SDG Progress Tracking for CFOs and Finance Teams

Only 12% of SDG targets are on track for 2030. With just five years left, CFOs and finance teams in the UK are under pressure to integrate Sustainable Development Goals (SDGs) into financial strategies. Regulatory updates like the ISSB standards (due mid-2025) and FCA disclosure requirements are making sustainability reporting a financial obligation, not just an ethical choice.

Key points:

• 31% of UK business leaders report financial benefits from sustainability efforts.

• 80% of institutional investors prioritise sustainability disclosures, warning of higher financing costs for non-compliance.

• 90% of UK firms face challenges with sustainability data collection and analysis.

Finance teams are pivotal in aligning SDGs with business goals, ensuring compliance, and providing audit-ready, transparent data. Tools like neoeco’s FiSM platform simplify this process by automating real-time SDG tracking and linking it to financial reporting.

Why the CFO holds a key role in advancing the SDGs? | Alessandra Genco, Leonardo

The Role of Finance Teams in SDG Measurement and Reporting

Finance teams have become key players in measuring and reporting on the Sustainable Development Goals (SDGs). This shift reflects how Environmental, Social, and Governance (ESG) reporting has moved beyond being solely the responsibility of sustainability teams. With the UK's Sustainability Reporting Standards expected by July 2025 and the Corporate Sustainability Reporting Directive (CSRD) impacting around 10,000 non-EU companies with significant European operations, finance professionals are stepping up to lead SDG tracking efforts.

This transition makes sense. Finance teams are experts in data governance and compliance, ensuring that ESG disclosures are accurate and auditable. By embedding sustainability into the business's core processes, they not only identify risks but also uncover opportunities. This approach helps align SDG metrics with financial performance indicators, creating a more integrated framework for decision-making.

"My currency is dollars, euros or pounds. But I now have a second currency - it could be trees, litres of fertiliser, or the number of women farmers we support. And you've got to treat that second currency just like your financial one - with assurance, systems, and reporting." - Kirsty Law, CFO – Sustainability at Olam Food Ingredients

This idea of a "dual currency" highlights how finance teams are naturally positioned to handle sustainability challenges. Their expertise in risk management, data control, and reporting makes them ideal partners for sustainability teams. Together, CFOs and Financial Controllers are interpreting carbon data, preparing for audits of non-financial disclosures, and linking ESG outcomes to financial results.

Integrating SDG Metrics with Financial KPIs

To successfully integrate SDG metrics, finance teams need a clear framework that outlines how SDG-related investments and outcomes will be communicated to investors. These SDG Finance Frameworks should detail the company's goals, the methods for measuring impact, and the Key Performance Indicators (KPIs) and targets that reflect the organisation's influence - both positive and negative - on specific SDGs.

A materiality assessment is a crucial first step. This process helps finance teams prioritise SDGs based on their relevance to the business's operations and stakeholder expectations. Once the most relevant SDGs are identified, specific KPIs can be established to track quantifiable outcomes for each goal. Embedding these KPIs into ESG reporting ensures consistent monitoring and provides stakeholders with transparent updates on progress.

Strategic planning should also align with SDG objectives. By integrating ESG targets into forecasting and decision-making processes, companies can ensure that SDG performance becomes a routine part of business planning. The data collected through this process can then be used to refine strategies and improve outcomes over time.

Additionally, companies must communicate how their SDG goals align with their overall business strategy, including how they secure funding for related initiatives.

The Need for Audit-Ready Data

Defining SDG metrics is only the beginning. Finance teams must also ensure that the data supporting these metrics is of high quality and audit-ready. This is critical for accurate reporting, building trust with stakeholders, and avoiding accusations of greenwashing. In 2022, 69% of companies globally sought assurance for some of their sustainability disclosures, yet 97% acknowledged challenges in auditing ESG data. Clearly, prioritising data quality is essential.

Standardised and traceable data is key for meeting global frameworks like ISSB and CSRD. External audits not only ensure regulatory compliance but also help detect issues early, improving operational efficiency. Reliable audit reports and financial statements boost confidence among stakeholders and attract potential investors.

To manage this process effectively, finance teams should establish an ESG steering committee, with internal auditors playing a central role. This committee can oversee digital ESG systems to ensure that data collection comes with a complete audit trail. Continuous monitoring can help identify and address issues quickly, while clear methodologies for evaluating ESG risks and opportunities ensure consistency.

