For the last 5 years, my firm has tracked the sustainability goals of the world’s largest companies. These thousands of targets commit multinationals to do many important things, such as slashing carbon emissions in half (or to zero) or bringing the percentage of women in management up dramatically. The project, managed in part by my colleague Jeff Gowdy, keeps the public and free website www.pivotgoals.com humming.
For now, we focus on the world’s largest 200 companies (from the Fortune Global 500), pulling the goals primarily from sustainability reports. We and our researchers categorize the targets in multiple ways, including by 29 topic areas and by value chain stage. And we try to capture goals that are specific, rather than intentional statements (such as “we want to reduce our energy use”).
After half a decade, it’s a good time to step back and see if, and how, the goals have evolved. At the recent New Metrics '17 event, I took a few minutes on stage to share some of what we’ve learned.
1. More companies are setting goals … and companies are setting more goals
Out of that shifting group of 200 giant corporations — a list that doesn’t turnover as fast as you’d think — the number of companies with public, specific targets has risen from 155 (77 percent) to 188 (94 percent). So, almost every large company now has some form of sustainability report and goals to match. That’s a big victory for the sustainable business movement. The total number of goals in the database — counting only those that are forward-looking (i.e., from 2017 and beyond today) — has risen from 1,300 five years ago to more than 2,000 today (FYI, the website has close to 4,000 today. We've kept the 2015/2016 goals in for now for benchmarking purposes; many companies got serious with their 2015 goals.).
2. Companies are setting more goals in newer categories, especially on the social side
Everything you ever wanted to know about setting ESG goals — and achieving them
Learn more from keynote speaker Jeff Gowdy, as he takes us through an in-depth review of ESG target-setting — on November 18 at New Metrics '19.
A majority of companies cover the basics on footprint — climate, energy, water and waste — and those categories have remained popular (see chart). But the growth in some other categories is intriguing and indicative of a shift in thinking. For example, there are now many more goals focused on renewable energy, including dozens of large companies with 100 percent renewable-energy targets.
But we see an even bigger change on the social side. Look at the rise in specific targets on community (philanthropy, societal health and wellbeing, etc.), or at the targets about employees (engagement, health and many other areas). In both of these categories, we’ve seen a rapid increase from a fraction of companies to about half. And organizations are committing in entirely new categories focused on women and human rights. One caveat: It’s possible that our goal-categorization process has gotten more sophisticated and "woke"... but I doubt that entirely explains what we see in the data. It's also not new for companies to work on these issues — what’s changed is establishing specific, public, numeric targets in areas that can be hard to measure.
It’s not just the categories that have changed — the goals are more ambitious, as well. As a simple proxy for a quantitative analysis of the targets, I did a text search, looking for appearances of the words zero, all or 100 percent. Goals with this language are generally more aggressive and in keeping with environmental and moral thresholds. In 2012, the goals included 126 mentions of these more extreme words. By 2017, the number was up to 350 (and on this point of counting words — again, broader goals showed up more frequently. The words diversity/inclusion and women appeared exactly zero times in our 2012 data. Today, there are 19 mentions of the former and 55 of the latter). I'm sure that these numbers will continue to rise.
4. The number of science-based (or science-equivalent) targets has risen
This is where things get a bit trickier to measure. Jeff and I add some analysis behind the scenes to assess every goal on how well it aligns with an external threshold (driven by science or morals). For example, there are solid estimates on how fast it needs to decarbonize, including analysis by PwC that the world must reduce carbon intensity in the global economy by more than 6 percent per year. Thus, if a goal commits the company to reduce at that pace, we call it “science-equivalent,” regardless of whether the company explicitly said it’s tying the goals to science. In my mind, the level of ambition, and the actual outcomes, are what matter.
For 17 of our 29 goal categories, we look for language that demonstrates threshold and contextual thinking (e.g., on water, does the goal talk about “water-stressed” areas or water replenishment), or keeps to moral/human standards (e.g., zero fatalities or zero human rights violations). We also refer to the Future-Fit benchmarks for guidance. For ease of communication, we call these all “science-based.”
By and large, we’re generous on what’s in or out. We give the benefit of the doubt on some goals, especially big, aspirational targets without specific, public deadlines. Given all those caveats, I can say that the number of science-based goals has risen. In 2012, about 20 percent of the goals in the eligible categories qualified, while today it’s 33 percent. We may never see 100 percent science- or context-based goals, but a majority would be good. After all, science-based goals should be the minimum standard, not a stretch target.
So, that’s where we are on goals. As with all things in corporate sustainability, we’re both moving fast and not fast enough. So, let’s all keep the pressure on companies as internal and external influencers. We now have great examples of visionary leadership. Let’s build on it.