How can co-operatives accelerate progress towards meeting the SDGs? And what metrics should they use to measure sustainability accurately? These were just some of the questions discussed during a workshop at the ICA Global Cooperative Conference in New Delhi, India.
Sonja Novkovic, the session’s chair, pointed out that ESG indicators fail to take into account aspects like tax evasion.
The session also heard from Ilcheong Yi, senior research coordinator, UN Research Institute for Social Development (UNRISD), Geneva, who warned that “bad, undesirable inappropriate indicators” will fail to provide an accurate picture of real sustainability.
He described some of the issues with current ESG indicators, such as their exclusion of small and medium enterprises by design; the way they present a single figure aggregated and/or averaged without showing variation, and their neglect of context.
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To address this, UNRISD has developed 61 sustainable development indicators, which are available at sdpi.unrisd.org, all based on different kinds of context. When applying these indicators companies that scored well under the ESG indicators scored poorly when applying the sustainable development performance indicators (SDPI).
For example, under conventional ESG reporting standards, an entity can say it has reduced its GHG emissions’ intensity by 5% per annum, concluding it made a positive contribution to sustainability. However, the same entity could have, in fact, increased its absolute emissions by 10%, meaning it remains unsustainable.
Chiara Carini, senior researcher, Euricse, Italy, is also researching the issue by assessing the sustainability in Legacoop co-operatives. Over the last two years, the project has looked at potential dimensions and indicators that co-ops could use to measure their sustainability.
“In defining these indicators we explore existing standards, similar projects,” she said, adding that literature and projects focused on defining and applying indicators for the co-operative sector were limited.
Carini’s project tested a list of indicators on economic sustainability, occupational effects, governance, processes, social sustainability and environmental sustainability. Legacoop plans to launch a platform that will enable co-ops to report on SDGs and integrate indicators.
“As a sector we need to work together to get some results and changes in the regulation,” said Carini.
Dr Justin Bomba CEO of Mufid (Mutual Finance for Development) Union in Cameroon, shared his organisation’s experience, explaining some of the challenges faced by co-operatives such as inadequate regulatory frameworks, climate change, unfavourable macroeconomic environments, and unfriendly policies that not favour the organisation and development of co-operatives.
With this in mind, Mufid has set a list of indicators to evaluate the impact and sustainability of its co-op members. The performance evaluation will look at governance, financial stability, credit portfolio quality, compliance with regulators and social performance.
Ibon Zugasti, partner and director, Prospektiker, and international project manager, LKS Mondragon Corporation, Spain, also weighed in on the issues, arguing that greenwashing had led to a 17% achievement rate for the Sustainable Development Goals – which, he said, marks “a huge failure”.
