This Framework sets out the theory of transformational governance and how it is underpinned by the targets and tenets of SDG 16: peace, justice and strong institutions.
Transformational governance is a principles-based philosophy — not a new legal concept — that calls on businesses to be more accountable, ethical, inclusive and transparent as a driver to responsible conduct, enhanced ESG performance and strengthened public institutions, laws and systems. This means fostering a culture of integrity, fairness and inclusion beyond legal formality — asking not just what is legal but what is right.
Understanding the “G” in ESG
With the increasing overlap and urgency on environmental, social and governance (ESG) issues, transformational governance is a prism through which businesses can expand their understanding of the “G” in ESG. It demonstrates how businesses can assess and implement SDG 16 through three interrelated dimensions:
- Conventional governance: broadening the traditional notion of corporate governance to include board and management oversight, values and culture, strategies, policies, operations and relationships.
- Sustainable governance: strengthening governance with respect to managing environmental and social risks and opportunities.
- Global governance: inspiring business to contribute responsibly to public institutions, laws and systems at the international, national and municipal levels.
Businesses are encouraged to engage holistically across this spectrum of transformational governance, moving beyond compliance to become advocates of the principles of peace, justice and strong institutions.
Why Business Should Take Action
Of the 17 Sustainable Development Goals, SDG 16 is the least understood by business but arguably the most consequential to business. Responsible businesses want to operate and serve in communities where there are institutions, laws and systems that protect their rights and the rights of the individuals they employ and serve. At the same time, they recognize the need for their own values, strategies, policies and relationships to support them in respecting people, planet and prosperity. By supporting the central tenets of SDG 16, they foster more sustainable, inclusive and stable societies.
Business is also increasingly being compelled to act on unconventional issues chiefly due to rising expectations from:
- Consumers calling on business to be responsible societal actors, including by delivering goods or services that do not harm people or planet and by speaking out on social issues that affect the communities they serve
- Investors, including institutional investors, sovereign funds managers and others, who develop and/or use indices that include ESG factors to determine which companies to invest in and, in some cases, to take action against those that have underperformed
- Governments and regulators are increasingly introducing directives or legislation on ESG issues and increasingly enforcing such instruments
- Employees and prospective employees aligned with certain values, culture and commitments in order to increase attraction to, and decrease attrition from, the business
These expectations raise the bar for business to adopt an ethical and values-based approach to culture, governance and leadership, resulting in greater shared value for the business, employees, investors, consumers and communities.
How to Use this Framework
The Framework presents the what, why and, most importantly, how of transformational governance through guidance and examples for each target of SDG 16. While the principal responsibility for achieving these targets rests with Governments, business has an important role to play in strengthening its internal and external activities consistent with corporate purpose and stakeholder capitalism.
The Framework is a tool for businesses to embrace transformational governance. It does not aim to create new commitments or standards but to:
- Deepen understanding of the targets of SDG 16
- Strengthen cross-functional engagement across these targets
- Encourage businesses to assess where they are on the transformational governance journey and to identify opportunities for improvements
- Incorporate into board and management oversight, values and culture, strategies, policies, operations and relationships
Who Should Use this Framework
The Framework is intended for all businesses to embrace transformational governance to strengthen performance and partnerships — as a complement to, not a substitute for, Government action. While the themes of the Framework impact all businesses, they will understandably engage at varying levels of maturity and across various functions, from legal/compliance to Government affairs to sustainability — depending on their size, scope and resources. Investors are a parallel audience to business. The Framework also aims to inform Governments, the multilateral system and civil society on how to better engage with responsible businesses to advance peace, justice and strong institutions.
How to Read Each Target
The Framework covers each of the targets of SDG 16: 10 targets and two targets representing means of implementation (meaning that these targets are considered foundational to the realization of all the targets under this Goal). Each target has been interpreted in spirit rather than in literal meaning to highlight the relevance and application in a business context.