"CSRD once more calls for a good dialogue with the auditor. One should be aware that the regime of limited assurance does not mean that companies can lower the standards for the information quality for now and invest in this quality later when reasonable assurance is required. In both cases, quality and reliability of the information must be in order." - Wim Bartels, EUROPEAN SUSTAINABILITY SENIOR PARTNER

Finance teams must also stay informed about frameworks like IFRS S1 & S2, CSRD, and GRI to remain compliant with evolving regulations. Just as traditional financial controls are critical, so too are robust systems for managing sustainability data.

The ultimate aim is to present ESG data that is clear, consistent, and reliable. By applying the same rigorous standards to sustainability metrics as they do to financial reporting, finance teams can create a solid foundation for tracking SDG progress that meets both regulatory demands and stakeholder expectations.

Frameworks and Standards for SDG Reporting

Finance teams face a challenging ESG landscape but can lean on established reporting standards for guidance. For instance, 71% of N100 companies align their reporting with the UN SDGs, and over 100,000 companies globally use the GRI framework. These frameworks provide a reliable structure for integrating SDG metrics into financial reporting processes.

Key Frameworks: ISSB, CSRD, and GHGP

Three key frameworks stand out for UK finance teams: the International Sustainability Standards Board (ISSB), the Corporate Sustainability Reporting Directive (CSRD), and the Greenhouse Gas Protocol (GHGP).

ISSB focuses on providing investors with a global standard for sustainability-related financial disclosures. Its aim is to deliver comparable and actionable data. The UK government is currently reviewing exposure drafts for UK-specific standards, UK SRS S1 and UK SRS S2, which are expected to be finalised later this year. These standards may introduce mandatory sustainability reporting requirements.

CSRD adopts a broader perspective, requiring companies to report on their sustainability performance, including their impact on people and the environment. Unlike ISSB’s investor-centric approach, CSRD uses a double materiality perspective, addressing both financial impacts and broader societal and environmental effects.

GHGP is the most widely used framework for carbon accounting. It provides a standardised approach for measuring greenhouse gas emissions across Scopes 1, 2, and 3, making it essential for finance teams tracking climate-related SDG progress.

The UK government’s approach reflects a practical mindset. As Justin Madders, UK Minister for Competition and Markets, stated:

"We want to work with businesses to develop a 'common sense' sustainable reporting framework that is transparent, clear and proportionate for those investing in the UK."

Connecting SDG and ESG Reporting Standards

Aligning SDG and ESG reporting standards can simplify processes and create more cohesive reporting structures. By linking SDG targets to business strategies and performance indicators, companies can integrate SDG reporting within the broader ESG framework. This alignment not only enhances a company’s reputation and stakeholder confidence but also improves access to global markets and investment opportunities.

The Task Force on Climate-related Financial Disclosures (TCFD) recommendations have been fully incorporated into ISSB Standards. This integration provides a clear roadmap for including climate considerations within broader SDG reporting. For UK finance teams, ISSB’s more detailed and prescriptive requirements offer a financially integrated approach that addresses both climate and sustainability objectives.

Despite challenges such as data management complexity, strategic alignment, and maintaining transparency, solutions are emerging. These include leveraging technology, adopting integrated reporting frameworks, engaging stakeholders, and strengthening collaboration between finance and sustainability teams. Over time, regulatory developments and advancements in reporting technologies are expected to drive more thorough impact measurement across all sustainability dimensions.

To support this transition, the UK government has set up a Technical Advisory Committee (TAC) and a Policy and Implementation Committee (PIC) to assess and endorse IFRS S1 and IFRS S2. This ensures that UK standards align with global best practices while addressing local market needs.

The FiSM Approach: Integrating SDG Tracking into Financial Reporting

FiSM, or Financially-integrated Sustainability Management, brings sustainability directly into the heart of financial reporting. By embedding sustainability metrics into financial systems using established accounting principles, FiSM creates a reliable data framework that CFOs trust and auditors can verify. This approach seamlessly connects financial data with sustainability goals, offering a unified perspective.

One of the biggest hurdles in sustainability reporting is the disconnect between financial data and sustainability metrics. Traditional methods often rely on manual data collection from various systems, which increases the chances of errors. FiSM addresses this by applying double-entry accounting principles to sustainability data. It treats environmental and social impacts as measurable business transactions. By integrating Sustainable Development Goal (SDG) targets into financial planning cycles, organisations can streamline data management and align more effectively with their strategic goals. Embedding specific Key Performance Indicators (KPIs) into financial reports also ensures transparency in tracking progress. This method makes SDGs a core part of the corporate vision, encouraging continuous development.

neoeco's Role in SDG Tracking

The practical application of FiSM is well-illustrated by neoeco, a platform that delivers real-time, audit-ready SDG insights using automation and Life Cycle Assessment (LCA) methodologies. Acting like an AI-powered bookkeeper for sustainability data, neoeco processes and maps information efficiently.

