be halfway along to achieving the goals of the SDGs, but of course in the time since those commitments were made, a lot of things have happened. And in a context of a global financial crisis and COVID and climate change, and also now a lot of economic problems, have maybe the SDGs slipped down the priority agenda? How are we getting along? Are we halfway there?
Jessica Lobo:
We're not getting along that great. I think the important thing about the SDGs is that they are a holistic framework. They'll allow us to consider those interconnections between the financial crisis and COVID and climate change and the rest. I think what we've noticed on our report, but also more generally, is a concerning trend both in government but also in business to take a siloed approach to addressing those issues. And we're seeing that a lot with climate action. It's not wholly surprising, because climate is a big, complex issue itself, but of course the dangers of taking a narrow focus on climate action, for example, is that we are not recognising the other associated issues and challenges that need to be addressed alongside it. And I mean, I'm sure as the title of this podcast, you've been exploring that in relation to our transitions to net zero and some of the social and community impacts that aren't having as much attention as they need to.
We're halfway through. We've got seven and a half years left to achieve the SDGs, but we have seven and a half years left to achieve the goals. And I think that's really doable. There's a lot of businesses and organisations that are already committed to the goals. And so there's lots that we can do by mobilising those people and those resources. And I think they're really important set of ambitions that we need to keep up the momentum on.
Bradley Davidson:
I would just add to the sentiment that where we first met, Jessica was on the SDG Young Innovators programme. And actually, we talk a lot about talent attraction through environmental and social development, how the next generation of leaders really want to see progress. And so, whilst we're not where we need to be, I definitely remain optimistic that there is a wave of change that's gaining pace. But on that, for our listeners, what are the main conclusions of the report? What would you like our listeners to take away?
Jessica Lobo:
Well, I'll try and summarise just I guess shy of 150 pages. It's a big read. I'm sure everybody's not going to read the whole thing, but there is a lot of really interesting things in there and I would encourage you to dip into the bits that are most relevant, that are most important to you. I guess as a main summary, the report I mentioned focuses on the domestic delivery of the goals, so those things that are relevant to us here in the UK. And so, we assessed 132 of the targets which we thought relevant. I mentioned we did the red, amber, green rating. We found that the UK's only performing well on 17% of those targets. So there are gaps in policy or inadequate performance on 64% of them and 11% where there's just little to no policy in place to address the target and where performance is poor, or even in some places declining.
And this is the second report in the series. The first measuring up report was back in 2018 and it provided a baseline. And in comparison to that assessment, our findings this year suggest that we've seen improvements in 23 targets. Some of those are in reducing and managing waste and implementing environmental policy. But we've also seen regression in 18 targets and no change in 65 of them, which were rated amber or red four years ago. And I think some of the goals which we've not seen a single good performance rating are things on poverty, education, gender equality, decent work, energy, climate action. There's quite a lot. One of the biggest concerns that comes out of the report is that we are leaving people and places behind. And in many cases, this has worsened. And we see really clear evidence that the strong interconnections between the goals and the targets means that tackling these kinds of issues is going to require systemic change. We can't achieve them in isolation.
But I could pick out an example of that. Underperforming schools remain a significant issue. The ratio of qualified teachers to pupils hasn't increased and that indicates, I guess, a growing teacher shortage problem. And plans to embed sustainability and climate change in particular into the curriculum are insufficient in that teachers are unsupported to teach these issues, which means that although sustainability issues are rising up the agenda for the UK public, there's a lot of misinformation and misconception and a lack of education that's limiting our ability to take necessary action on them. So, we need to look at tackling education so that we can improve our climate action and being able to implement more sustainable consumption and behaviours in our lifestyles.
As a second example, one of the largest challenges in decarbonizing the energy system is heating. Already there are 16% of homes in England that fail to meet the decent home standards. And the cost of poorly insulated homes is exasperated by the cost of heating homes. People who are living in the most deprived areas, that's who are being affected most by this, they're twice as likely to be impacted by heat waves as those in neighbouring places. So we need to tackle poverty, but we also need to tackle housing standards and climate action together to ensure that we're not undermining our progress in one area, but ensuring that we can actually make sure that no one's left behind and tackle these systemic issues holistically.
So there are 120 or over 120 recommendations in the report. Lots of them look at some of those individual issues, but there are also some overarching ones for government. And our four broad calls to action is that the government develops a whole of government, whole of society approach to deliver the SDGs, demonstrate, really importantly, top-level political leadership, undertake their own review, and finally, to fulfil their commitments to establish an effective stakeholder engagement mechanism to really implement and deliver on these goals. And that stakeholder engagement piece is really important because what we do find in the report is that there is lots of action from businesses, from investors, from civil society and academic organisations and even local governments that they're all embracing the SDGs. And there are almost 50 case studies in the report and some really encouraging progress in the area. And that's what we really, I think, need to capitalise on.
Tim Phillips:
There are two things that happen in every episode, Jessica. And the first one is that I make Bradley explain what a three-letter acronym is. Tick, we've done that. The second one is that we are always running up against this problem of measurement and evaluation. The report really has some hard-hitting conclusions and some of them are quite surprising, and there will be some people who are sceptical of them. How much can we trust the numbers in this report?
