Published on GreenBiz
The fast-approaching 2020, focal point of countless corporate sustainability strategies, signals that we’re almost officially a decade away from 2030, the landmark year for climate action.
The next decade invokes in us a mixed sense of emergency, uncertainty, hope and resolution. To rein in the soon-to-be-irreversible damage to our planet, governments, organizations and businesses around the world look to 2030 as a guiding post to set their sustainability goals as well. Many are deeply engaged in rethinking existing commitments and dreaming up newer, more ambitious targets.
With so many companies currently engaged in this exercise, GreenBiz wanted to decode the lifecycle of corporate sustainability goal-setting, from ideation to execution. Our editorial director Heather Clancy and I talked with sustainability luminaries of seven major companies across diverse industry sectors to understand their processes, common time frames, external frameworks, metrics and more. We gleaned insights in seven key areas.
1. The timeframes for new commitments are all over the calendar
Follow long-term ambitions with a clear path to get there
Ingersoll Rand is looking at the 10-year horizon — and its bold 2030 commitments certainly need a decade of building up to.
The industrial manufacturer aims to reduce customers’ carbon footprint by 1 gigaton (1 billion metric tons of carbon dioxide, or the equivalent in other greenhouse gases), and reach carbon-neutral operations and net-positive water by 2030, among other goals. To keep things on track for the long run, the company sets annual targets, said Scott Tew, executive director of the Center for Energy Efficiency & Sustainability at Ingersoll Rand.
Similarly, Intel prefers long-term goals. It had been working toward its 2020 commitments and soon will develop ones for 2030, but there are shorter-term, internal milestones and targets that help Intel understand the path to get there, said Suzanne Fallender, director of corporate responsibility. Some specific functions, such as supply chain, have annual goals, she said.
Short-term goals can galvanize internal action
Citi uses a 10-year timeframe for its ambitious $100 billion environmental finance goal, but also uses shorter-term goals to “light the fire.” Val Smith, global head of corporate sustainability at the financial services firm, said that given the increasing urgency related to climate change, as well as the United Nations Sustainable Development Goals, five years is increasingly the “Goldilocks time horizon.” “To really mobilize and galvanize the businesses internally, a shorter-term goal may make more sense,” Smith said.
Keurig Dr Pepper, too, tends to set shorter time horizons, as it considers speed a competitive advantage. Keurig Green Mountain acquired the Dr Pepper Snapple Group in 2018, and the combined beverage company timed the unified goals to 2025 rather than 2030 because it could be “a very different company” by the latter timeframe, Chief Sustainability Officer Monique Oxender said.
Micron is relatively new to sustainability goal-setting, which means it needs more tangible achievements and quick wins, said Marshall Chase, who became director of sustainability for the computer memory and storage company eight months ago. While Micron views one year as the stepping stone, it’s open to big-picture trajectory down the road, especially for reducing greenhouse gas emissions and energy consumption, Chase said.
Focus on what makes sense for the business
All companies agree that when setting timeframes, business strategy and corporate culture play a big part. Regardless of the overall preference, each specific goal also might have its own deadline. That’s why IBM’s vice president of corporate environmental affairs and product safety, Wayne Balta, said businesses should align goals to what they’re doing at a given point in time rather than aligning with “milestone” years such as 2020 or 2030.
“I think the driver toward the term of a goal ought to be more geared toward the topic of the goal and what the company’s fundamental business is rather than society’s easy recognition that a new decade starts,” Balta said.
2. Moonshot or low-hanging fruit?
We already know about Ingersoll Rand’s bold, 1-gigaton target for 2030. How ambitious are other companies when they set sustainability goals?
Micron sets tangible and concrete goals as a business-to-business company that needs certainty and clear directions, Chase said. “There’s very much an engineering culture here, so we want a direct line of sight to exactly what we’re doing and what we can do today in order to accomplish something.”
Fellow chipmaker Intel also doesn’t want goals to be unrealistic or disconnected from actual measurement, so it uses analysis scenario planning to map out paths to reaching the more ambitious ones. But Intel is not afraid to think big. “If you hit all your goals, then maybe they weren’t ambitious enough,” Fallender said.