One of its standout features is the FiS Ledger, which integrates over 90 ESG impact factors into every financial transaction. Whether it’s a purchase order, invoice, or expense, each action automatically generates corresponding sustainability data, including metrics relevant to SDGs. For finance teams, this automation eliminates the need for time-consuming manual data collection, cutting the process time by 60%.

The benefits of this innovation are clear. Dan Firmager, BFP ACA, ESG Advisor at Kreston Reeves and ICAEW Climate Champion, highlighted its impact:

"neoeco stood out by going beyond traditional carbon accounting. Their use of Life Cycle Assessment gave us the granularity we needed for accurate, future-proof ESG reporting."

This level of detail is crucial for SDG tracking, especially when it comes to understanding complex supply chain impacts and indirect effects. By evaluating a wide range of impact categories beyond just carbon, neoeco’s LCA methodology provides the depth needed for effective SDG reporting.

Additionally, the platform’s AI-driven automation significantly improves data accuracy and speeds up reporting. For example, neoeco increased the granularity of emissions data tenfold and reduced data gaps by 80%. Its compatibility with accounting systems like Xero, SAP, Dynamics 365, Oracle, and QuickBooks ensures that environmental and social impact calculations integrate smoothly with existing financial processes, making ISSB reporting more efficient.

Best Practices for Monitoring and Reporting SDG Progress

Tracking progress on Sustainable Development Goals (SDGs) requires a methodical approach that transforms ambitious targets into actionable outcomes. Finance teams play a pivotal role in this process, ensuring that sustainability goals are seamlessly integrated into financial workflows while meeting the scrutiny of auditors and stakeholders. By embedding SDG targets into financial planning, organisations can align their sustainability efforts with core business strategies.

Embedding SDG Targets into Financial Planning

To effectively track SDGs, organisations need to treat sustainability goals as integral business priorities. Start by reviewing your operations to identify which SDGs align with your organisation’s activities and areas of impact. Collaboration across departments is key to embedding sustainability into the wider business strategy. Once the priority SDGs are clear, set SMART targets - specific, measurable, achievable, relevant, and time-bound objectives. These targets should be monitored alongside traditional financial key performance indicators (KPIs).

Integrating sustainability into key business functions - such as supply chain management, HR policies, product development, and marketing - ensures that every decision accounts for its broader impact on SDG commitments. This comprehensive approach helps finance teams allocate resources more strategically, driving measurable progress towards sustainability goals.

Using Automation for Accurate Reporting

Automation and AI are transforming how organisations track and report on SDGs. These technologies minimise errors in manual data collection and provide real-time insights, enabling faster, more informed decision-making. Since 2018, the application of AI in SDG initiatives has grown by 300%. For finance teams, automation delivers significant time savings and ensures greater accuracy by seamlessly processing sustainability metrics.

By integrating tools like the ISSB reporting frameworks with automated SDG tracking, organisations can create a unified system that meets both regulatory requirements and internal performance goals. However, adopting automation effectively requires a strong foundation in AI governance, ensuring transparency, accountability, and a focus on human-centric design. These technological advancements, combined with robust compliance practices, form a powerful toolkit for managing sustainability efforts.

Maintaining Compliance with Evolving Standards

As regulations around sustainability reporting continue to evolve, staying ahead of compliance requirements is vital. Currently, 73% of the world’s 250 largest companies rely on the GRI Standard for their sustainability reporting. Aligning with established frameworks like GRI while preparing for new standards, such as CSRD and ISSB, helps organisations avoid costly pitfalls. Non-compliance can result in significant financial losses, with a single incident potentially costing businesses an average of £3.2 million in revenue.

Regular risk assessments and ongoing compliance monitoring are crucial to safeguarding the organisation. Building internal expertise through training in sustainability reporting, data analysis, and ESG best practices equips teams to adapt to shifting standards.

"There's a big difference between simply responding to ESG requirements in tenders and proactively leading those conversations. It's about moving from a reactive to a proactive approach - investing in sustainability, pushing these ideas up the chain and encouraging developers to adopt better practices that make a real difference."

• Tom Tutty, CFO at Glencar Construction

Consistent reporting through frameworks such as GRI, SASB, and TCFD ensures compliance and transparency. Ultimately, SDG reporting is not a one-off task but an ongoing process that requires continuous evaluation and refinement of strategies.

