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UN SDG alignment
This page provides information on how Upright produces data on companies' alignment with the UN Sustainable Development Goals (UN SDGs).
Upright's SDG alignment metrics reflect the share of revenue from products that are aligned or misaligned with each UN Sustainable Development Goal (UN SDG).
The SDG alignment of products and services is classified using the following scale (classes):
- Strongly aligned
- Moderately aligned
- Weakly aligned
- Neither aligned nor misaligned
- Weakly misaligned
- Moderately misaligned
- Strongly misaligned
Strongly aligned products have a clear direct impact on the SDG, whereas moderately aligned and weakly aligned products have a lesser direct or indirect impact on the SDG.
The classification of each product's alignment is determined based on a combination of:
- The SDI AOP Taxonomy: The Sustainable Development Investments (SDI) Asset Owner Platform (AOP) has created a standard for mapping investments to the SDGs. Their taxonomy defines industries on a product category level that contribute to the UN SDGs.
- Upright’s own net impact data: e.g. SDG 3 - Good health and wellbeing overlaps with Upright’s own impact category Physical diseases. Therefore, products contributing negatively to Physical diseases (exceeding a certain impact score threshold) also contribute negatively to SDG 3. This approach enables detailed mapping of large groups of products to the SDGs.
- SDG targets and indicators: The explicit descriptions of the SDG targets determine what products are relevant for (mis)alignment. For many targets the descriptions are explicit and can easily be adapted for products and services, while for some targets the definitions are broad and require more interpretation. The indicators below the targets are less useful in developing the methodology: they are often indicators on a country level and not always translatable into products and services. Where the indicators are relevant, they usually contain the same information as the targets.
- Scientific research and individual assessment: In case products cannot be easily mapped to the SDGs based on the SDG targets and the Upright net impact data, the mapping is based on product-specific individual assessments done by the Upright analysts. The assessments rely primarily on publicly available scientific research.
Company-level metrics are produced by combining a company's product mix (i.e. revenue shares by product) with information on the SDG alignment classes of its products.
This metric provides a sum of revenue shares of different alignment classes. Two unit types are provided for these figures:
- Summary percentage
- Pure revenue shares
The user can choose between these types on the Upright Platform. The types are explained in more detail below.
Moderately and weakly aligned revenue is given less weight in the total value as follows:
Total SDG-aligned revenue share
= revenue from products that are strongly (mis)aligned with SDG X
+ revenue from products that are moderately (mis)aligned with SDG X * 0.5
+ revenue from products that are weakly (mis)aligned with SDG X * 0.25
Simple example with only strongly aligned products
A company produces solar panels and electric cables
Solar panels and electric cables are both strongly aligned with SDG 7 - Affordable and clean energy
Solar panels are also strongly aligned with SDG 13 - Climate action
50% of company revenue comes from solar panels, and 50% from electric cables
=> The total SDG-aligned revenue would be 100% to SDG 7 and 50% to SDG 13
All alignment classes are weighted equally.
These metrics are computed simply by summing up the revenue shares of products that are (mis)aligned with the relevant SDG.
Upright data on company product mixes
Upright uses the same data on company product mixes for SDG alignment data that it is using for producing net impact data.
Upright produces estimated revenue breakdowns by product by using the revenue subdivisions reported by the company as a starting point and refining it based on market statistics, other market research, and quantitative metrics produced from company publications (websites, annual reports, regulatory filings) that relate to the revenue shares being estimated. Additionally, some companies disclose supporting information directly to Upright
These metrics show aggregate values of revenue aligned with pre-defined sets of SDG targets. They are only provided for companies, and only when the user has chosen the unit type "Pure revenue shares" for the Total SDG-aligned revenue share.
These aggregates are calculated for three target sets, with two alignment strengths and three aggregation classes each, resulting in a total of 18 aggregate figures. See below for description of these.
For these aggregate metrics, only the products that are (mis)aligned with a set of specific SDG targets are considered. The sets used are:
- any SDG target
- any environmental SDG target
- any social SDG target
The any SDG target set essentially sums the total alignment with any SDG. The any environmental SDG target and any social SDG target sets are pre-chosen sets of SDG targets that have no overlap, i.e. any target classified as environmental is not on the list of targets classified as social, and vice versa.
SDG targets considered environmental are:
2 – Zero Hunger: 2.4, 2.5 6 – Clean Water and Sanitation: 6.3, 6.4, 6.5, 6.6 7 – Affordable and Clean Energy: 7.2, 7.3, 7.a, 7.b 8- Decent Work And Economic Growth: 8.4 9 – Industry, Innovation and Infrastructure: 9.4 11 – Sustainable Cities and Communities: 11.6 12 – Responsible Consumption and Production: 12.1, 12.2, 12.3, 12.4, 12.5, 12.6, 12.7, 12.8, 12.a, 12.b, 12.c 13 – Climate Action: 13.1, 13.2, 13.3, 13.a, 13.b 14 – Life Below Water: 14.1, 14.2, 14.3, 14.4, 14.5, 14.6, 14.7, 14.a, 14.c 15 – Life on Land: 15.1, 15.2, 15.3, 15.4, 15.5, 15.7, 15.8, 15.9, 15.a, 15.b, 15.c 16 – Peace, Justice and Strong Institutions: 16.b
SDG targets considered social are:
1 – No Poverty: 1.1, 1.2, 1.3, 1.4, 1.5, 1.a, 1.b 2 – Zero Hunger: 2.1, 2.2, 2.3, 2.a, 2.b, 2.c 3 – Good Health and Wellbeing: 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.a, 3.b, 3.c, 3.d 4 – Quality Education: 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.a, 4.b, 4.c 5 – Gender Equality: 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.a, 5.b, 5.c 6 – Clean Water and Sanitation: 6.1, 6.2, 6.a, 6.b 7 – Affordable and Clean Energy: 7.1 8 – Decent Work and Economic Growth: 8.1, 8.2, 8.3, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10, 8.a, 8.b 9 – Industry, Innovation and Infrastructure: 9.1, 9.2, 9.3, 9.5, 9.a, 9.b, 9.c 10 – Reduced Inequality: 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.a, 10.b, 10.c 11 – Sustainable Cities and Communities: 11.1, 11.2, 11.3, 11.4, 11.5, 11.7, 11.a, 11.b, 11.c 14 – Life Below Water: 14.b 15 – Life on Land: 15.6 16 – Peace, Justice and Strong Institutions: 16.1, 16.2, 16.3, 16.4, 16.5, 16.6, 16.7, 16.8, 16.9, 16.10, 16.a
Aggregate figures are calculated separately for two strengths of alignment or misalignment:
- strong – includes only products strongly (mis)aligned with the SDG targets specified in the target set
- moderate – includes only products that are strongly or moderately (mis)aligned with the SDG targets specified in the target set
Aggregate figures are separated into three aggregation classes based on what is aggregated:
- Aligned - the aggregate revenue share of products that are aligned with the SDG targets specified in the target set with the alignment strength specified
- Misaligned - the aggregate revenue share of products that are misaligned with the SDG targets specified in the target set with the alignment strength specified
- Strictly aligned - the difference between products that are aligned with the SDG targets specified in the target set with the specified alignment strength, and products that are misaligned in the same target set and alignment strength
Metrics for portfolios (e.g. funds, indices, private wealth management portfolios, sales portfolios) are computed simply as weighted averages of the company-level metrics. The weighting depends on the type of the portfolio, with the most common weighting being based on the market value of each constituent.