Adobe is another practitioner of ambitious goal-setting. The software company was able to reduce its carbon emissions per employee by 25 percent in 2018, even when it had a 19 percent increase in employees due to some big acquisitions. For Adobe’s sustainability strategist, Vince Digneo, that success means it’s time to do even more.
Keurig Dr Pepper strives for aggressive sustainability goals, in line with the high bars set by the beverage industry, Oxender said. The new company wants to push forward collective action in the sector to make sure significant changes can happen quickly, be it in packaging, water use or other impact areas.
3. Who makes the call?
For most companies we interviewed, sustainability goal-setting is embedded across the entire organization.
In business for over half a century, Intel remembers the days when only two people were looking at supply-chain responsibility issues. The firm is driving a much more “integrated goal-setting approach from the start,” Fallender said.
She brings together environmental teams, supply-chain teams, human resources, the diversity and inclusion group and the Intel Foundation teams to design the big picture, while engaging Intel’s core business units for specific goals in client computing, data center and product energy efficiency.
“We look at it from a technology industry slice and what goals are set by leading technology companies, but also what goals are set by leading manufacturers on a global scale,” Fallender said. “We also are a strong brand, so we often look beyond the tech sector to see best practices there as well.”
Intel’s transition from a PC-centric company to a data-centric company means moving into new areas such as autonomous driving, artificial intelligence and the internet of things. So Fallender’s team is bringing employees in those areas into early discussion, too.
Also an IT manufacturer, Micron has a Sustainability Council that consists of cross-functional senior directors and VPs to provide strategic oversight. Chase’s sustainability team then consults and supports specific functions to achieve targets. For instance, the responsible sourcing team, environment, health and safety team, sales, investor relations and enterprise risk management teams all have authority to develop their unit-specific goals and seeing them through. This is the best way to motivate employees across functions to pitch in on sustainability, Chase said.
Citi’s primary sustainability goal is to reach $100 billion in environmental finance by 2023, which means financing projects with an environmental angle — including renewable energy, green bonds, water quality and conservation, sustainable transportation and buildings. The Environmental and Social Risk Management team, as well as the operations and supply chain teams, also partner together to achieve sustainability goals. Over the years, Citi has observed an increasing level of leadership involvement in sustainable goal-setting. “This is no longer purely a grassroots effort; this is also very much a top-down effort,” Smith said.
Ingersoll Rand engages its local employee teams at over 125 sites and offices in goal-setting. These are empowered local teams of employees who get to decide what’s the most relevant goals for their local sites. Tew’s team will support them at the corporate level and track the progress they make on behalf of the enterprise.
4. External frameworks and peer review complete the puzzle
Companies use a combination of benchmarking, materiality assessment and external frameworks to measure their progress.
The United Nations Sustainable Development Goals are the most common frameworks referenced. For greenhouse gas emission reduction, many companies consult the science-based targets. Some also comply with the Task Force on Climate-related Financial Disclosures. Notably, Ingersoll Rand is consulting all three to set its sustainability goals.
Seeking perpetual feedback
As part of its year-round investor outreach, Intel uses a materiality matrix to get direct feedback on the company’s priorities, which tend to be climate, water and human capital management, Fallender said. In addition, Intel benchmarks its performance within the industry to understand how peers go about their goals.
Keurig Dr Pepper and Adobe also value perspective and feedback from the sustainable business community. Both companies want to collaborate with membership organizations and NGOs to push forward collective action.
“If you singularly look at your own company and what you are capable of, you’re drawing a limit that won’t likely be enough over time. You have to look at the larger landscape and look at all of those other entities as partners in ultimately achieving where you all need to go together,” Oxender said.
Micron and Citi find growing stakeholder interest in environmental and social issues to be powerful change agents. They use materiality assessments to gauge the top priorities of clients and investors.
5. Green light, red light: Review goals often and make adjustments
All the companies interviewed have their goals reviewed at least annually, often in the form of a public-facing sustainability report.
Intel conducts frequent operations reviews and regular check-ins with management review committees from different departments. Fallender’s team meets quarterly with senior leaders on the environmental side, but teams such as diversity and inclusion have monthly meetings.
