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Study:
Setting Sustainability Goals Can Improve Financial and Environmental Performance

Companies that set tangible sustainability goals do a better job of improving both their financial and environmental performance, according to a new white paper by CH2M HILL, a global consulting, design, construction and operations firm.

Sustainability Goals That Make an Impact focuses on the link between sustainability goal-setting, environmental and financial performance, and stakeholder recognition, making the case for setting more tangible goals.

CH2M HILL conducted research in 2012 and 2013, using its proprietary benchmarking methodology that includes analysis of publicly available sustainability and financial data, third-party analysis and rankings, along with interviews with sustainability executives from client organizations.

“Our research shows companies that set measurable sustainability goals and align them with their business processes, strategic priorities, and staff compensation models were not only more effective in improving environmental performance but also sent a strong, positive message to their stakeholders,” said Dr. Veli Ivanova, CH2M HILL’s Global Sustainability Practice Director.

The paper’s findings include the following recommendations:

Companies should set multi-year, organization-wide goals. As sustainable development requires long-term thinking, multi-year goals, combined with annual targets and milestones, most effectively drive performance. In the most sophisticated companies, a goal leader supported by multi-disciplinary teams manages each corporate sustainability goal.

Robust, business-focused progress monitoring processes are critical. Sustainability leaders who employ robust processes to help set, monitor and track progress, with regular reporting to executive leadership, are more successful in making sustainability a top agenda item for their boards. An increasing number of companies tie executive compensation to sustainability goals.

Stakeholders should be involved in goal setting. The goal-setting process brings most business value when it involves a broad group of stakeholders. Internal stakeholders will be responsible for achieving the goals and more aligned with them if involved in the process. Fully engaged external stakeholders help calibrate goals, may be more aware of socio-economic trends and can help improve corporate reputation.

The CH2M HILL research supports a growing movement that emphasizes the importance of context in sustainability goal-setting and reporting, and the need for what Andrew Winston is calling a "big pivot" in the way companies approach business — reversing the traditional tendency to focus on short-term earnings and then tackle environmental or social challenges if there's time or enough stakeholder demand. Companies also are beginning to appreciate the importance of setting science-based goals, such as aligning greenhouse gas reduction efforts with the amount that science dictates is necessary to make an impact.

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