Each target section includes:
- What the target means for business
- How business should implement the target
- Ways that business can take action internally and externally
- Examples of individual and collective business action
- A mapping of the target against industries and intersections*
Ways Business Can Take Action
The guidance presented in the Framework builds upon international standards for responsible business, including the Ten Principles and the UNGPs, among others.
Businesses are encouraged to integrate the underlying values and principles of transformational governance — to be accountable, ethical, inclusive and transparent — in their internal and external activities, including throughout their supply chains.
Some ways business can internally advance SDG 16:
- Values and culture
- Board, committee and management composition and oversight
- Education, employment and training
- Policies and processes including ethics and compliance programmes
- Contract provision, due diligence and grievance mechanisms
- Risk management and reporting
Some ways business can externally advance SDG 16:
- Advocacy including lobbying
- Policy engagement
- Capacity building
- Collective action and partnerships
- Supporting Government monitoring and reporting
What are the Sustainable Development Goals (SDGs)?
In September 2015, all 193 Member States of the United Nations adopted a plan for achieving a better future for all — laying out a path over the next 15 years to end extreme poverty, fight inequality and injustice, and protect our planet. At the heart of “Agenda 2030” are the 17 Sustainable Development Goals (SDGs) which clearly define the world we want — applying to all nations and leaving no one behind.
What is SDG 16?
SDG 16 sets out to promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels. This goal includes 12 targets covering the themes of peace, justice and strong institutions.
What is SDG 16+?
The concept of SDG16+ has been implemented by Pathfinders, which is a group of 38 UN Member States, international organizations, global partnerships, civil society and the private sector, working to accelerate action to implement the targets for peace, justice and inclusion across all of the SDGs. SDG 16+ acknowledges that SDG 16 is foundational to sustainable development and that targets across the 17 SDGs contribute to peaceful, just and inclusive societies.
What is a principles-based approach?
Corporate sustainability starts with a company’s value system and a principles-based approach to doing business. This means operating in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption (the Ten Principles of the UN Global Compact). Contributing to the SDGs is neither a substitute for, nor unrelated to, implementation of these principles. Implementing the Ten Principles is itself a key contribution to the realization of the SDGs, and a vehicle for achieving the SDGs’ broader vision of peaceful and inclusive societies.
The Roadmap to the Framework
The Framework was developed through the work of the UN Global Compact Action Platform for Peace, Justice and Strong Institutions, launched in September 2018.
It was informed by interviews with more than 60 business leaders that led to commitments made by over 1,300 Chief Executive Officers from more than 100 countries in A Statement from Business Leaders for Renewed Global Cooperation, presented to the UN Secretary-General on the 75th anniversary of the United Nations. This Statement highlighted that good governance is the foundation of good business, with Chief Executives recognizing that “peace, justice and strong institutions are beneficial to the long-term viability of our organizations and are fundamental to upholding the Ten Principles of the United Nations Global Compact and achieving the Sustainable Development Goals”.
In order to explore the themes of peace, justice and strong institutions within a national and regional context, a series of 14 country consultations were held with representatives from business, Global Compact Local Networks, civil society, Government and academia in attendance.
The country consultation global synthesis report, "Advancing Business Understanding of Peace, Justice and Strong Institutions" and individual country reports summarize the key findings.
Country Consultation Global Synthesis Report
2021 and Beyond
This Framework is only the beginning of a journey encouraging businesses to adopt a more expansive approach to the "G" in ESG through SDG 16. From 2021 onwards, the UN Global Compact will focus on the dissemination and operationalization of the Framework and the philosophy of transformational governance, working towards more practical guidance for implementation. Two task forces will be established comprising businesses and our Global Compact Local Networks respectively to guide internal corporate engagement and national-level policy dialogues. This work is a priority focus of the UN Global Compact 2023 Strategy.
Michelle Breslauer, Senior Manager, Governance & Peace, United Nations Global Compact