In the world of business, KPIs, milestones, targets, and goals are considered the backbone of progress. You set financial targets, conduct market research, and implement key performance indicators to measure success. But when it comes to sustainability—a term no longer confined to environmentalism but also encompassing social justice and economic equity—many businesses fall short on setting concrete targets.
We have to ask the question. Why?
The immediate assumption we make when we notice these things missing is that companies do not place as much importance on these issues as they do on making money. They believe they can rather get away, year after year, ticking boxes and telling positive stories about their business and hopefully distract their stakeholders from the truth.
So, why should you place as much importance on sustainability targets as you do on budgeting or forecasting? The answer lies in the integral role sustainability plays in corporate responsibility, risk mitigation, and ultimately the creation of long-term profitability and value.
Here’s a 10-point guide to setting and achieving your sustainability goals.
1. Establishment of a measurement and management platform
One of the biggest challenges facing all businesses today is transparency. The adage, ‘what you can’t measure you can’t manage’ holds particularly true to sustainability. Sustainability source data is complex due to it generally being diverse, disorganised, disparate and decentralised, creating a massive challenge for sustainability teams who are responsible for its collection, collation, analysis and communication. It is for this reason that an enterprise sustainability data analytics and reporting platform together with a formal management system that includes mapped processes and procedures, workflow and roles and responsibilities are critical factors for the successful implementation of a world class sustainability roadmap.
2. Establish a Baseline
Before setting targets, you need a baseline to understand where you currently stand. Analyse your current carbon footprint, waste generation, water usage, and social impact. Assessing your baseline provides a factual starting point, against which you will measure your performance by achieving relevant milestones and targets
3. Align with Corporate Goals
Your sustainability targets shouldn’t stand in isolation. They need to be aligned with your broader corporate strategy, objectives, and vision. Whether it’s reducing the carbon footprint by 20% or establishing a more inclusive workforce, your sustainability efforts should amplify your corporate message and reinforce your company’s mission.
4. Utilise SMART Criteria
Many companies are setting quite ambitious targets, however, in order to make your targets realistic it is important to ensure they are Specific, Measurable, Achievable, Relevant, and Time-bound (SMART). This approach ensures that your targets are well-defined and achievable within a defined timeframe. It also makes it easier to monitor progress and make adjustments as needed.
5. Stakeholder Engagement
Involve internal and external stakeholders in the target-setting process. Employees, board members, investors, and even customers can offer valuable insights into what sustainability targets are most critical and achievable.
6. Benchmark Against Industry Standards
One of the best ways to determine if your sustainability targets are ambitious yet realistic is by benchmarking against industry standards or competitors. Consider adopting globally recognised frameworks and standards like the United Nations Sustainable Development Goals (SDGs) to give your targets a universally understood framework.
7. Legal, Regulatory and Compliance
Ensure that your targets comply with existing laws and regulations. Being aware of local, national, and international legislation related to sustainability can save your company from potential legal issues and reputational damage. It is also imperative that your targets are in alignment with industry frameworks and standards. This will ensure your company adheres to best practices set by the relevant authoritative bodies. From a compliance risk perspective, engaging in and implementing a SHERQ integrated risk management system and approach to business management is essential as it underscores the importance of employee welfare, environmental stewardship, and organisational excellence in a very organised and consistent way that the market is familiar with.
8. Assign Responsibility and Resources
A company can have all the systems in the world, however, it’s the personnel managing the system who are accountable for the outcomes and ultimate impact of the strategy. After all, targets without dedicated and responsible personnel and resources are just wishes and dreams. Designate a team or individual to oversee sustainability initiatives and ensure that they have the necessary resources—financial, technological, and human—to be successful.
9. Monitor and Review
Establish clear metrics and KPIs to monitor your sustainability efforts. Regularly review your performance against your targets to identify areas for improvement so you aren’t caught with your pants down. Don’t be afraid to restate your targets if circumstances have changed significantly; flexibility and agility are key in any planning and implementation process.
10. Transparency and Reporting
In an era of heightened corporate scrutiny, transparency is non-negotiable. Make your sustainability targets and progress public through annual reports, dedicated sustainability reports, or online platforms. Open up your results to verification agencies and ensure the achievement of KPIs is validated once achieved. This not only builds trust among stakeholders but also holds the organisation accountable for its commitments and achievements.
11. Bonus Point: Celebrate and Iterate
Achieving a sustainability target is a significant milestone and should be celebrated. However, the work doesn’t stop there. Sustainability is a long-term commitment requiring ongoing effort. Use the knowledge and experience gained from achieving one target to set new, more ambitious targets, after all, this should be a process of continuous improvement which often includes some failure as well.
12. Bonus Point #2: Incentivise Through Executive Bonuses
In most organisations, executive and employee bonuses are tied to key performance indicators like revenue growth, market share, or profitability. However, integrating sustainability targets into this kind of compensation can serve as a powerful motivator for all personnel to buy into a sustainability program and to recalibrate their priorities.
13. Another Bonus Point: Take advantage of Sustainable Finance (including higher ESG ratings)
In the modern economic landscape, sustainable finance has emerged as a cornerstone for forward-thinking businesses. It involves aligning financial strategies and instruments with sustainable development outcomes. By integrating environmental, social, and governance (ESG) performance into financial instruments, companies are able to reduce their cost of debt and get buy-in from their financial stakeholders to pay attention to and achieve their ESG objectives. This not only attracts conscious investors but can also result in preferential lending rates and increased market trust.
14. While we are at it… : Embrace the Circular Economy
Sustainability doesn’t end with achieving a set target; the longer-term vision should involve transitioning to a circular economic model. This can mean closing the loop on waste streams, making the most out of resources, shifting to provide your product as a service and circular supply chains.
Businesses should also prepare for and aspire to implement systemic changes in their businesses. This requires a paradigm shift in how we perceive growth, value, and success and requires businesses to conceive and champion new business models and innovations that reduce ecological impact and promote social welfare.
The Imperative for Sustainability Targets
Every year, you establish a budget and make financial forecasts because you understand that planning is essential for financial growth and stability. The same logic applies to sustainability. However, sustainability planning goes beyond profits. It’s about ensuring that your organisation operates responsibly and ethically, contributes positively to society, and minimises its environmental impact.
So, the next time you sit down for a budget meeting or a forecasting session, table sustainability targets and the drivers to achieve these objectives in your corporate strategy. Ignoring this critical aspect is not just a missed opportunity but also a risk that organisations can no longer afford to take.