Adobe reviews goals at least semi-annually, and more frequently if a metric seems inconsistent, Digneo said, although it usually takes three years to tell if an initiative is really succeeding.
Citi also reviews goals semi-annually, while publishing a sustainable progress scorecard in its annual global citizenship report.
Micron keeps its goals flexible to make sure they align with the dynamic, evolving market environment. And it’s not afraid of making changes if need be. “As our environment morphs, as our business morphs, recognizing that there are potentially evolving and emerging challenges, that’s where we would start to morph our goals,” Chase said.
Ingersoll Rand holds internal monthly updates on almost all targets and quarterly reporting to the CEO. Accountability is baked into specific business units. “We believe that if you’re serious about accomplishing something, it needs to be measured and it needs to be tracked and people need to be accountable,” Tew said.
Last year, Ingersoll Rand’s CEO signed a commitment to increase gender parity in leadership roles and diversity in the workforce. It was not a part of the company’s original 2020 commitments, but the company decided to respond to the rising gender parity issue globally.
IBM uses an internal management tool that collects data every three to six months, which is then reviewed at least annually.
Based on the statistics, it expanded the 2020 renewable energy and CO2 reduction goals to colocation centers (IBM data center spaces that the company doesn’t own and operate, but that account for 13 percent of its data center activity) and set new targets for 2025.
“Our progress against the 2020 numbers was moving along well enough to cause us to say, ‘Hey, we’re ready to reach further,’” Balta said.
6. When the going gets tough, the tough talk it out
For some companies, the accountability conversation happens earlier in the goal-setting lifecycle.
Chase’s team at Micron wants to create an environment where people are comfortable talking about missed goals in the first place. He also will explain to customers and investors why certain targets they’re concerned about might not be on track. And Tew’s CEES team at Ingersoll Rand integrates sustainability inside the business processes from the get-go.
For others, public disclosure plays a big part. Citi is focused on being as transparent as possible about the criteria and methodology it uses to measure progress toward the goals, which is why it publishes a sustainable progress scorecard in its annual report, Smith said.
When goals fall through, risk disclosure provides transparency and explains what actions are being taken to mediate the situation, Fallender said. That’s why Intel integrates corporate responsibility report into the annual 10K report it files to the U.S. Securities and Exchange Commission, as well as in proxy statements and other investor communications.
Ultimately, accountability falls on the department in charge of developing and reaching specific goals. Adobe, IBM, Ingersoll Rand and Citi’s sustainability leaders all said they will communicate directly with team leaders accountable for target delivery to determine what support they need to get back on track.
7. Turning challenges into opportunities
Sustainability leaders encounter daily challenges because setting goals that involve the entire organization is extremely complex. They need to juggle resource constraints, cost issues and varying opinions from people that might not consider sustainability their top priority. It’s also harder to mobilize action around these goals compared to activities that drive direct growth for the core business. It’s one of the hardest jobs that people in the sustainability function has.
The takeaway: Sustainability goals cannot be set in a vacuum. “Make sure you’re aligning with your company’s strategy, and make sure you can articulate how each goal is leading to supporting that,” Fallender said.
Finding ways to drive enthusiasm internally is also important. For example, Intel ties social and environmental objectives to executive and employee compensation.
Some companies have more specific challenges, such as larger environmental footprints to offset. Semiconductor manufacturers such as Micron and Intel have high energy usage and GHG emissions. Ingersoll Rand makes large energy-consuming appliances and uses tons of refrigerant in its cooling technology. These companies focus on responsible sourcing and energy efficiency to draw down their climate impact and make sure their products are being designed to operate within the emerging circular economy.
“Our goal is that there’ll be no end of life, that we actually have a true cradle-to-cradle footprint so that the products at the useful end of their life, we find out a way for them to be reused again,” Tew said.
We found the most common threads in these seven areas, but actual goal-setting is a much more sophisticated practice.
Sustainability leaders simultaneously must be the visionaries that see years ahead and the housekeepers that handle the nitty-gritty of execution. They are the bridge connecting senior executives, investors, employees and the general public. The good news is, the business world is largely waking up to environmental and social issues, so corporate sustainability mavens are not as alone on this journey as they might have been in the past.
GreenBiz editorial director Heather Clancy contributed reporting to this article.