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Setting,TrackingandIntegratingHigh-ImpactSustainabilityGoals
TargetingValue
March2018
RebeccaO’Neill
SustainAbility isathinktankandstrategyconsultancy workingtoinspiretransformativebusinessleadershiponthesustainabilityagenda.
SeniorManager
Welcome
#TargetingValue
MarkWeickLeadDirector,Sustainability
andEnterpriseRiskManagement
TheDowChemicalCompany
HilaryParsonsHeadofCreatingShared
ValueEngagement,
Nestlé
MeetthePanelists
Agenda
ProjectOverview1.
WhyGoals?2.
StateofPlay3.
BarrierstoProgess4.
MaximizingValue&Impact5.
SharingAmbition,DisclosingProgress6.
TheFutureofGoalSetting7.
SeeChange
HowTransparencyDrivesPerformance
SustainabilityIncorporated
IntegratingSustainabilityintoBusiness
ClosingtheSustainability-InvestorRelationsGap
TheImportanceofEngagingInvestorRelations
TargetingValue
TransparentlySettingandTrackingImpactfulGoals
EngagingStakeholdersResearch
CoreTheme
• Outlinethebusinesscase forsettinggoals,andrelatedopportunitiesandrisks
• Exploretheexistinglandscape ofgoals
• Identifylessonslearned aboutmaximizingvaluecreationandimpactthroughgoals
• Provideguidanceonhowtocreatebusinessvalueanddeliverpositiveimpacttosocietybysetting,trackinganddisclosingongoals.
Objectives
• Literaturereview
• 20+interviewswithcorporatepractitioners,NGOs,consultanciesandthoughtleaders
• Surveyof16EngagingStakeholdersNetworkmembercompanies
• Createddatabaseofsustainabilitygoalsfromtop65Fortune500companiesfromfood,energyandfinancesectors
Methodology
Whetherandhowgoalsettingcreatesvalueanddrivesimpact
WhyGoals?DriversthatmotivatecompaniestosetCSgoals:
• Driveperformanceontheissue
• Breakdownabigchallengeintosomethingmanageable
• Alignwithmethodsoftrackinggeneralbusinessperformance
• Motivateemployeesandensurecompanyaccountability
• Strengthenreputationandtrust
• Competewithpeers
• Driveinnovation
• Meetorexceedregulatorystandards
• Addressmoralimperatives
0% 10% 20% 30% 40% 50% 60% 70%
Increasesemployeeengagement
Content/narrativeforannualsustainabilityreporting
Improvedbusinessperformance
Drivesinnovationtoenablecompanytoachievegoals
Strongeraccountabilitywith internalstakeholders
Improvesbusinessreputation
Strongeraccountabilitywithexternalstakeholders
Drivesintegrationofsustainabilityintothebusiness
WhyGoals?Thebusinessvalueofsettingsustainabilityperformancegoals
MarkWeickLeadDirector,Sustainability
andEnterpriseRiskManagement
TheDowChemicalCompany
HilaryParsonsHeadofCreatingShared
ValueEngagement,
Nestlé
Whygoals?PanelistDiscussion
Leading the Blueprint Delivering Breakthrough Innovations
Advancing a Circular Economy Valuing Nature Safe Chemistry for a Sustainable Planet
Engaging for Impact: Communities, Employees, Customers
World-Leading Operations Performance
2025SustainabilityGoals
TheNestlé Approach
EnhancingqualityoflifeandcontributingtoahealthierfutureOurpurpose
ValuesrootedinrespectOurvalues
ForindividualsandfamiliesEnablinghealthierandhappierfamilies
• Offeringtastierandhealthierchoices• Inspiringpeopletoleadhealthierlives• Building,sharingandapplying
nutritionknowledge
Tohelp50millionchildrenleadhealthierlives
ForourcommunitiesEnablinghealthierandhappierfamilies
• Enhancingrurallivelihoods• Respecting&promotinghumanrights• Promotingdecentemploymentand
diversity
Tohelpimprovethelivesof30millionpeoplelivingincommunitiesdirectlyaffectedbyourbusinessactivities
FortheplanetEnablinghealthierandhappierfamilies
• Caringforwater• Actingonclimatechange• Safeguardingtheenvironment
Tostriveforzeroimpactinouroperations
Wherewemakeimpact
41socialcommitments
Howweimpact
Our2030ambition
StateofPlay
Evolvingandvariednatureofgoals1.
Growingfocusonimpact2.
Shifttowardcontext-basedandsystemschange3.
Variabletimeframes4.
Greaterintegrationintocorebusiness5.
Thecurrentlandscapeofcorporatesustainabilitygoalsreveals:
BarrierstoProgress
“ ““Wewanttosethigh-impactgoalsbutfinditdifficult.”
“Ourcompanycultureleadsustobeinginthemiddle,notleadingwithbigaspirationalgoals.”
“Weaspiretobenetpositiveincertainareasatsomepoint,butthat’scomplicated,andwe’renotquiteabletotacklethatyet.”
