It takes more than numbers to set smart climate goals

It takes more than numbers to set smart climate goals

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Small and medium-sized companies must do their part to reduce emissions, but they face unique challenges in setting the right goals.

With many companies in the goal-planning stage as they retire 2015 targets and set new ones, it is an appropriate time to evaluate our troubled relationship with carbon goals. Despite strong agreement within the scientific community that we need to keep global temperatures from rising more than 2 degrees Celsius, or 3.6 degrees Fahrenheit (PDF), I’m not seeing goals that are bold enough to get us where we need to go.

Climate Counts’ 2013 study found that only 49 percent of global corporations’ carbon emissions are on track with what scientists recommend. And even when goals get the numbers right, they can fall apart without adequate support, planning and accountability.

My advice and links to resources are aimed primarily at small and medium-sized businesses that may face unique challenges in taking the bold steps needed but whose participation in achieving deep global emissions reductions is essential.

Why are carbon reduction goals so varied?

Some exciting developments are focused on linking greenhouse gas emission goals to environmental thresholds. PricewaterhouseCoopers’ study, "Two Degrees of Separation: ambition and reality" (PDF) (Low Carbon Economy Index 2014), lays out the urgency of taking this approach in stark terms. While the study noted that the global economy needs to decarbonize at 6 percent each year, the researchers found “we managed only 1.2 percent. To avoid 2 degrees of warming, the global economy now needs to decarbonize at 6.2 percent a year, more than five times faster than the current rate, every year from now till 2100.”

Sobering statistics, indeed.

Kudos are due to the leaders embracing the challenge of integrating environmental thresholds into their corporate targets. This article and blog offer excellent summaries of the leaders’ approaches. These include considering a company’s economic value in setting carbon targets, as Autodesk has done, as well as a context–based approach that meshes the IPCC’s targets with corporate contribution to GDP. Another worthwhile resource is "The 3% Solution," in which WWF and CDP demonstrate that a 3 percent emission reduction for all U.S. companies meets both the necessary cuts scientists are calling for and leverages cost-saving potential.

Companies also can turn to EPA’s Center for Corporate Climate Leadership to use the Corporate GHG Goal Evaluation Model to help evaluate new or existing goals. Another resource is the WWF, WRI and CDP’s Sectoral Decarbonization Approach, with sector-specific guidance on setting emissions targets based on climate science.

Near-term and long-term goals: Reconciling the science gulf

But what should the overworked, wildly multitasking sustainability manager at a small or medium-sized company do when the science says one thing and their company’s appetite for large reductions — not to mention budget and capabilities — point to a much smaller number? Reconciling this very real and uncomfortable gulf is critical.

Here’s where investment in innovation helps goals push companies towards new solutions. Setting near-term, more realistic goals, with a smaller stretch component, as well as bold, science-driven, longer-term goals can help bridge the gap. A company may not know how it will achieve the more ambitious future goal but it knows it needs to be investing in innovation and motivating its employees to develop game-changing solutions. The longer-term targets also help ensure that the company’s short-term investments support lasting solutions, such as renewable energy or product innovations.

One caveat here is that the longer we delay in achieving reductions, the deeper the necessary annual emission targets become. It’s worth revisiting economist Nicholas Stern’s 2007 conclusion (PDF) that the benefits of strong, early action on climate change outweigh the costs. But inability to set deep targets early on should not be an excuse for inaction.

Setting goals that lead to success

As all of us involved in goal-setting are well aware, agreeing on targets is only one piece of the puzzle. There must be accountability at the highest levels and an iron-clad link to investment dollars to ensure that goals motivate the development of innovative products and processes. Pure Strategies’ research and conversations with companies that are sustainability leaders revealed that putting goals into business terms helps provide organizational alignment and accountability. Targets that connect the product portfolio, revenue and sustainability — such as 40 percent of net revenue will come from products meeting carbon reduction criteria by 2020 — are helping top companies coalesce around their goals and motivate change.

The bottom line

Small and medium-sized companies that lack the ability to go bold right now should still proceed with science-based targets that push their companies in the right direction. I recommend that they review the science and ensure that their longer-term goals, such as for 2025 or 2030, are science-based.

They should set near-term goals that push as hard as possible, and invest in innovation and long-term solutions, such as renewable energy.

I also suggest that they set business-relevant goals that have clear accountability. At the same time, they should educate, motivate and incentivize employees to ensure success.

Finally, is anyone keeping tabs on all this? If you want to see how the leaders are performing, turn to the Pivot Goals site to check on the carbon goals and performance of the Fortune Global 500. But we can’t rely on their initiatives alone; smaller companies need to shoulder their share of the environmental burden right now.