Integrating UN Sustainable Development Goals (SDGs) into Corporate Financial Strategy – An Evidence-Based Framework for Indian Corporations

Abstract

The integration of the United Nations Sustainable Development Goals (SDGs) into the fabric of corporate finance is a growing trend in emerging economies which we see in the case of India where sustainability issues are very much at the fore of business performance. In this research we look at which Indian companies have included SDG aligned practices in to their finance plans and we also look at the financial results of that inclusion. We used a secondary data based quantitative research method which looked at 10 companies in key sectors including financial services, energy, manufacturing, information technology, and infrastructure. We got our data from annual reports, sustainability reports, ESG indicators and CSR SDG alignment reports. What we found is that there is a very clear and positive relationship between a company’s level of sustainability and its financial performance. Firms that have integrated SDGs into their business models saw great revenue growth, improved operational performance, better return on equity, greater market value, and also saw less financial volatility when compared to those at early stages of the process. Also we see that in these companies’ case environmental efficiency, quality of governance, and focus on employee development was very much related to what we see as financial health and risk management. What we find is that SDG integration is a tool not only for Corporate Social Responsibility but also a value adding strategy which in turn plays a role in long term competitiveness, investor trust, and organizational resilience. Our study also puts to the fore that which ways of integrating SDGs into the financial decision making of the company that Indian corporations may use to put in place a structured approach to the issue.