Why do so many companies set renewable energy and sustainability goals, and then set new ones once they’ve achieved their initial targets?
It’s because these actions both demonstrate environmental commitment and help to drive operational efficiency and bottom-line savings. They also instantly position a company as a leader to customers, employees, and institutional investors, generating reputational and brand value. Consider the following:
- Forty eight percent of the Fortune 500 have now set greenhouse gas (GHG), energy efficiency, and/or renewable energy goals, up five percent since 2014, according to the 2017 Power Forward 3.0 report from WWF, Ceres, Calvert Investments and CDP.
- Ten Fortune 500 companies have set science-based GHG targets (goals in line with the reductions required to keep global temperature rise below two degrees Celsius), with an additional 82 saying they plan to set targets within the next two years.
- Fifty-three Fortune 500 companies have set renewable energy goals, up from 42 in 2014. More than 100 companies have now set targets to purchase 100 percent renewable energy for their global electricity consumption through the RE100
But if you haven’t yet set a goal, where do you begin?
At its core, sustainability target setting — for GHGs, energy use, renewables, etc. — is a lot like setting any other goal: You first need to measure where you are, set the target, create a plan of how to get there, and continue to measure your progress along the way.
One of the most repeated sustainability axioms is “you can’t manage what you don’t measure,” and indeed it is impossible to set a goal if you don’t have a solid baseline and accurate data to measure against. Therefore, having verified emissions inventories is a critical part of the process.
In the end, an effective goal aligns the corporate culture and stakeholder expectations while providing momentum for the company’s sustainability objectives.”
A corporate sustainability goal should be aggressive, yet credible and achievable. Some companies choose stretch goals without knowing exactly how they will get there, while others only set goals that they have a detailed roadmap to achieve.
Yet, an overly-aggressive goal — for instance 100 percent renewable energy by the end of the year — has a high risk of failure, while an under-aggressive goal — 5 percent renewable energy usage by 2025 — will likely be targeted as inadequate by activist stakeholders.
A middle option is to provide a long-term aspirational goal (e.g. 100 percent renewables by 2025, or an 80 percent GHG reduction by 2050), along with one or more interim targets for credibility.
In the end, an effective goal aligns the corporate culture and stakeholder expectations while providing momentum for the company’s sustainability objectives.
The goal-setting process also engages a wide range of internal constituencies, from the energy manager to the C-suite and perhaps even the board, which ensures commitment and accountability at all levels of the organization.
Many companies also tie compensation bonuses to the achievement of sustainability key performance indicators (KPI), which can serve as an additional incentive. This of course makes the selection of KPIs especially important.
There are many resources for organizations looking to set targets, including:
- The United States Environmental Protection Agency (EPA) and its non-profit partners C2ES and The Climate Registry provide annual recognition for GHG goal setting and achievement through the Climate Leadership Awards (the application period for which is currently open). Their criteria provide a good overview of what a credible GHG target entails.
- The EPA’s Center for Corporate Climate Leadership also provides an extensive GHG goal-setting methodology.