Propel Your Sustainability Strategy with Process-based Targets

We see it all the time, your leadership understands that they need a sustainability strategy and public goals, but they are concerned about committing without a clear sense of the path to get there. In this blog, we dive a bit deeper into an impactful tactic to bridge the gap, build momentum, and maintain accountability: setting process-based interim targets.

We know where we need to go, but not how to get there

It’s a phrase we hear often when supporting companies to develop credible and effective strategies for sustainability. We have found it helpful to structure our conversations around five iterative steps: scan, understand, prioritise, acknowledge, and set strategy, goals & targets. Check out this blog post to read more about these steps.

The first three steps scan, understand, and prioritise are about understanding the resilience of the context where you operate, understanding the limits to that resilience, and identifying the most material impacts of your operations and your value chain. We have written about this process in our embedded strategies guide, and it’s the reason that we have been developing and refining our Impact Materiality Radar process. The key impacts that emerge from these early steps become the key focus areas for your strategy.

In the next step, acknowledge, you work with your senior leadership and your board to help them develop their conviction around the need to address these issues and to articulate long-term goals, ambitions, or vision statements (they go by many names). This work can be supported through developing position statements that help to clarify the the need for action and what the company needs to commit to do over the medium- or long-term. In these blogs, we talk more about why you may want to develop a position statement and how to develop credible statement.

But one of the key places where we see companies getting stuck is the gap between recognising the need to take action and the fear of not knowing exactly how to achieve these long-term goals.

There are a growing set of external expectations that can guide or frame what needs to be done, such as net zero by 2050 or even net zero by 2040, nature positive by 2030, or aligning with any of the Sustainable Development Goals for 2030. But leadership and boards can be reluctant to commit to these goals because they don’t have enough clarity on the work and resources required to achieve them. While they may support the idea of decent work, a healthy environment, and community resilience, the path often seems daunting and unclear.

Our research reveals that the organisations that cross this chasm have often done it by setting process-based interim targets that focus on the work that needs to be undertaken to get there.

What are process-based interim targets?

Interim targets are often shorter-term targets that provide accountability and help those inside and outside of the organisation to know whether you are making meaningful progress towards your longer-term commitment or goal.

In some cases, they will be lagging indicators – they will specify expected outcomes such as a 20% emissions reduction or water use reduction by year 1, a 35% reduction by year 2, and so on. These are outcome-based interim targets, soyou will be judged on whether you achieved the impact. While they are certainly important, leadership teams and boards can fear them at early stages, especially when there isn’t a clear plan to achieve them.

Whereas, at the early stages of working on sustainability issues, we find that leading indicators in the form of process-based interim targets that clearly outline the specific actions that your company intends to take to achieve its high- level goals or commitments are very helpful. For instance, you may need to undertake work like gathering data by completing baseline assessments at all your facilities in the coming year, developing workplans by the end of year 1, developing and/or delivering training in year 2, undertaking pilot projects, and developing policies or processes. These process-based targets can be specific tasks, collaborations, initiatives, or interventions. You will be judged on whether you completed the action in the time frame that you committed to do so.

As part of our work on our free goals database we’ve been comparing thousands of reports over a range of sectors. By looking back over time, we can learn how companies make progress across a range of different sustainability issues. Behind the scenes, we’ve been compiling this work into a process-based targets database – and over the coming year, we will be releasing a series of issue-based guidebooks that explain the commons steps that companies take to make progress on each topic.

Setting process-based interim targets

In the meantime, here’s what we have observed. While each issue will have its own set of associated actions, we have found that the progression follows a similar pattern. Most organisations seem to operate on a five-year strategy cycle, so across the time periods, we have grouped process-based targets based on their position in that five-year cycle.

Below, we’ve outlined some of the key steps we’ve found across a few different issues to highlight the kind of work flow you should expect if you are at early stages of your journey. While we have grouped these actions on a yearly basis over a hypothetical five-year cycle, the proposed timelines are only for guidance and are based on the pace we see outlined by other companies. The timeframe for actions and work for each step needs to be embedded in your organisational context, which may require different time allocations.

Year 1: Understanding the issue, understanding pressures, aligning your organisation, and benchmarking.