Conclusion: The Importance of Integrated SDG Tracking

For CFOs, incorporating SDG tracking into their operations goes beyond mere compliance. It's a forward-thinking strategy that taps into a massive annual investment of over £13.6 trillion, with a potential 30–40% alignment opportunity, despite an estimated £2.4–4 trillion funding gap for SDGs.

FiSM solutions play a key role here by embedding ESG considerations directly into financial processes. This allows CFOs to pinpoint opportunities, allocate resources more efficiently, and ensure precise, audit-ready reporting. A prime example is neoeco's FiSM platform, which leverages AI and Life Cycle Assessment methods to provide real-time insights across 96 ESG impact categories.

The market is already shifting in response to these strategies. In 2021, CFOs within the CFO Coalition pledged to channel £400 billion of corporate investments into SDG-aligned initiatives. That same year, sustainability-linked bond issuances skyrocketed to £88 billion globally - a tenfold increase from 2020. These numbers highlight the growing demand for credible sustainability reports, which are essential for building trust with stakeholders and attracting ESG-focused investors.

"CFOs need to be acting now and integrating ESG into their finance function to take full advantage of the opportunities. In the immediate future CFOs need to ensure compliance with the existing ESG reporting standards, and create transition plans and related KPIs." - Deloitte

The regulatory environment adds urgency to this shift. Over half of FTSE 350 companies now tie executive pay to ESG metrics, while new frameworks like ISSB and CSRD demand sustainability disclosures that match the precision of financial reporting. As Jerome Lavigne-Delville, Co-lead of the UN Global Compact's CFOs for the SDGs coalition, puts it: "These disclosures should be at least the same quality level of financial information – and you need the CFO on board to get this". Such regulations also support better risk management practices.

By embracing integrated SDG tracking, CFOs can proactively identify sustainability risks that might otherwise harm financial stability. Their expertise in finance, compliance, and data management uniquely positions them to lead this charge, creating robust sustainability frameworks that deliver measurable outcomes.

Finance teams that prioritise audit-ready SDG tracking can unlock long-term growth while gaining a competitive edge in an increasingly ESG-focused market.

FAQs

How can finance teams align SDG metrics with financial KPIs to drive sustainable business strategies?

Finance teams can connect SDG metrics with financial KPIs by first pinpointing which SDGs align most closely with their business activities. From there, they can map these goals to tangible financial and strategic objectives. Establishing clear, measurable targets based on industry benchmarks ensures relevance and accountability.

Using tools like the SDG Impact Evaluation Matrix can show how sustainability initiatives directly tie into financial performance. Regular reviews and updates of these metrics help keep them aligned with changing strategies and global standards. Platforms such as neoeco streamline this process by integrating sustainability data with financial reporting, offering real-time, audit-ready ESG disclosures.

What are the main challenges UK companies face in managing sustainability data, and how can they ensure accurate, audit-ready reporting?

UK companies often face hurdles when dealing with ESG regulations. The complexity of these rules, combined with inconsistent data collection methods and a heavy reliance on manual tools like spreadsheets, can create a breeding ground for errors and inefficiencies. On top of this, businesses must keep up with shifting standards such as ISSB and CSRD, which adds another layer of difficulty.

One way to tackle these challenges is by using automated, integrated platforms. These tools simplify data collection, bring consistency to reporting, and ensure alignment with global frameworks. For instance, solutions like neoeco use AI-powered automation to offer real-time insights. This not only helps finance teams merge sustainability data with financial metrics but also ensures reporting is accurate and audit-ready. By adopting such technology, companies can work more efficiently, minimise mistakes, and stay ahead of ever-changing regulatory requirements.

What are the main differences between the ISSB, CSRD, and GHGP frameworks, and how can finance teams decide which one to use for SDG reporting?

The ISSB (International Sustainability Standards Board) is centred on global climate-related disclosures, with a focus on IFRS S2. This standard emphasises financial materiality while addressing environmental impacts. For organisations operating in Europe, the CSRD (Corporate Sustainability Reporting Directive) outlines detailed ESG standards (ESRS), covering a broad range of environmental, social, and governance topics. On the other hand, the GHGP (Greenhouse Gas Protocol) serves as a widely recognised framework for measuring and reporting greenhouse gas emissions, forming a key foundation for climate-related disclosures.

For finance teams, aligning with the ISSB is ideal for global sustainability and climate reporting, especially when financial materiality takes precedence. The CSRD is better suited for organisations requiring detailed ESG reporting within Europe. Meanwhile, the GHGP is indispensable for precise greenhouse gas accounting and works seamlessly alongside both the ISSB and CSRD frameworks.

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