The war could not discourage businesses from the principles of sustainable development – EBA study
96% of businesses continue to align their activities with the Sustainable Development Goals, which corresponds to the level of 2021. This is evidenced by the second wave of the annual expert study – the EBA Sustainable Development Index. The European Business Association has conducted this research to assess the level of UN Sustainable Development Goals being integrated into business strategy, as well as the Ukraine Recovery strategy.
Thus, the Index integral value has improved and amounted to 3.50 points out of 5 possible. This is 0.23 points higher than the result of 2021.
The respondents assessed the level of integration of sustainable development components into the National Recovery Plan at 3.50 points. Also, they rated the level of business contribution to sustainable development projects at 3.79 points.
During the war, businesses focused their attention on the social component of sustainable development (there are three components in total). Thus, the main priority of business is to support employees and their families in relocation, payment of salaries during forced downtime, and compensation to the families of those wounded in the war (97%). The second priority is to support the Armed Forces of Ukraine and the Territorial Defence Forces (84%). In third place is the provision of humanitarian support to internally displaced persons – 69% of respondents stated this. Assistance to medical institutions, which is provided by 66% of respondents, closes the top four areas of sustainable development direction for businesses in wartime Ukraine.
It is interesting to note that in 2021, environmental issues were prioritized in the field of sustainable development. At the same time, despite the already mentioned obvious predominance of the social component in the sustainable development programs of companies, the level of support for the most vulnerable categories of the population in the labour market, particularly people with disabilities, older people, and students and young professionals, has significantly decreased and is relevant for less than a quarter of the surveyed businesses. At the same time, the share of companies with projects related to women’s leadership or gender equality has slightly increased to 32%.
The number of respondents who regularly inform stakeholders about the progress of sustainable development projects has increased to 90% compared to 83% in 2021. Compared to 2021, the share of respondents who prepare separate non-financial reports (according to GRI standards, the UN Global Compact progress report, etc). At the same time, as of the end of December, only 8 companies out of the 200 largest taxpayers in Ukraine reported on sustainable development in non-financial or integrated reports for 2021. We are talking about companies and groups of companies such as Naftogaz of Ukraine, MHP, Ferrexpo, Auchan, Metinvest, Kernel, Carlsberg, and Farmak. This is a third less than last year. In general, the IT industry demonstrates the most remarkable progress in reporting on sustainable development in 2022.
89% of respondents finance sustainable development projects during the war, while in 2021 this figure was 96%. At the same time, the amount of investment in sustainable development projects has increased significantly compared to 2021 – the number of respondents with budgets of more than UAH 100 million has increased 20 times and the number of those who spend less than UAH 500 thousand annually on sustainable development projects has decreased three times. Representatives of IT and telecommunications, retail, consulting, audit, and legal industries have especially increased their budgets. The largest investors remain the same as in 2021. These are namely IT and telecommunications companies, as well as heavy industry and healthcare.
According to the respondents, the incentives for improving progress in the implementation of the Sustainable Development Goals in Ukraine could be grants and targeted non-repayable assistance from international organizations, support (financial, organizational, advisory, and informational) for innovative projects, tax benefits, and regulatory changes (including reduction of bureaucratic procedures and a temporary moratorium on strengthening control and raising standards).
It should be noted that since the introduction of martial law, the state has already implemented a number of deregulation measures in the field of economic activity for the period of martial law – the declarative principle of obtaining certain permits has been introduced, a moratorium on planned state control measures has been imposed, the introduction of increased technological standards for metallurgy and glass industry has been postponed, conditions for environmental tax exemption have been created, etc.
Business has improved its assessment regarding the level of integration of Sustainable Development Goals into public policies.
Business highly assessed the efforts of the state to consider the environmental, social, and economic components, particularly in the National Recovery Plan of Ukraine. It rated the level of SDG integration at 3.20 points moving it to the neutral plane, compared to last year’s negative assessment of 2.75 points.
