How General Mills, McDonalds and Kering are setting credible, courageous sustainability goals
Corporate adoption of science-driven sustainability targets is gaining momentum, as companies seek to align their strategies more specifically with the ambitious greenhouse gas emissions reductions needed to avoid global temperature increases of more than 2 degrees Celsius.
In a recent GreenBiz webcast, a panel of experts — including strategists from General MIlls, Kering and McDonald's — explained why going big on sustainability goals is increasingly a smart business strategy, as well as a good stewardship policy. They discussed the intersection of today’s major frameworks, such as science-driven goal setting, the Science-Based Targets initiative (SBTI), planetary boundaries, Sustainable Development Goals, and more, and provided concrete business cases from several organizations on how they are conducting this transition.
Jon Dettling, global director of services and innovation at sustainability consultancy Quantis, kicked off the discussion. Dettling observed that companies are increasingly adopting science-based goal setting, an approach that aligns a business’ sustainability strategy with environmental science.
From SMART to SMARTER
Many people are familiar with the guidance to set SMART goals (the acronym stands for Specific, Measurable, Attainable, Relevant and Time-based.) Dettling argued that in order to tackle the most pressing issues of our time, the corporate world must shift instead to SMARTER goals. Here are those characteristics:
- Moving the pack
- Reaching out
Dettling asserted that meaningful sustainability goals are not just about individual companies but also all the other partners with whom they work. Sustainability leaders use the best science available to guide them in setting their goals. When it comes to climate change, this means tackling a company’s entire value chain and incorporating Scope 3 emissions (PDF) into sustainability strategies. Quantis worked with the World Resources Institute to develop a Scope 3 Evaluator to help companies get started.
What’s important is not just where the leaders end up, Dettling said, but where the middle of the pack ends up. Good leaders understand that planetary health is not a competition. For this reason, leading companies are moving away from benchmarking, which positions companies compared to what others are doing, to assessing what the planet can support and defining their objectives consequently.
This leads to what may be the most surprising change in the translation from SMART goals to SMARTER goals: The former advocated for attainable goals, but Dettling said that’s the wrong focus. Goals should instead be ambitious, and use planetary needs as the point of departure, he said. It is then a leader’s job to figure out how to achieve those goals. Dettling advised, "Remember to downgrade achievability and upgrade what needs to happen."
The Scope 3 imperative
Jeff Hanratty, applied sustainability manager at General Mills, discussed his company’s efforts at setting science-based targets. He noted that 50 percent of General Mills’ environmental impact falls outside of the company’s direct footprint, and that the company realized it had to expand out to include scope 3 emissions in its reduction efforts. Given that the "lion’s share" of General Mills’ value chain is in agriculture, Hanratty said, the company extended its focus to food chain resilience.
By way of example, Hanratty explained that General Mills ships Häagen-Dazs ice cream all around the world, and that much of it is made in France. He expected to find that the food miles associated with long-range transportation were a problem, but it turned out that the dairy cows’ carbon footprint had the biggest impact in that value chain.
General Mills ultimately set a science-based greenhouse gas reduction target of 50 to 70 percent by 2050. Hanratty said the announcement brought a lot of press, and turned it into a leadership play for the company. He further emphasized that the goal is absolute, such that any future growth at General Mills will need to be at least carbon neutral, and likely carbon negative.
Michael Beutler, director of sustainability operations at Kering, supported the need for companies to address their full value chain. While Kering’s end products are Gucci couture and Pomellato jewelry, Beutler pointed out that clothing comes from agriculture and jewelry comes from mining. Most of Kering’s supply chain consists of business partners that form a necessary part of sustainability goals.
In order to address its full value chain, Kering uses Natural Capital Accounting that includes an Environmental Profit and Loss (EP&L) calculation. The company’s science-based target is to achieve a 50 percent reduction in Scope 1 through 3 greenhouse gas emissions by 2025.
Rachael Sherman, director of global sustainability at McDonald’s, said that the company serves the equivalent of 1 percent of the world’s population every day, and thus seeks to use its scale for good. After evaluating its impacts, McDonald’s determined its priorities to be families, beef sustainability, packaging and recycling, and investing in its people. Sherman described climate stewardship as a foundational goal that ties all of these together.
McDonald’s announced its first science-based target this year, covering restaurants, offices and supply chain. The commitment covers franchisees, which account for the bulk of McDonald’s-branded restaurants. Sherman observed that McDonald’s produces no goods, so it can only achieve its goal by working with supply chain partners.
General Mills’ Hanratty observed, "It’s scary to share a goal with someone, and in the same sentence tell them you’re not sure how you’re going to achieve it. But this is science. We didn’t pull it out of the air, it’s what Mother Nature needs from us."
Scientific understanding and data evolve and can be relatively fluid, and that means targets must be as well, he added. McDonald’s Sherman agreed, noting that once people understand the concept, they are much more comfortable with these targets.
Sherman also noted the importance of checking for an SBTI-approved sectoral decarbonization approach when setting corporate goals.
The panelists discussed how sustainability champions can create engagement and earn C-Suite buy-in for a science-driven sustainability strategy. Hanratty quoted the adage, "Never let a good environmental crisis pass," saying it still rings true. He advised people to look at the business impacts of climate change.
For instance, a few winters ago, General Mills lost about 60 plant operation days due to extreme weather, which was unprecedented. "Use those words. Draw the connection. Break it down to help the business folks understand the impact," Hanratty suggested.
Editor's note: This story was updated May 31, 2018, to clarify the McDonald's sustainability priorities.