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Insights 5 Jun 2017

Value Creation through Goal Setting

By Rebecca O'Neill

Companies are pursuing increasingly ambitious sustainability goals. There are a range of frameworks to help guide them in their goal setting, however, on the whole, the targets set by companies are not in line with what’s necessary to resolve our collective sustainability challenges.

SustainAbility’s new research will provide practical guidance to help companies set, track and integrate high-impact sustainability goals.

Company leaders are increasingly recognizing the business value that arises from tackling environmental challenges through goal setting, when shown sustainability and business performance.

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The private sector has seen a maturation of approaches to corporate sustainability goals over the past several decades. There has been progress towards a focus on impact (e.g., number of people benefited) vs. process (e.g., set a policy). We’ve also seen a general transition from relative (e.g., 15% less water used per unit) to absolute (e.g., zero waste) to net positive goals (e.g., create more forest than is used).

The focus on impact and on ambition has led to a shift from incremental (e.g., reduce emissions by 2% per year) goals to more transformational and context-based (e.g., science-based target for emissions reduction) goals – i.e. aiming for what is necessary for a sustainable economy.

SustainAbility has actively encouraged companies to set high-impact goals – those that drive positive social, environmental or economic value and business value, where their ambitions are high enough to meet  the sustainability challenges.

What is driving this evolution?

There is growing public sector, stakeholder and investor interest in quantifying business contributions towards achieving progress on sustainable development challenges. The 2017 GlobeScan and SustainAbility Survey of sustainability experts identifies, company performance on goals as one of the top two attributes to be considered a sustainability leader, specifically the company’s ability to define ambitious targets and motivate achievement against them. In addition, company leaders are increasingly recognizing the business value that arises from tackling those challenges, when shown sustainability and business performance.

We are seeing growth of goals that align with the core business, have senior leadership buy-in and support, and aim to achieve the highest possible impact with the greatest possible efficiency.

No shortage of frameworks

There is also a growing list of frameworks that provide both structure and ambition for companies to consider in their goal setting. There are expectations for companies to actively contribute to the Sustainable Development Goals (SDGs), a set of 2030 goals to support a new sustainable development agenda. Future-Fit Goals define the environmental and social break-even points for business: the do no harm thresholds that any company must eventually reach, no matter what its size or sector, to participate in creating a flourishing and sustainable future for all. Science-based climate targets are greenhouse gas emission reduction goals in line with the level of decarbonization required to keep global temperature increase below 2 degrees Celsius compared to pre-industrial temperatures.

El Nino, Data 2015. Science-based climate targets set the level of decarbonization required to keep global temperature increase below 2 degrees Celsius compared to pre-industrial temperatures.

Why haven’t we progressed further by now?

Despite the limited  progress we have seen, the landscape of corporate commitments and action is still not where it needs to be if we are to avert climate change, reduce inequality and address the plethora of other sustainability challenges. One common barrier we hear from our conversations with companies is related to impact measurement – we have seen advances in metrics across all issue areas, but many companies still struggle to not only define the “right” metrics for their goals but also to track their company’s specific impact with confidence.

Despite the limited progress we have seen, the landscape of corporate commitments and action is still not where it needs to be if we are to avert climate change or reduce inequality.

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Another barrier we’ve seen is cultural. Businesses often choose to share goals internally with employees first and then publish them for external stakeholders. Many companies remain reluctant to make goals – especially more substantive and/or longer term ones – public for fear of retribution if the goals are not achieved. However, transparency around goals is necessary to enable accountability in aspiration and performance.

High-Impact Goal Research

SustainAbility is undertaking a research project that explores high-impact corporate sustainability goals. The research will identify lessons learned from a wide range of company examples to understand what has worked well and what has not when setting high-impact goals. We will provide practical guidance on how companies can increase business and societal value by setting, tracking and disclosing against goals.

Some questions we are considering are:

  1. What is the current landscape of goals? How are companies defining value and impact?
  2. What is the overarching value of setting goals? Do different types of goals have different relative business value?
  3. What types of goals drive impact and which ones don’t? Do different types of goals generate impact in different ways?
  4. How do you design goals that drive impact?
  5. How have those who have aligned their sustainability goals with their corporate strategy benefited from this integration?
  6. How are different drivers moving goal setting forward? What are key barriers and opportunities in goal setting?
  7. What are best practices in transparency on high-impact goals and progress against them?
  8. What are the risks of not achieving a goal? To what extent can these risks be mitigated through transparency?

The research project will run through to the end of the year, when we will publish the outputs on our website.

The Engaging Stakeholders Network

The research is part of SustainAbility’s Engaging Stakeholders Network 2017 program. Engaging Stakeholders is a global network of leading companies who believe that transparency drives performance – members include Ford, Novo Nordisk, Adobe, Shell and many other major brands.

SustainAbility is hosting two workshops to discuss the research findings and the broader theme of value creation through goal setting. The workshops are invitation only, for members of the Network or for those companies interested in joining the Network.

  • The US Workshop will be hosted by Johnson & Johnson at their New Brunswick, NJ Headquarters on October 11-12. Learn more.
  • The European Workshop will be hosted by Barclays at their London Headquarters on November 15-16. Learn more.

If you would like to learn more about the Engaging Stakeholders Network, the 2017 research project or the workshops, please email stakeholders@sustainability.com.

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