Purpose of the SDG Assessment tool
The intention of a Sustainable Development Goal (SDG) assessment is evaluating a project’s or a transaction’s contribution to the agenda 2030 using the UN Sustainable Development Goals (SDG) and adhering targets.
There are several tools or models existing today with regards to assessing a company’s or a finance institution’s portfolio against the SDGs. The intention of this tool is to assess the potential effect on the SDGs at a transaction or specific project level.
The World Business Council for Sustainable Development (WBCSD) has created various SDG Sector Roadmaps translating the UN Sustainable Development Goals to business context and level. These interpretations have been used and incorporated into the SDG Assessment Tool to assist the project and/or transaction assessment.
The SDG assessment is developed with focus on financial institutions’ need for SDG-assessments to better evaluate potential benefits and drawbacks of funding activities. However, the tool can be used by any sustainability professional to assess a project or a transaction.
The results of the assessment can in turn be used as input to investment decisions, transparency and reporting, as well as determining eligibility for financial incentives mechanisms. For the latter, it may be useful to separate between proactive mitigation measures by the assessed project of a specific transaction versus lender requested mitigation measures. The SDG-tool is not designed to evaluate a company profile, nor a finance institution’s potential overall portfolio effect.
Users of SDG Assessment Tool
The SDG Assessment Tool is intended to be used by qualified environmental and social advisors or consultants.
Scope of the SDG Assessment
Agenda 2030 focuses on contributing to sustainable growth in developing and least developed countries, whilst reducing impacts to the natural environment and to climate change, as well as adapting to the effects from a changing climate. The assessor should keep this in mind for the SDG-assessment.
The SDG-assessment is intended to be used on project developments or specific transaction related activities. This SDG-assessment guideline is not developed with the intention of providing guidelines for corporate level reviews.
Project-related SDG-assessments
In order to assess a project, the scope of the assessment should include the construction and operational phase, as well as the decommissioning phase of a project. The SDG-assessment should include
- Project related activities and developments,
- Associated facilities, and
- Key suppliers and contractors.
Associated facilities are activities that would not have been initiated was it not for the project. This could be the construction of a pipeline or transmission line associated with an energy production project, or for example rail and/or road developments to accommodate for transport needs of a larger industry project. The definition of associated facilities is linked to the interdependencies between the activities, and not to which companies have operational control of the activities.
Key suppliers are the main tier 1 suppliers of the business entities assessed. Substantial risks related to central components in the value chain of a project’s or transaction’s activity (such as risks linked to conflict minerals, to scarce minerals (ex. cobalt) or human rights risks in exposed regions).
Key contractors are business entities delivering services or products on site of the project developer.
SDG-assessments related to existing operations and facilities
For SDG-assessment of existing operations, the assessor should include ongoing activities, potential amendments to existing operations and consequences and risks thereof, as well as key suppliers and contractors. If the assessed activity results in the development of further associated facilities, these should be included in the SDG-assessment.
Information required for an SDG Assessment
The assessment should include the relevant business entities’ risk identification and management systems such as for environmental and social risks and impacts, human resources and quality systems.
For project related assessments the SDG-assessment should take into account the potential effects of mitigation measures as outlined in the environmental and social impact assessment, as well as relevant management plans.
The SDG assessment should not consider potential secondary positive effects from a project that the project itself does not control. This would be relevant . local authorities’ disposition of increased tax income.
For project evaluations the SDG assessment should only consider Corporate Social Responsibility (CSR) programmes that are specifically and solely part of the project development plan. General corporate CSR activities, not related to project impacted people or impacted communities, should not be considered.
For both projects and existing operations, the SDG assessment should include considerations of potential action plan(s) such as those coming out of an environmental and social due diligence of a financial institution.
Qualification of Assessment Results
The SDG-assessment is conducted and reviewed at the sole discretion of the assessor and the reviewer. The tool does not have a built-in verification of the results or conclusions. The owner or developer of the SDG-tool takes no responsibility for the results, conclusions or communication thereof.
Premises and Assumptions
The SDG-results should be accompanied by an explanation stating the premises and assumptions for the results. This will increase consistency and credibility of the assessment. Furthermore, it will enable comparison of assessments between organisations. The premises and assumptions should include the following considerations:
- Does the transaction assessed adhere to the principles stated in this assessment guideline?
- Has the assessment taken into account particular risks and impacts in the value chain?
- Has the assessment taken into account scope 3 greenhouse gas emissions?
- What assumptions have been made as to efficiency of mitigation plans such as Biodiversity Action Plans, Resettlement Action Plans or Livelihood Restoration Plans?
- Does the SDG-assessment focus on potential direct impacts at project level?
- Is the purpose of the SDG-assessment for internal or external use?
