Reporting and goal-setting are inextricably linked, yet at opposite ends of the sustainability process. Rather than starting with past progress, sustainability leaders have realized that greater accomplishments start with a stronger and clearer vision of what the future should look like.
When ambition and action come together, great things can happen. Knowing this, companies that set ambitious goals with concrete targets are receiving more praise and delivering more value to their business. Reporting and goal-setting are inextricably linked, yet at opposite ends of the sustainability process. Rather than starting with the progress of the past, leaders in the sustainability space — including both corporates and their advisors — have realized that greater accomplishments start with a stronger and clearer vision of what the future should look like.
Science-based, multi-stakeholder initiatives such as science-based targets and Future-Fit have helped propel companies towards goals that are rooted in forward-looking realities. This also makes sense from a company standpoint, as well. From my own experience as a consultant working with companies to set sound sustainability goals, I can confirm that those that focus on how things “ought to be” deliver the most bang for the buck.
I caught up with Kristina Joss, Executive Director at UK-based sustainability consultancy SalterBaxter, to hear more about her view on sustainability goals. Her answers were an excellent intro to the more detailed thought leadership piece the firm recently published on the subject.
What’s wrong with many of the sustainability goals we see today?
Kristina Joss: Corporate sustainability targets have traditionally been driven by reporting frameworks with an emphasis on disclosure and year-on-year progress, much like financial metrics. These will no doubt remain important, especially as investors look for greater harmonization in sustainability reporting in order to apply it to business valuation. However, the sustainability landscape has evolved significantly in the last decade and the risks of inadequate action are growing. This means the conventional targets we have seen to date are no longer enough to drive the transformational change required, and a new generation of goals are emerging that are more ambitious and strategic for today’s business environment.
What kinds of goals are better and why?
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KJ: Sustainability goals should focus less on where things are today and more on how we want things to be. With this in mind, there are two core characteristics for better sustainability goals.
The first is focus — which sounds obvious, but too often companies overlook the importance of ensuring the goal is focused on where they can have the greatest influence and where the company’s impacts are the greatest. Sustainability goals should be strategically relevant to the company with careful attention to its products and services. One example is DuPont’s goal for doubling investment in R&D programs that have direct, quantifiable environmental benefits for customers and consumers, with a target for introducing a 1,000 new products related to safety.
The second is driving transformation, both inside and outside the business. Traditional sustainability goals have been very inward-looking. Today’s sustainability leaders are developing goals that deliver significant breakthroughs in the business, lead systems change across the value chain and influence wider ecosystems on cross-sector issues. H&M really broke the mold by addressing a longstanding challenge for the apparel industry when it created a goal that focuses on changing behaviors across the value chain to align with the company’s broader sustainability goals.
How is the new generation of corporate sustainability goals similar to corporate strategy goals? What are some examples?
KJ: Sustainability goals should really be more useful for companies themselves rather than trying to appeal to external stakeholders. Much like corporate business goals, they should allow companies to manage risks and opportunities unique to their sector and business, with clear links to commercial and strategic value. This could include goals that respond to future customer demand, the long-term value of assets, or even the growth of your product portfolio. They will still drive the reductions and progress traditional targets have sought to achieve, but will also incite the right type of action in and out of the business and deliver better returns on investment.
A great example of a company using sustainability as a business drive is Ford. Its goal for delivering its Smart Mobility Plan focuses on leveraging emerging opportunities in mobility to drive up transactions and market share, while also accelerating the transition to a more sustainable business model.
If the next generation of goals should drive transformation that is anchored first and foremost on sales and growth, how does this link back to sustainability?
KJ: Sustainability and business growth are not mutually exclusive. It is this belief that is driving the next generation of sustainability goals, and many of the transformational changes and leadership we see in the space today. As a result, there are some really powerful examples out there that demonstrate how business growth and innovation can drive sustainable change and vice versa. Our biggest challenge is not in making this possible, but convincing people that it is, and that it is critical for the long-term transformation the world needs.
What are a some of the most inspiring goals you’ve seen and why?
KJ: The goals that I find inspiring are the ones that really think outside the box and/or leverage a company’s influence for systems change. For example, Alpro has partnered with WWF to develop science-based targets for nature; and ING is the first bank to commit to steering its lending portfolio towards science-based goals. Another unique example is Danone’s goal for employee engagement on sustainability: To deepen an “ownership mindset,” Danone will grant one Danone share — in combination with an annual amplified, dividend-based incentive scheme — to each of its employees. Finally, Target’s recently announced goal of having 80 percent of its suppliers set science-based reduction targets on scope 1 and 2 emissions by 2023 is very impressive in its focus on influencing the system beyond their four walls.