However, according to the respondents, environmental issues remain the least highlighted in the state policy, as well as last year, but the progress in considering the economic components amounted to 21%.
Almost all respondents talk about barriers to the implementation of Sustainable Development Goals at the state level. First, in terms of insufficient funding and resources, as well as last year. 79% of respondents believe that the focus of the state has now shifted to ensuring defence capability, which is obvious in the conditions of martial law. At the same time, a number of those believe that the main obstacles to the implementation of Sustainable Development Goals at the state level are the lack of budget and resources, low awareness of the principles of sustainable development among officials and lack of understanding of the need to implement the principles of sustainable development has halved.
Therefore, companies have directed their sustainable development programs to support the state, and the social component has come to the fore in sustainable development projects. The budgets of companies aimed at sustainable development projects have increased several times and businesses are talking about plans to further increase them. Despite the war, the number of companies that see barriers to their implementation of Sustainable Development Goals has decreased. If there are barriers, they are mostly internal. Companies have improved their assessment of the state’s efforts to implement Sustainable Development Goals in strategic documents, particularly in the National Recovery Plan. The 2022 Sustainable Development Goals prioritized for business are in line with the goals of developing countries. In fact, the business performs the function of the state in certain areas.
According to the results of last year’s Index, we recommended, namely, forming a single body that will coordinate the work in the field of implementation of the Sustainable Development Goals from monitoring data to informing the public about progress and providing proposals to the Government and Parliament. In August this year, the Office for the Implementation of the Sustainable Development Goals was established under the Office of the Vice Prime Minister for European and Euro-Atlantic Integration (SDG Office). As far as we can see from public sources, cooperation has been established between the state institutions that coordinate the work in the field of implementation of the Sustainable Development Goals – the SDG Office, the State Statistics Service, the Secretariat of the Cabinet of Ministers of Ukraine, as well as UNDP in Ukraine. Therefore, it is very important to involve the business community in this process, whose representatives can ensure the promotion of those Sustainable Development Goals that are difficult to implement at the state level. We look forward to our cooperation this year!
Having analyzed the results of this year’s Index, we also formulate several recommendations that can help in the further implementation of the Sustainable Development Goals in Ukraine:
- For the SDG Office: When preparing reports, papers, or other materials that illustrate progress in sustainable development, collaborate with businesses and possibly create a separate section on the contribution of business to the SDGs.
- For the Government and Parliament: It is advisable to continue to create conditions (improve the regulatory framework and attract assistance from international partners) for the implementation of the Sustainable Development Goals in the period of post-war recovery of Ukraine. This applies, namely, to the issue of integration of people with disabilities, because according to the latest data of the Pension Fund of Ukraine and the State Enterprise “Information and Computing Center of the Ministry of Social Policy of Ukraine”, as a result of the military invasion of the russian federation, the number of people with disabilities has increased by 26 thousand 699 people. Besides, a very large number of military and civilians are still in the process of rehabilitation, and treatment and do not yet have any status of a person with disabilities.
- For businesses: It is necessary to increase their transparency to stakeholders and bring it to a systematic traceable level, particularly through the introduction of mandatory non-financial reporting. This will facilitate the attraction of investments in further development and increase the company’s export potential.
The Sustainable Development Index has been conducted by the European Business Association since 2021. The research was conducted in August-October 2022. The study is based on the results of a survey of 62 member companies and 18 in-depth interviews with representatives of EBA member companies.
The purpose of the study is to assess the consequences of russia’s aggression on business in terms of implementing the UN Sustainable Development Goals, changing priorities in the field of sustainable development in wartime, and identifying factors that hinder or can contribute to the sustainable post-war recovery of business and the state.
The integral indicator of the index consists of two equivalent components:
- Assessment of the level of integration of the UN Sustainable Development Goals into company strategies.
- Average assessment of the level of integration of economic, environmental and social components of sustainable development in the National Recovery Plan of Ukraine.