How to maximize the impact of corporate sustainability goals
This is part 1 of a 6-part series revealing findings from SustainAbility’s recent report, "Targeting Value," which focuses on how to maximize impact through corporate sustainability goal setting. Part 2 addresses corporate sustainability goals around water stewardship.
While there has been a substantial improvement in high-impact sustainability goal-setting by companies over the past decade, this activity has been limited to a small block of leading companies. Even those leaders have more to learn and apply, leading to the question: is current best practice producing ambitious enough goals to meet current and future sustainability challenges?
The right approach to setting corporate sustainability goals depends on company culture, where the company is on its sustainability journey, the context of the issue targeted and many other factors, explained in SustainAbility’s newest report, "Targeting Value."
Setting and tracking progress on goals is critical to being a sustainability leader, as noted in our 2017 GlobeScan-SustainAbility Survey of sustainability experts, which identifies company performance on goals as one of the top two attributes experts consider when judging sustainability leadership. However, through our initial research, we found that sustainability goals don’t always create business value and sustainability impact.
As a result, we decided to explore: How can we ensure that goals do create value for the business and drive impact on environmental and social issues?
Maximizing value and impact
Our research interviewing over 20 corporate practitioners, NGOs and thought leaders, surveying 16 companies and creating a database of sustainability goals from 65 Fortune 500 companies (the biggest from the food, energy and finance sectors) revealed important lessons to apply and pitfalls to avoid when designing high-impact goals. This enabled us to develop a clear set of current best practices, which include the following eight key steps:
Start with material issues
Setting goals around material issues ensures that the goal is tied to the core business. When asked which goal attributes successfully generate business, social, environmental or economic value, "material" was the top response in our survey of 16 companies.
Understand the context
The best practice today is to first identify the ultimate end goal for the system challenge, in other words, what is necessary to achieve sustainability on that issue. Once the ultimate end goal for the system challenge is clear, a company needs to determine what that context means for the organization and the goal it is setting.
The goals that create the most value are generally those embedded into and across the business, not those owned solely by corporate sustainability teams. Engaging with the right decision-makers across the company is essential to building buy-in on the goal and accessing the expertise to design and pursue it. Finding the right internal partners is also crucial for driving accountability throughout the business.
Stretching themselves can prove challenging for many companies, but the research illuminates the importance of aspirational vision to setting goals that create impact. Of course, what is considered ambitious varies depending on the specifics — the issue, the company, the scope, the deadline and other factors. Companies hesitant to set ambitious goals could start by defining just one issue area where they want to excel and build from there; it’s acceptable for a company’s goals to range in ambition level.
Develop theory of change
The best goals are supported by a clear theory of change. To develop a theory of change, sustainability teams need to work with business partners to explore what ultimate impact the company needs to make to play its part in addressing the issue and what levers the company can influence directly or indirectly to bring about that result. For example, can the company influence policymakers? Are there legal courses of action? Is the company large enough in scale to shift the market by influencing suppliers or distributors?
Define the metric
Selecting the right metric for the goal is a common challenge that can be made easier by focusing on impact (the intended outcomes or change brought about by the goal) and partnering with subject matter experts who understand the issue and the company’s ability to influence it. Focusing on the outcome needed can leave the company more open to new and different paths to achieve the impact, as opposed to locking itself into a particular process. Companies must avoid confusing reach (for example, the number of people affected by company’s activities) with impact (the ultimate outcome).
Agree on deadlines
The current best practice involves setting a longer-term goal based on context, then outlining the key milestones that show the short- and medium-term steps required to get to that goal. Making the timeframe of a goal too short may limit impact, but interviewees also cautioned that when goals are too far out, it can prevent the company from being agile, locking it to fixed targets in what is, in reality, a dynamic environment.
Engage external stakeholders
Companies that solicit outside insights and opinions to shape their goals are often more strategic in their thinking. External stakeholders can shed light on new or better ways for the company to influence issues.
Looking to the future
Businesses must continue to evolve their approaches to goal-setting. Companies have a responsibility to ensure they are operating in a sustainable manner, and setting goals to outline what that responsibility means to them is an important part of that journey.
Companies must also get smarter about impact — not just enough impact but the right impact. The best goals create shared value and this requires, at the very least, stronger alignment with the business model, and sometimes outright transformation.
Companies can find comfort in knowing they are not alone in facing these challenges. The role of external stakeholders such as government, NGOs and academia is not just to push companies to raise their ambitions, but also to support them in setting and achieving more impactful and strategic goals — and to do their part by setting and pursuing high-impact goals of their own.
With the exciting global developments of the Paris Agreement and the SDGs, a pathway exists, clearer than at any time previously, for the private sector to follow to play its part in developing a truly sustainable society and economy for all.