Companies ‘Unprepared to Meet Their Environmental Targets’
Companies are increasingly using public goals to signal their commitment to sustainability and their superiority to rivals, but many are unprepared to meet those targets, according to a report from Green Research.
According to the report, “Setting and Managing Sustainability Goals: Trends and Best Practices for Sustainability Executives,” while most companies have effective procedures for managing financial and other operational goals, processes for managing sustainability goals are still maturing. A quarter of the sustainability executives surveyed for the study say their companies have set “aspirational” sustainability goals and lack a clear plan to achieve them.
In the survey of 32 senior sustainability executives at major companies in North America, Europe and Asia, over 40 percent said progress on sustainability goals is reported to senior management only semi-annually or annually. More frequent reporting would offer these companies better control and lower operational risk, the study said, but for many firms, gathering environmental data is still cumbersome.
“Despite the best of intentions, even some excellent companies are challenged to execute on the sustainability goals they announce,” said David Schatsky, principal at Green Research and author of the study.
The report said management practices surrounding sustainability goals vary widely among companies. “Some companies have excellent procedures in place for defining and managing sustainability goals,” Schatsky said, “but many are still developing and run the risk of disappointing stakeholders.”
In the survey, 57 percent of respondents characterized at least some of their sustainability goals as “stretch goals” – that is, challenging but probably achievable – and 54 percent said at least some of their goals are “realistic,” meaning they represent what the company believes is achievable based on an assessment of its current performance. Only four percent said they had goals that were “very unlikely to be achieved”.
Green Research said that targets for realistic or stretch goals are best set through a bottom-up process, beginning with a baseline of current performance. Companies then look at what projects are already planned that may impact performance and determine what additional initiatives they can take.
But a bottom-up analysis is rarely sufficient for determining appropriate targets, the report said, and targets often originate at the top.
The report noted that some companies have a mix of realistic, stretch and aspirational targets. For example, Fujitsu’s “Green Policy 2020” calls for a reduction in Japanese CO2 emissions of 30 million tons by 2020 with an interim target of a 15 million ton reduction by 2012. The 2020 target is a top-down goal, Green Research notes, while the 2012 target was developed through bottom-up analysis.
The report says that the best way to manage sustainability goals are CEO support, operating executive accountability, ties to compensation and regular progress reporting.
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