Making it real: Will Norway's taxonomy unlock the SDGs?

The UN's Sustainable Development Goals (SDGs) represent a blueprint for global sustainability. Every member state of the UN has promised to work to achieve these goals by 2030. But what would it take to deliver on these promises at the local level?

• Norway has developed a taxonomy for SDG indicators for local and national governments.
• The taxonomy makes it easier for decision-makers to monitor and understand their progress on the SDGs and ESG goals.
• The taxonomy is broadly applicable to different markets and could be a very valuable tool for private sector players.

The SDGs are inspiring. They are actionable. Moreover, they are universally recognized. They are also hugely complicated; there are 17 Goals, 169 Targets and more than 230 different indicators associated with the SDGs - most focused on monitoring data at a national level.

For sub-national governments like municipalities, this can be a challenge. “Many of the SDG indicators are national indicators that cannot be easily disaggregated to a local level,” noted Anne Romsaas, Chief Advisor for SDGs at the Norwegian Association of Local and Regional Authorities (better known as KS). “But if we want to make great progress on the SDGs, we need data that can really inform decision-making at a local level. We need indicators with local relevance.”

When the municipality of Asker, just South of Oslo in Norway, was amalgamated through the merger of three smaller municipalities in 2020, municipal leaders took a global leadership role by using the SDGs as the framework for the new municipality. The municipal master plan was aligned to the 17 SDGs and the SDG principles were safeguarded within the municipality's operational objectives. However, the municipal leadership team quickly found that they needed better ways of measuring sustainability.

“As we talked with other municipalities, we realized that everyone was looking for the same thing - some sort of a model or taxonomy that could help municipalities measure their ESG and SDG activities,” said Geir Graff, Portfolio Manager for Strategic Projects for Asker municipality. “There are lots of municipalities doing great work, they just don't know how to measure it.”

Over the next two years KS funded a project to develop a taxonomy, with Statistics Norway, Asker municipality and a number of other Norwegian municipalities, regions and stakeholders. “We wanted to develop a system and methodology that would fit everyone, regardless of their size. We wanted to make it easy to use, and we wanted it to be easily applicable to the local context,” added Anne Romsaas at KS.

The taxonomy was officially launched in March 2022. It had already been applied in 2021 to run a voluntary sub-national review of the municipal sector to assess how they were performing against the SDGs. The data was presented to the UN, along with the taxonomy, in the summer. Not surprisingly, it was extraordinarily well received.

The taxonomy allows municipalities to manage a range of SDG and ESG-related issues. At the resource level, it provides all municipalities — regardless of size or resources — the tools to quickly and easily find and understand the key performance indicators most important to them. Resource constraints have been a significant barrier to most municipalities. The taxonomy and accompanying tools remove that barrier.

At the strategic level, the taxonomy helps decision-makers find indicators that measure the impacts and outcomes of their decisions, thereby providing them with the data and insights they need to influence policy making and investment. “We're trying to make decision-making more knowledge-based by giving leaders the tools they need to actually do something about sustainability at the local level,” noted Anne Romsaas.

Moreover, the taxonomy also helps drive public-private partnerships and enables greater investment into new sustainable infrastructure and technologies. The voluntary local review for the municipalities in Møre and Romsdal County, for example, found that water leakage was a major problem for those municipalities and was contributing not only to financial losses, but also to a lack of progress on SDG 6 (Clean water and sanitation for all). That gave the municipalities the data they needed to engage with the private sector to help solve the problem.

“We want to be able to foster more partnerships with the private sector, more innovation, more technology and more businesses because we understand that there is a lot of potential for value creation in the sustainability field. But first we need good data about what the needs are and what we are trying to achieve,” said Geir Graff at Asker.

The toolset has already started to grow and evolve. A group of students at the Trondheim Sustainability Center together with the Norwegian University of Science and Technology (NTNU) have created an ontology — essentially a dynamic map — to help decision-makers understand the relationships between the various SDGs and the indices within the taxonomy.

A partnership with Microsoft using the Norwegian public sector open data portal led to implementing the taxonomy as a metadata solution. What that means is that developers can now start making tools that map the SDGs to key business processes and solutions. Using metadata, for example, a municipality can map the SDGs to their accounting system to see exactly where their money is going.

“The metadata allows us to make connections between data sets that were not possible before. Now we have vendors developing systems that map the SDGs to HR solutions, accounting systems and budgeting systems, for example,” noted Asker's Geir Graff.

Perhaps the most exciting thing about the new taxonomy is the interest it has been getting from outside the municipal sector. The taxonomy was purpose-built to be highly adaptable and ownership agnostic. As such, it is seen as a valuable tool to help both public and private sector players plan, execute and measure their ESG and SDG activities.

“Many private sector players have the same questions as municipalities - what should I be doing and how can I measure my activities? The ESG focus may be a bit different in the private sector, but the same taxonomy is broadly applicable,” argues Geir Graff. “Greater adoption by the private sector would also create more opportunities for partnership between government and businesses.”

Those in the infrastructure sector might be particularly interested in exploring the new taxonomy. As ESG becomes increasingly influential in the financing, bidding and development process, infrastructure players will come under increasing pressure to report on their ESG impacts and activities. Taxonomies like this one may help.

As Geir Graff at Asker noted, the aim of the taxonomy is to provide decision-makers with the insights they need to address the SDGs. “If we don't act at a local level, we will never see progress at the national or global level,” he argued. “This is all about actively supporting sustainable leadership so that we can all push forward in the right direction together.”

For her part, Anne Romsaas hopes the project will catalyze more radical change in the world. “Locally, regionally, nationally and globally, we need to bring about a transformative shift in the way we use our resources. We need to start seeing the interconnections between the three dimensions of sustainability. And we need to start creating policies that address these interconnections. It's going to take transformation and innovation to achieve our 2030 SDG goals. I think this taxonomy provides the language of this transformation.”