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Benchmarking Environmental Sustainability Goals

Goals signal intent and drive behavior. Some companies announce sustainability goals to signal their commitment to become sustainability leaders and to compete for superior positioning with their rivals. According to a recent Green Research sustainability executive survey, 15 percent of sustainability executives say their goals were significantly influenced by the goals of competitors. Judging from the dozens of interviews we’ve conducted on this topic, we believe competitive factors play an even larger role than this number suggests.

A Quantitative Framework for Comparing Goals
To support the competitive benchmarking that is a part of setting sustainability goals, Green Research developed a quantitative framework for analyzing a company’s environmental sustainability goals. We look at publicly declared sustainability goals that are relevant for the current year or future years. To be included in our analysis, goals must have one or more of these characteristics: specific, quantitative or time-bound. Goals that are vague, lacking quantitative targets or without definite end dates are excluded.

We then classify the goals in standard categories that we’ve developed based on our review of dozens of sustainability reports and hundreds of goals. Then we perform simple analytics that make it easier for a company to benchmark its goals against others in its industry or against any group of companies. We found, for example, that the major computer makers like Dell and Hewlett-Packard have on average 14 public environmental sustainability goals each, more than twice as many goals as the major food processing companies such as Nestlé and Unilever.

Not All Goals Are Created Equal
Another finding: Some companies have an impressive list of goals that, upon closer inspection, lack impact because they are either not quantitative or not forward looking. IBM, for instance, is on record with nine sustainability goals by our calculation, but only one, the CO2 reduction goal, is forward looking; the others are goals for the year just ended and can no longer drive action. Lenovo has set 12 goals, but most of them are non-quantitative such as “Establish product energy/carbon footprint targets.”

Not all goals are created equal. Aggressive goals are more powerful than modest goals. Public goals have greater impact than internal goals. Quantitative goals are more credible than non-quantitative goals. And goals for the future send a signal that goals described in retrospect do not.

Goals Are Classified into Three or Four Major Areas
Sustainability goals generally fall into one of three broad areas:

1.     Operations

2.     Product and packaging

3.     Recycling and reuse

Food companies and others sometimes have goals in a fourth area: sustainable sourcing.

Each of these areas presents its own set of sustainability issues. Operations issues include greenhouse gas emissions, waste management, water use and energy use. Product and packaging issues include energy and eco efficiency; packaging reduction and reduction of hazardous materials. Recycling has operational dimensions (such as managing take-back) and product dimensions (such as design for recyclability and procurement of post-consumer/recycled materials).

Mix of Goals Varies by Industry
In aggregate, the computer companies have more product and packaging goals than operations goals. Dell and HP, especially, have a higher share of goals focused on product and packaging than the other companies studied. An appropriate balance of goals will vary by company and product mix. Dell has discovered, for example, that for some of its products, the environmental impact of manufacturing and end use are about the same. For other products, though, the use phase accounts for a much greater share of environmental impact than manufacturing or other lifecycle phases. Acer makes a point of describing its recycling policies and processes but it has no explicit public recycling goals, which make it an outlier in this comparison. Recycling is an appropriate area for establishing performance improvement goals.

Goals vary by industry as well. Our analysis of major global food processors found that the vast majority of their public sustainability goals are operational in nature; so far companies in this sector have adopted few goals dealing with product and packaging, recycling or sustainable sourcing.

The Top Issue: Greenhouse Gas Emissions
The number of goals dedicated to a particular issue is a measure of how much focus that issue is receiving. In the case of the computer makers, the primary focus is greenhouse gas emissions. Reducing GHG emissions is the subject of some 22 goals across all of the companies studied.  Hazardous materials and product energy efficiency and are of significant importance; they are addressed by 12 and 10 goals respectively. So far, water is a relatively minor focus for these computer makers; only two goals address water use. Lenovo’s sustainability report makes the point that water is not a material issue for the company: it discharges no waste water, has no wet processes and draws water only from municipal sources.

Goals Are Not the Same as Performance
I should emphasize that the method described here is focused on publicly declared environmental sustainability goals, not sustainability performance. It would be a mistake to confuse a statement of sustainability goals with actual sustainability performance. Many companies are making good progress working toward aggressive goals that remain internal. But the public declaration of aggressive, achievable, forward-looking sustainability goals is an expression of intent that we believe has a positive impact on internal and external stakeholders. We believe that good practices around the setting, management and communication of goals drives good performance.

David Schatsky, principal of Green Research, is a consultant and adviser to businesses on a range of topics, from clean tech markets to corporate sustainability best practices to business strategy in the Internet and information technology markets. Having spent almost a decade as an analyst and senior executive at JupiterResearch, a leading research and advisory firm focused on Internet business, Schatsky is an expert in business strategy, industry analysis and market research.

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4 thoughts on “Benchmarking Environmental Sustainability Goals

  1. Your statement indicating that only one of IBM’s “Sustainability Goals” is forward looking is not factually correct. While some of IBM’s goals are expressed in terms of a quantified year to year improvement, these goals are ongoing, and comtinue to apply beyond the most recent year that we report in our Corporate Responsibility Report. As such, they continue to drive additional improvement in each and every year.

    As an example, one of IBM’s goals is to “Achieve year-to-year reduction in hazardous waste generation from IBM’s manufacturing processes indexed to output.” While we report our performance against this goal on a yearly basis, the goal has been in place since 1995, driving consistent improvement in this area.

    In the area of energy efficiency, while IBM’s 3.5% annual energy conservation goal may appear modest to some, its cumulative impact over the last 20 years has been very significant. Between 1990 and 2010, IBM saved 5.4 billion kWh of electricity consumption, avoided nearly 3.6 million metric tons of CO2 emissions (equal to 52 percent of the company’s 1990 global CO2 emissions) and saved $399 million through its annual energy conservation actions.

    While I would agree that there may be merit in establishing long term environmental goals and commitments in some areas, I think it is inaccurate to characterize shorter term recurring goals, such as those used by IBM in some areas as “lacking impact.” In fact, the cummulative impact of attaining these goals over a sustained period is very important.

    While long term stretch goals such as zero waste or “carbon neutral” may be fashionable, it is continued and consistent performance that leads to real environmental improvement.

  2. Hi Tim,

    I’m sorry I didn’t see your comment until just now when someone pointed it out to me. I cannot agree more with your points about continued and consistent performance being required to drive real environmental improvement. And our analysis makes clear that we do not equate goals with performance. Performance is what matters. In the case of IBM, the company’s performance has been impressive. Goals are about communicating.

    We undertook this research not to rank companies but to provide them with a tool that they can use to easily understand what others in their industry and in other industries are doing. We know from our work with sustainability leaders at many companies that this benchmarking is an important input into the process of goal setting.

    Thanks for your comments.

  3. Good Day David Schatsky!

    I am from the Philippines, currently taking up BS in Civil Engineering at De La Salle University. We’re currently working on our thesis that focuses on Environmental Goal and Performance of Contractors here in the Metro. I would just like to ask if we could take a look at your quantitative framework which serves as the basis for your evaluation on companies? It would really be a great help! If not, can we ask for recommended references as we are currently working on our models based from the contractors’ response to our survey forms. We are also searching for benchmarks/frameworks that could serve as the basis of our assessment. Hoping for your favourable response. Thank you and more power!

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