0% 10% 20% 30% 40% 50% 60%
Lackofexpertiseneededtoachievethem
Lackofbudgettosupportachievingthem
Wehavenotfacedbarrierstosettinghigh-impactgoals
Lackoforganizationwithincompany
Lackofincentive
Other
Executivepushback
Departmental/middlemanager(orlower)pushback
Lackofdata
Lackofcomfortwithsettinggoaldon’tknowhowto achieve
BarrierstoProgressBarrierstosettinghighimpactgoals
• Communicateinternally• Set“comfortable”initialgoalsandthenincreaseambition
• Acceptthatit’soktomisshighlyaspirationalgoals
• Weighrisksofbeingtooconservativewithgoals
• Factorinlikelybusinesschanges• Revisegoalswhennecessary
Fearoffailing
• Emphasizethebusinessbenefitsofachievingthegoal
• Findalliesacrossthecompany
Lackofinternalbuy-in
• Partnerwithinternalandexternalexperts
• Identify whichdatayoudo haveontheissue
• Investindatacollectionandundertakeresearchtounderstandissues
Inadequatedataorweakdatacollectionmethodology
BarrierstoProgressOvercomingthebarriers
Managingwhencompanyperformanceaffectsagoal
• Financialcontextaffectedabilitytoachieveenergyefficiencygoal
• Twooptions:
• Adjustthegoaltoalessambitiousandpossiblyattainablelevel,or
• Keepthegoalandacceptthefailure
CaseStudy:Dow
“Wekeptthegoalbecauseitexpressedambitionandkeptusaccountable.We’vedecidedthatwewanttobeoutthereontheedgeleadingevenifthatmeanswemightmisssomethings.”
MarkWeickDirectorofSustainabilityPrograms
MarkWeickLeadDirector,Sustainability
andEnterpriseRiskManagement
TheDowChemicalCompany
HilaryParsonsHeadofCreatingShared
ValueEngagement,
Nestlé
StateofplayandbarriersPanelistDiscussion
MaximizingValue&Impact
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Busi
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Val
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High-impact goals
Impact on issue
Mostgoalsfallinthemiddleofthespectrum,andmorehighimpactgoalsareneeded.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other(pleasespecify)
Groundedinwhatisachievable
Strongincentives
Long(butdefined)timeframe
Short-termmilestones
FocusontherightKPIforimpactmeasurement
Aspirationalvision
Strongtheoryofchange
Focusoncompanymaterialissue/Integrationintobusinessstrategy
MaximizingValue&ImpactAttributesofgoalsthatsuccessfullygeneratebothbusinessvalueandexternalimpact
Process GoalAttribute
Startwithmaterialissues Material
Understandthecontext Context-based
Partnerinternally Integrated
Setambition Visionary
Developtheoryofchange Providesclearpathtoimpact
Definethemetric Measurable
Agreedeadline(s) Time-bound
Engageexternalstakeholders Informedbystakeholders
MaximizingValue&ImpactBestpracticesforsettinggoalsthatdrivevalueandimpact
Thewrong goalsarecounterproductive.Ifyousettheright goalsandgroundtheminscience,youcreateanorthstartosteertheentireorganizationby.
GeoffKendallCEO&Co-FounderFuture-FitFoundation
• Ensuresthatgoalssupportcorebusinessstrategy
• Trendtowardcompaniesfocusingtheirattentiononfewerkeyareasinsteadoftryingtosetgoalsforallissuesthecompanymayimpact
• Enablescommitmenttoambitiousgoals
MaximizingValue&ImpactStartwithmaterialissues
“Tomakelonglasting,positivesocietalimpact,thenensurethegoalsmakegoodcommercialsenseand,whereverpossible,arepartofthecorebusinessandcorestrategy.”
KatieHysonVPofCitizenshipandReputationBarclays
• Identifytheultimateendgoalforthatsystemchallenge
• Determinewhatthatcontextmeansforthegoalthecompanyistryingtoset
• Helpsdetermineappropriateanddefensiblelimitstothecompany’sinvolvementinimpactingtheissue
MaximizingValue&ImpactUnderstandthecontext
• Goalsthatcreatethemostvaluearegenerallythoseembeddedintoandacrossthebusiness
• Engagingwiththerightdecision-makersacrossthecompanyisessentialto:
• Buildingbuy-inontheneedtosetagoal• Accessingtheexpertiseneededtodesignandpursueit
• Drivingaccountabilitythroughoutthebusiness
MaximizingValue&ImpactPartnerinternally
Cascadinggoalstoalllevelsofthecompany
• Setnetzerogoalsongreenhousegasemissions,wasteandwater
• Tooabstracttobemeaningfultoemployees
• Brokedownlargegoalsintosmallertargetsacrossbusinessunits
• Strengthenedconnectiontocompanyvision
CaseStudy:Swire
“Ifyoustarttoexplaintopeople,‘Hereistheoverarchingobjective.Hereiswhatitlookslikeatagranularlevelforyouandwhatyoucandotobepartofthemission,’thenthatcanhavemeaningfulresults.”
