Sustainable Development Goals and Firm Value: A Review of Literature

Abstract

There is a slow pace in the adoption of sustainable development goals into organizations’ business strategy as a result of the challenges of the interconnections and the fact that some thought pattern view SDGs to be value destroying which is premise on the theory of the firm to maximize wealth for shareholders. This can affect the achievement of sustainable development. With the changing role of business in this era to carry all stakeholders along in order to achieve sustainable development. More attention has been demanded from business to protect the people and the planet which is crucial, hence, the need for cooperation by all organizations is crucial for achieving the agenda 2030. To this end, we examined the role of SDGs in firm value from available literature. This is as a result of the slow adoption of SDGs to reveal whether firm value is affected when SDGs are implemented. We revealed that businesses are to prioritize, measure, monitor and report SDGs for firm value to enhance from these goals. Furthermore, we revealed that the relationship that exists between SDGs and firm value is dependent on the theory underpinning the study and as well as the measures used. The study also revealed that reporting SDGs gives a firm competitive advantage in the light that the firm are perceived to be transparent in their activities in being socially and environmentally responsive. This translates into more market shares which increases the firm value. We recommend that government should make disclosure mandatory. Standard setting bodies should come up with a framework for reporting SDGs and as well as all sustainability disclosures while organizations should report SDGs and view SDGs as value enhancing since it fixes environmental, social and economic issues. When this is adopted, firm value is enhanced.

Keywords: Sustainable Development Goals (SDGs), Firm Value, book-value, market-value, environmental social governance (ESG)