Strategic Roadmap: Setting SMART Sustainability Targets for Organizations
Whether you have been engaging in sustainability programs prior or not, the reality is that sustainability has shifted into the mainstream. Organizations seek to create value for all stakeholders, responding to both internal and external factors while contributing to the triple bottom line. January is an excellent time to set sustainability goals and targets. All organizations have a corporate strategy that stipulates the objectives they wish to achieve within the identified timeframe. According to the Oxford Advanced Learner’s Dictionary, a goal is something you hope to achieve. It is a long-time commitment. For example, the overall goal of sustainability for a typical organization is to make a profit in a socially inclusive and environmentally sustainable way. In this regard, sustainability is a journey of continuous improvement with no destination.
A target, on the other hand, has a quantitative connotation. It is a result you are trying to achieve. For example, we want to achieve zero workplace fatalities in 2024. That’s a target, and it is quantifiable.
How do you go about setting a sustainability target for your organization?
Setting up a committee: Sustainability initiatives or programs often involve cross-collaboration across different organizational units. Thus, setting up a committee for championing the organizations’ sustainability initiatives is a good idea. This committee must have competent employees who understand sustainability science and trends in the industry/sector. Part of this committee’s deliverables is determining the organization’s sustainability targets. The selection of this committee must also be intentional and reflect good diversity to aid in the generation of quality ideas.
Understanding clear corporate vision and mission as regards sustainability: How does the organization connect its corporate vision and mission to sustainability? What does the organization seek to achieve with sustainability initiatives? Is it just a compliance obligation? Or does it seek to create value? These questions require engaging internal and external stakeholders to understand the organization’s vision for sustainability initiatives. A clear understanding of these will determine how SMART the sustainability targets will be. For example, we have had experience with organizations that are just ready to do the minimum required to pass an assessment required by a client. They have no ambition to excel or integrate sustainability beyond passing the assessment. That already limits the scope of any sustainability targets. Also, an organization whose business model is built on sustainability differs from those seeking to integrate a sustainable business model into their operation.
Case in point: Parallelpoint Consult
Our vision at ParallelPoint is to be the preferred world leader for sustainability innovations and solutions. We are committed to achieving this by responsibly supporting institutions through innovation, research, and operational excellence to enable us to create a healthy, productive, and sustainable society.
Leverage on materiality assessment: Sustainability issues are extensive; organizations must conduct a materiality assessment to determine the important issues important to their stakeholders. These allow the organization to be strategic and focused, setting targets for important issues. For instance, a manufacturing organization may consider workplace health and safety a very important social issue, while a financial institution may prioritize corporate governance. These issues can be broadly classified under the ESG framework. Getting good results requires aligning with ESG standards, frameworks, and initiatives to know the topics expected to be disclosed by these standards and investors.
Metrics spotlight: From the material topics, the next thing is to identify the metrics or indicators that can be used to assess performance on those issues. For example, if diversity is a material issue, a good metric will be the ratio of males and females in the workforce. Knowing what the reporting frameworks expect to be disclosed is important in determining these.
For example, the GRI standard on water consumption requires the organization to disclose the following.
- Total water consumed in megaliters in the reporting period
- An explanation of the process for setting any water-related goals and targets that are part of the organization’s approach to managing water.
- Any change in the quantity of water consumed between the previous reporting year and the current reporting year
Determine baseline: A fundamental question is, what are we currently doing? What is our baseline? It is pertinent for the committee to determine the baseline of those metrics for the sustainability material issues. This assessment lets the organization know the current state of things or what has not been done. For instance, before an organization can say it wants to recycle 40% of its waste, it must first understand the waste stream, the quantity of waste generated, and the amount of recyclables there. I mean, is the organization currently sorting the waste? An organization that does not currently sort recyclables may be unable to set a target to recycle 40% of the waste. It is not impossible; it just requires more commitment and resources. Targets should be SMART and contextual.
Okay, let’s continue.
Setting targets: targets for sustainability material issues must be specific, measurable, achievable, realistic and time-bound. The target must be quantifiable, provide the expected outcome in the targeted year, and include a baseline year. For example, if we are to set a target for diversity in the workplace, it goes like this.
- Increase the number of female employees by 10% in 2025 against a 2023 baseline.
This target is SMART as it puts a quantifiable indicator, a target year, expected improvement and the base year. If the number of female employees in 2023 was 20, a total female employee of 22 by 2025 would have met this target.
It is important to note that setting targets for Greenhouse gas emissions reduction needs to follow the best Science available in line with recommendations from the IPCC. This requires working with the Science-based target initiatives (SBTi), an organization that helps an organization set Science-based targets using a robust framework.
A good plan: A goal without a good plan is often said to be just a wish. The committee must come up with a good plan to achieve the targets. The action plans must be localized to specific departments for action. The management must provide the commitment and resources to accomplish the plan.
Periodic performance review: The performance against the target must be reviewed periodically to track if the company is in line with meeting the targets. An important issue is the need to recalibrate and re-strategize if the progress does not indicate acceptable performance. For example, if I have set a target to recycle 40% of waste by the end of the year and my performance review shows we are only recycling about 5% of the waste. Then, the committee can decide to review performance and consider all factors responsible for that outcome. The committee may then choose to reduce the target and communicate accordingly.
Communication: A good target or plan must be well communicated to all stakeholders for practical implementation. Sustainability improvement will happen at the confluence of mindsets, attitudes, and understanding of all parties involved to achieve the desired results. Whatever the target or plan, stakeholder integration is a recipe for success.
At parallelpoint consult, we support organizations through these processes and ensure they get it right once. Integrating and capturing value from sustainability requires an effective and smart strategy. At parallelpoint Consult, we are very strategic, and you can leverage our expertise to develop and implement a sound sustainability management system.