Globally, there have been shifts in public policy and consumer concerns about global warming and pollution increase. Swayed by changing customer perspectives and the requirements of the Paris Agreements to which 191 countries are signatories, companies have been making declarations that address how they intend to mitigate and adapt to climate risk. Research has emerged however indicating that many organizations are struggling to meet their targets. In 2021, Black and Veatch with the Green Biz group compiled a study that determined that many organizations were committed to developing and meeting their sustainability goals however many were floundering on where to start. The report determined that more than 80 % of the companies surveyed with revenues greater than US$250 million set greenhouse gas (GHG) reduction goals, yet 25 % set goals that they were unsure how to achieve.
I propose that the challenges may be rooted in the type of targets chosen.
Understandably, a company may not want to be seen as out of touch with market trends or the perils of the climate emergency. It may therefore seem attractive from a reputational standpoint point to make sustainability declarations similar to your peers or competitors! However, for sustainability targets to be realistic and achievable, they must be value-driven, not brand-driven.
Any target set must be consistent with an organizations' internal and external context. It must consider your company's voluntary and mandatory obligations and be well thought out and aligned with its purpose and business principles. Rather than compromise your endeavors with quick fixes, treat sustainability as a corporate strategy issue. A business imperative that impacts your environmental, economic and social performance.
There are many ways organizations can embark on their sustainable journey but the trick is finding the right one. Ideally, targets should be driven by specific threats and opportunities linked to the business. They should be set in response to trends or issues that can directly or indirectly impact the organization’s short-term and long-term objectives. For instance, an international fashion firm could emphasize different areas compared to a company in the extractive sector. The fashion firm may as a primary objective focus on issues of human rights as it pertains to the ethical sourcing of fabrics. The company in the extractive sector may instead choose to focus on pollution and wastewater management given its direct link to its production output. Both issues reside under the umbrella of sustainability. Both if addressed would address stakeholder risk albeit with different tactics. This example underscores that actions should be specific to the impact and dependencies of each company's business and its stakeholders.
If you are anxious to start on your sustainability journey, begin by re-grounding yourself on the corporation’s fundamentals by understanding:
· What is your organization’s mandate?
· What are your corporate values?
· What are the key activities that are necessary for creating value for your business?
· What are some key risk events (economic, environmental, or social) that if they were to occur would prevent you from capturing value
· Can the above issues enhance value creation or offer the market a solution?
· Which of your stakeholders are likely to be impacted by your action or inaction?
· What are some goals that can be reasonably set to help you meet your targets?
· What resources are required?
· Is your leadership committed to trusting the data and supporting sustainable action?
Image Adapted from IDB's guide to green bonds
While the global conversation is focused on emissions, there are other opportunities to embed sustainability into your organization. By answering the questions above, you will be armed with information that will help you widen your search. You can then confidently assess some options that are actionable, fit your context and align to business objectives. Once selections have been made and are supported by the board and management, start living your commitment. This must not only be in speech but reflected in governance structures, corporate policies, and processes.
The path to sustainability is not a branding exercise. It is a thoughtful process that starts with clarity of purpose. Don't select your sustainability targets on impulse! Success would not be derived through copying and pasting your neighbours' targets.
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