Sustainability reports have always aspired to place a company’s activities and impacts into context. The Global Reporting Initiative (GRI), for example, has included “sustainability context” as a reporting principle since 2002. But in practice, this aspiration hasn’t always been met: Companies often report performance indicators but omit information that would help stakeholders understand the significance of the data.
For example, if Company A reports it used 10 million gallons of water and Company B used 200 million gallons, Company A has better environmental performance, right? Not so fast! If Company A withdraws 90 percent of the available water from a river, degrades its water quality and discharges it upstream of a community, it may have much worse performance than a bigger water user. It all depends on the source of the water, the sustainable level of withdrawals from that source, what share of withdrawals the company claims, and whether water is returned to the source – and in what condition. These considerations quickly move context into the realm of science, particularly in determining sustainable levels of use or “ecological limits.”
Sustainability context is even more important when setting goals. Yet according to the World Resources Institute (WRI), “Despite…looming ecological threats, most companies set sustainability targets based on what is considered feasible or competitive rather than what is necessary to preserve Earth’s resources for future generations. Out of 40,000 corporate sustainability reports published between 2000 and 2014, only about 5 percent mention ecological limits.” As Andrew Steer of WRI sums it up: “Stop just doing better and do enough.”
There’s no doubt that providing sustainability context and setting science-based goals can be daunting. When Ford launched a pioneering science-based climate goal in 2008, its scientists had to develop a complex model of emissions and atmospheric greenhouse gas (GHG) levels in order to set a target reflecting their share of necessary reductions. The good news is that science-based goals are becoming better understood and established, with guidance, tools and inspiration more readily available than ever before. For example:
- The Science Based Targets initiative provides guidance and tools to companies to make it easier to adopt GHG emission reduction targets that limit global warming to less than 2 degrees Celsius. A collaboration among CDP, the UN Global Compact, WRI and World Wildlife Fund, Science Based Targets provides different models for emission reductions. As of December 2016, more than 200 businesses had pledged to work with the initiative to set goals related to climate. Next up – helping companies ensure their water neutrality goals are meaningful and scientifically sound.
- The Future Fit Business Benchmark is an open-source tool that allows companies to benchmark their sustainability performance with an eye toward being “fit” for the constraints of the future. As they put it, “a future-fit® business is one that in no way undermines – and ideally increases – the possibility that humans and other life will flourish on Earth forever.”
- The World Resources Institute worked with Mars to set goals that take into account science regarding the global carbon budget, water stress and other ecological constraints. The goals also take into account the local context of impacts throughout the company’s supply chain and operations.
- Kellogg committed to deliver a 65 percent reduction in Scope 1 and 2 emissions by 2050. What’s also significant is that the company is engaging direct suppliers to reduce absolute Scope 3 emissions by 50 percent by 2050. Kellogg even specifies the percentage of suppliers to be engaged – 75 percent of Tier 1 suppliers – and how they’ll be engaged: by reporting to CDP Supply Chain by 2020.
The concept of living within one’s limits is straightforward. But for companies setting sustainability goals, figuring out those limits and how they relate to a company’s activities and impacts – positive and negative – has been challenging. That picture is changing rapidly. We hope we’ve provided some insight on the how to set these goals, to secure a better future for all of us.