Jessica Lobo:
That's a good question. I mentioned the ratings and I guess for the astute listeners who might have worked out that those numbers didn't add up to a hundred percent. So, for 8% of the targets that we wanted to assess, and those were the ones that were related to the domestic delivery of the goals, we found that there were gaps in the available or appropriate data, which made it impossible to measure our performance. We just didn't include a rating on them, which is a shame. And there's a chapter in the report which specifically looks at data and sets out recommendations to address some of those issues. Where most of the numbers have come from, a lot of them have come from the Office for National Statistics who've made some really good progress in collating and presenting SDG data and disaggregating it too on their reporting platform. And our researchers and chapter leads then looked at other sources to help plug the gaps or provide more relevant detail on some of those issues.
There's a couple of caveats. One is in disaggregation, which is really important. I guess an example of that in goal three, which is around good health and wellbeing, pregnancy is really generally very safe in the UK, but Black women are 4.5 times more likely to die during pregnancy and childbirth than white women. And that paints a really different picture when we can see the data at that level. So that level of disaggregation is not always available to us, but I think that's something that we really need to work on so that we've got that full picture. The other caveat is that it's just the timeliness of the data. Some of the results weren't actually as shocking as we thought there would be. And that's in part because we've not yet got all the data from post-COVID. So we're seeing a lag and it may well be that things get worse when that data catches up.
So it's not a perfect assessment and there are some gaps in our knowledge that we weren't able to plug. And that's really where we need government to take this more seriously and do a review themselves. But in the meantime, I think it's a good indicator of progress and where we're at, at the moment.
Tim Phillips:
Yes, we need government. Hopefully people in government are going to be reading the report and taking note of it. There are a lot of recommendations for government in the report. Far fewer recommendations for finance. Is this because you think investors can't really move the needle on solving these problems?
Jessica Lobo:
No, absolutely not. I guess that's just the focus of our report really. We wanted to capture a picture across the whole of the UK, and naturally, a lot of that falls on what the government isn't doing. But we've got a couple of chapters on finance and another one on business, the latter of which crucially starts with the fact that investor interest is one of the most important drivers of corporate sustainability. And I think we've already talked a little bit about just how critical that role of business and other stakeholders is. I think investors play a really key role in shaping both the positive and negative outcomes related to the SDGs. It's not just about mobilising finances and resources that bridge some of those gaps, but it's also about holding stakeholders to account. I think the SDGs as an articulation of the world's most pressing issues, and definitely some of the UK's most pressing issues, the goals can really guide investors in understanding the trends and impacts of their activities. And so, I think aligning investments with the ambition goals can ensure longer-term financial performance and safeguard against risks and crises.
We really need investors to be involved in this, but I think the SDGs are also important in what investors are trying to do. So, in the report we've pulled out just a few of the initiatives and resources that are currently out there, but I'm sure there are many more. And I think it's a very interesting time to watch developments in this space.
Bradley Davidson:
Jessica, one of the things that we often discuss is this idea of collaboration, to the extent we're allowed to under regulatory restrictions, but also engagement with topics and industry more widely. Do you feel as though you've got that engagement with investors and fund managers in the same way you do for potentially corporates and other business types?
Jessica Lobo:
We have some engagement within the Global Compact community and there's definitely a lot of work at the global level as well. But I think we would always like to see more. And I think, like you said, that collaboration and partnership piece is really important to this.
Tim Phillips:
Bradley, is this something that you see fund managers using as a tool already? And if so, which ones? I would imagine that it's pretty easy to give lip service to SDGs without incorporating them very much in any kind of investment strategy.
Bradley Davidson:
Market integration of SDGs is definitely evolving, particularly as the financial impacts of environmental and social factors are better understood, as Jessica alluded to there. There is this idea of dual materiality where not only will social and environmental impacts affect your business, but also the decisions that you make will have an impact on those factors too. And I think that's increasingly better understood and we are seeing that feed through into EU regulation. But I would say at present, the SDGs are primarily used as a communication tool, in that articulation piece, helping fund managers to evidence and provide focus towards the impact of their investment across the 17 goals. And I do think this is important. I don't think we can disregard the necessity for investors to be able to make informed decisions about where they place their capital and have really clear messages in terms of what the aims are in terms of environmental and social impact. So I do think that's a positive.
However, in the short to medium term, I'd expect to see fund managers utilising SDGs to firstly identify financial risks. BlackRock recently highlighted that the cost of inaction is greater than action when it comes to the SDGs. Actually, there is a risk to not engaging with the goals and the underlying targets in the near future. But on the flip side to that, there's also the opportunity to identify new avenues for investment and enhance your financial returns. The Business and Sustainable Development Commission estimated that achieving the SDGs may result to $12 trillion of additional market opportunities, representing around 60% of the real economy. So, it's not a small opportunity bucket that we're discussing here. There's material financial benefits to be had for those fund managers taking the time to understand what the goals and targets really represent and what the impacts we need are, and making sure that their investment decisions are aligned with those goals.
