What is Corporate Sustainability? “Corporate sustainability” refers to voluntary efforts by companies to reduce negative impacts and increase positive impacts on society. Other common terms include “corporate social responsibility” and “ESG” (environmental, social and governance). Corporate sustainability programs may include (but are not limited to) efforts to reduce environmental impacts, support communities, improve the lives of employees, and promote social justice. As the sustainability activator, Anthesis helps organizations create long-term business and stakeholder value through sustainable performance.
Anthesis Director Zeke Hart explains how corporate sustainability goals for companies have evolved over the years, as companies have expanded the scope and ambition of their commitments. Whether your company is in the vanguard of corporate sustainability or is just getting started, it’s worth understanding how leading practices have changed and how to set environmental goals for a business.
How Corporate Goals Have Evolved Over Time
Through our extensive work in sustainability corporate goal-setting for more than a decade, we’ve observed three distinct generations of sustainability goals for companies. From an initial focus on managing in-house environmental impacts, companies expanded beyond their own four walls to value-chain impacts and to social topics. Today, we see a broad move to “third generation” goals that are characterised by increased ambition, rigor and a focus on outcomes.
First generation (’90s to ’00s): beyond EHS compliance to voluntary environmental impact goals
Starting in the late 1980s and into the 1990s, companies with significant environmental impacts such as Baxter, DuPont, IBM and Shell began to take proactive approaches, committing to voluntary goals in areas such as hazardous waste, energy efficiency, air emissions and wastewater. These goals represented a natural extension of mandatory regulatory targets.
Second generation (’00s to ’10s): supplier, product and social goals become common
In a 2011 analysis of data for 31 sustainability leaders with current and past goals, we found that they were increasingly setting supplier, sourcing, product and social goals. Compared to their previous goals, they were now twice as likely to have product and supply chain goals (70 percent and 52 percent, respectively). And while social goals were still uncommon, there was a clear uptick in their frequency too. Today, product and supply chain goals are the norm, and social goals have become common as well. For example, the sustainability thought leader Andrew Winston found that from 2012 to 2017, the percentage of Fortune Global 200 companies with employee goals rose from 12 to 49, while those with community goals increased from 16 to 47.
Third generation (today): increasingly ambitious, expansive and innovative goals
Over the past decade, as sustainability leaders have sought to extend the impact of their efforts, they have expanded the scope and ambition of their goals in various ways, making commitments that show a higher level of accountability for societal impacts and outcomes, and a stronger integration into the business strategy.
Perhaps the most prominent type of third generation goal is the science-based target for greenhouse gas (GHG) reductions, which aligns corporate goals to the global GHG reductions that science shows are needed. Some companies are also using science or the external context to set water and circular economy targets, or simply promising to go all the way to 100 percent renewable energy or zero waste.
Expanded scope and sophistication of social and value chain goals
Second generation social and value chain goals were often process-oriented and limited in scope. A typical example might be: “Suppliers representing 75 percent of our sales will disclose their environmental impacts.” Today, we are seeing companies set ambitious quantitative value chain and social goals, such as Unilever’s objective to “link more than 500,000 smallholder farmers… into our supply chain,” Apple’s goal of a “closed-loop supply chain,” and Walmart’s commitment to “reduce GHG emissions in our supply chain by one gigaton (one billion metric tons).”
Focus on the societal and business outcomes
Instead of emphasising how much they will spend, or what process they will follow, companies are increasingly setting targets related to the outcome they want to achieve. For example, Vodafone has a goal to “use mobile technology to bring education to a potential three million young people in refugee camps,” while Dow is aiming to generate both a “$1B… of nature-enhancing projects”.
What Are the Implications for Your Company?
For many companies, the prospect of setting ambitious third generation goals will appear daunting. For others, which want to achieve or maintain a position of sustainability leadership, the bar has been raised. As you think about your next set of goals, keep the following in mind:
Look to set a combination of first, second and third generation goals
Even the most advanced sustainability leaders still will have some basic operational impact goals and relatively low-ambition targets. Think through what combination of goals will allow you to address your key issues and achieve the right balance of incremental and transformational change.
Align your goals to your sustainability strategy and ambition level
If you’re setting public goals for just the first or second time, keep in mind that many of the companies with leadership goals have been at it much longer. If you’re ready for third generation goals, focus on your most material sustainability issues, where the most business value is at stake.
Be creative, engage your organisation and think (relatively) long-term
The most effective third generation goals should be unique to your company and require ample time (think five to ten years or more). Engage a wide swath of internal experts and stakeholders to generate as many ideas as possible, with a focus on the ways your company wants and needs to transform for the future.
Benchmark the third generation goals of your competitors and peers to build internal support
It’s likely that many of your key internal stakeholders have no idea how ambitious and innovative corporate sustainability goals have become. By sharing these goals and explaining why companies believe it’s in their interest to set them, you can start a valuable dialogue on what the right analogous goals could be for your company.