PhilippeLacampFormerHeadofSustainableDevelopment
• Whatisconsideredambitiousvariesdependingonthespecifics
• Startwithmaterialpriorities;thenlookattherelatedSDGsforcontextandinspiration
• Settinghighlyambitiousgoalsischallenging– pickingoneissueareaisagoodwaystart
MaximizingValue&ImpactSetambition
“Goalsthataresetsohighthatthecompanyupfrontdoesn’tknowexactlyhowtoachievethemwillspurcreativityandinnovationwithintheorganization,ascomparedtogoalswherethecompanycanfollowamorelineartrajectoryandaddafewmorepercentagepoints.”
OleLundChief,LeadershipProgramsUNGC
• Todevelopatheoryofchange,sustainabilityteamsneedtoworkwithbusinesspartnerstoexplore:
• Whatultimateimpactthecompanyneedstomaketoplayitspartinaddressingtheissue
• Whatleversthecompanycaninfluencedirectlyorindirectlytobringaboutthatresult
• Explorehowthecompany’sbusinessmodelaffectstheissue,bothpositivelyandnegatively
MaximizingValue&ImpactDevelopatheoryofchange
Transparency Trust Collaboration SystemsChange
• Whendefiningthemetric,focusontheoutcomeneeded
• Partnerwithsubjectmatterexpertstodevelopthemostappropriatemetrics
• Avoidconfusingreachwithimpact
MaximizingValue&ImpactDefinethemetric
• Bestpracticeinvolvessettingalonger-termgoalbasedoncontext,andthenoutliningthekeymilestonesthatshowtheshort–andmedium-termsteps
MaximizingValue&ImpactAgreedeadlines(s)
“Youneedtofindthebalancebetweenamassiveseismicshiftinthewaythebusinessoperatesthatislonger-termandalsosmallerstepsalongthatbreakdownprogress,forexampleinto1-5yeargoals.Otherwisethe2030or2050goalcanbetoofarawayforpeopletoknowwhattodoaboutthatonadailybasis.”
JustinSmithGroupHeadofSustainabilityWoolworth’s
• Canleadtomorestrategicthinkingaroundgoalsetting
• Oftenenlightensthecompanytoneworbetterwaysthecompanycanimpactanissue
• Engagingstakeholdersdemonstratesthatacompanyisbeingthoughtfulinitsgoalsettingapproach
• Itcanbeawaytotestexternalperceptionsofagoalbeforefinalizingit
MaximizingValue&ImpactEngageexternalstakeholders
MarkWeickLeadDirector,Sustainability
andEnterpriseRiskManagement
TheDowChemicalCompany
HilaryParsonsHeadofCreatingShared
ValueEngagement,
Nestlé
MaximizingvalueandimpactPanelistDiscussion
SharingAmbition,DisclosingProgress
• Publishgoalsinaconsistent,easy-to-accesslocation
• Disclosedetailssuchasbaselineyear,targetyear,metric,contextandscope
• Updateprogressregularly
• Pursueassurance
• Clarifyandcommunicatebusinessbenefitofthegoals
• Speakfromthetop
• Acknowledgechangesandadmitfailure
• Considerdifferentaudiences
“Transparencycanbeadouble-edgedswordbecauseaudiencesperceiveinformationdifferently.Forexample,whatmightbeimpressivetothesustainabilitycommunityintermsofagoalthatrequiresasignificantinvestmentinbiofuelswithlittleimmediatereturn,maynotsitwellwithinvestors.”
Ourcoretransparencyrecommendationsforcompaniesregardinggoalsare:
Consistentlytrackingandreportingoutagainstgoals
• Easynavigationtoallgoalsbytheme
• Timelineandprogressclearlycommunicated
• Narrativearounddetailsofgoals,includingwhengoalchanged
CaseStudy:Nestlé
“Notonlyisclearreportingofourobjectiveshelpfulforourstakeholders,itsupportsourinternalreportingmechanismsaswell.”
HilaryParsonsHeadofCreatingSharedValueEngagement
MarkWeickLeadDirector,Sustainability
andEnterpriseRiskManagement
TheDowChemicalCompany
HilaryParsonsHeadofCreatingShared
ValueEngagement,
Nestlé
SharingambitionPanelistDiscussion
TheFutureofGoalSetting
Approachtogoalsettingmustcontinuetoevolvetogenerategoalsthatare:2.
• Context-based• High-impact• High-ambition
Goalsthatcontributetosystem-widechangeandsolvingglobalchallengeswillrequiresystem’sthinking,partnershipsandlarge-scalecooperation3.
Companiesmustgetsmarteraboutimpact–makingnotjustenough impact,buttheright impact1.
MarkWeickLeadDirector,Sustainability
andEnterpriseRiskManagement
TheDowChemicalCompany
HilaryParsonsHeadofCreatingShared
ValueEngagement,
Nestlé
FutureofgoalsettingPanelistDiscussion
TargetingValueSettingTracking&IntegratingHigh-ImpactSustainabilityGoals
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