Overall, the message is very similar to the conversations we've had on climate change. Yes, it is nations that commit to the SDGs on that broad global scale, but we have to recognise that private markets will be the enabler for change, as Jessica's articulated so well, and that the capital allocated by fund managers has the potential to swing the dial. So in short, I would say they are being used. I think, in our own discussions, we're seeing an increased number of customers want to align their portfolios to SDGs, but we need to move towards full integration, and that is going to be a process. It's not going to happen overnight. That engagement and collaboration piece is really important because no individual fund manager has to tackle this on their own.
We look at net zero commitments and things like GFANZ. There are ways to come together and really identify market solutions instead of having to do so on the micro scale. And that's actually why I asked that question, Jessica, because it's often that our customers are looking for ways to connect with other fund managers and ultimately understand the best approach at that industry-wide scale. So, talking of GFANZ, we're coming up to the first anniversary of COP26. Have the commitments made in Glasgow turned into action for SDGs? Is there a material shift? There's a lot of talk about private markets turning up and how that was the best representation we've had for some time at least.
Jessica Lobo:
I think in business we're seeing more net zero and science-based targets. We're seeing more work on climate risk, increased interest in things like nature-based solutions. I think COP26 has really talked about these a lot and helped get climate action up on the agenda of everyone. We still need more strategic and ambition action, but I think what we are missing is that holistic approach and then action on these issues. And when it comes to the government and our national efforts, we are making progress, but it's not enough and it's not coherent. I suppose I could pull out maybe an example from the report on that. In the UK, transport is the biggest emitting sector, and there are plans and investments going into decarbonizing public transport and looking at how we reduce the reliance of private car travel. But in the report, when we're looking at some of the other goals, we found that 51% of rural public transport users in the UK don't have access to a hospital or to their nearest hospital within an hour. And that's compared to just 8% in urban areas.
So, when we're thinking about investment and decarbonizing our transport, we need to make sure that it's not only spread evenly across the UK but also looks at plugging some of those gaps so that we are not isolating people, we're not limiting access to health or jobs or other services. And if we're considering some of those other issues, that holistic view will help our net zero plans, because we'll then reduce the use of private cars for lots of those journeys that are happening at the moment. And I think that's what taking action for the SDGs looks like, at least in my opinion, having that holistic approach of these issues. I think we're not seeing that, and COP26 really helped focus our attention on the climate, but the government is not considering those other issues which are going to undermine our own climate efforts and indeed our commitments.
Bradley Davidson:
From my perspective, that's why robust policy is so important. We often talk about the need for cohesion and this idea of crowding in, where ultimately, private markets can deliver the change, but actually on national scales we need policy that's directing that capital, identifying where the real issues are. We need both. No one set can do that on their own. And I remain optimistic in the way that not only I've seen customers tackle climate, but also the way in which I know we are within the bank, which is, yes, climate may be the focus of regulators, but we very much recognise you cannot separate environmental and social factors and getting one right without the other doesn't provide the ultimate vision that we have for society.
Jessica Lobo:
Yeah, absolutely. I completely agree.
Tim Phillips:
Hey Jessica – and Bradley as well. I know you could be talking about what's in the report all day, but we don't have time. It's probably a good idea for anyone who's listening to this to read the report. I've read it. I can really recommend it. Jessica, how can they get a hold of a copy?
Jessica Lobo:
It's available online, it's at our website, which is www.measuringup.org.uk
Bradley Davidson:
I've got the fun task, which Tim always gives to me, which is nice. We ask each guest, since this podcast is called A Just Transition, what does a just transition mean to you?
Jessica Lobo:
Ooh, I think a just transition is one which creates opportunity for dialogue and meaningful engagement with the people that are going to be impacted by those decisions. And that was one of the biggest messages that came out of a climate and human rights webinar series that my colleagues did earlier this year. And again, out of the report, we are at danger of leaving people and places behind. So we need to include them in the conversations so that we can come up with solutions that work for everyone. It sounds obvious but it's tricky – having meaningful and holistic conversations is really the only way that we can ensure that our climate strategies are not undermined by our own failures to address all of those other issues that sit aside them. So yeah, that's what I'm going to say. I'm going to say opportunities for really meaningful dialogue and engagement with people.
Tim Phillips:
Thank you, Jessica. And this, I think, has been a really meaningful dialogue. I really enjoy talking to you. Thank you so much for coming in today.
Jessica Lobo:
No, thank you. Thank you for inviting me.
Tim Phillips:
Thank you all of you for listening to A Just Transition and carrying on listening to A Just Transition. Tell your friends. And also, remember that it's not just our episodes with guests. There is also Bradley's news updates as well. So, when you subscribe, you'll be getting those. Bradley, is there one coming soon?
Bradley Davidson:
Yes, there is indeed. Look out for it in the next couple of weeks as always, and I'll leave the plug now. Remember to subscribe and please review. We always want to hear your thoughts on how we're doing and what you'd like to hear from us. But for now, goodbye.