Many companies will need to begin by building a comprehensive understanding of the issue, including learning more about the local context(s), history, and relevant scientific and Traditional knowledge. The next step is to link the issue to your business, including your impacts on the issue and the possible risks you face (such as transition risks from regulatory pressures or physical risks from increasing extreme weather events) and the implications for business continuity. A crucial aspect is articulating this link and developing a clear rationale for why it's important for the company to address this issue – to build a business case and align your organisation on why it needs to take credible action. You will also need to engage in benchmarking and understanding how other companies in your industry and region (as well as leaders in other sectors) are going about doing this work, the kinds of metrics that they're using, the data that they're gathering, and think about how you can use those insights to build out the work plan for your own organisation.

The following are examples of process-based targets we’ve identified for year 1.

For nature:

By 20[XX], we will learn about local biodiversity and ecosystems.

By 20[XX], we will conduct a materiality screening to identify nature-related dependencies, impacts, risks, and opportunities.

For community resilience:

By 20[XX], we will map key stakeholders in local communities for each community where we operate.

By 20[XX], we will review community plans and engage with key stakeholders to understand community priorities for resilience and wellbeing for each community where we operate.

By 20[XX], we will design and implement an effective community feedback mechanism, with input from our local stakeholders.

For employee wellbeing:

By 20[XX], we will use employee listening exercises to understand our workforce’s perspectives, needs, priorities, and ideas to support wellbeing at work.

By 20[XX], we will clearly define what wellbeing means for our organisation.

Year 2: Understanding the work required to close the gaps, gathering baseline date, and developing workplans.

The second year often consists of leveraging your previous learning to understand the gaps in your organisation and the work required to close them. This stage usually requires gathering data within your operations, and depending on the capacity of your organisation, also within your supply chains. Often this can be baseline assessments or engagement mechanisms, and sometimes both. During this period, companies also develop workplans and articulate strategies that outline the key activities they will pursue and set further process-based targets.

The following are examples of process-based targets we’ve identified for year 2:

For climate risk and adaptation:

By 20[XX], we will develop an action plan to embed climate risk into key decision making and risk management processes.

By 20[XX], we will develop an adaptation plan for priority climate risks.

By 20[XX], we will complete an inventory of all relevant Scope 3 activities.

For localisation:

By 20[XX], we will establish a local content taskforce with participants from our organisation and local communities to inform our efforts.

For water:

By 20[XX], we will undertake water risk assessments at each site in which we operate to understand our contribution to global and local water challenges

By 20[XX], we will identify priority watersheds and water-stressed areas within our operations

For fair compensation:

By 20[XX], we will undertake a wage assessment across our operations to understand the implications for our business.

Year 3: Pilot activities, building capabilities, and engagement

In year 3, companies begin to pilot the activities and interventions that they have identified. This often marks the beginning of the fundamental work to achieve their high-level goals and commitments. Companies also need to build capabilities related to material topics within their organisation, often through training and developing resources, policies, and procedures.

For many companies, their greatest social and environmental impacts lie within their supply chains, making supplier engagement a critical aspect of their strategy. This includes building an understanding of where suppliers are on their journey and how you can support them as a lever for your sustainability ambitions. During this stage, companies also engage with industry groups and topic-based collaborations to support broader systems change.

The following are examples of process-based targets we’ve identified for year 3:

For equity, diversity, and inclusion:

By 20[XX], we will build leadership capabilities on topics and practices related to diversity, equity, and inclusion.

For nature:

By 20[XX], we will identify and implement biodiversity improvement and conservation measures that would seek to create a net positive impact in our areas of influence.

For sustainable sourcing:

By 20[XX], we will develop a strategy to engage with industry groups/voluntary standards on key commodities.

Year 4 and onwards: Undertaking the fundamental work.

Year 4 and onwards is when we see companies really get down to the fundamental work that’s required to make significant progress towards their high-level goals and commitments. These activities will look different for each organisation, industry, and region that they operate within. Often, for organisations maturing in their sustainability journey, this will also include incorporating efforts within their supply chains into their strategy.

For fair compensation:

By 20[XX], we will extend our fair compensation commitment and undertake a wage assessment in our value chain.

For water:

By 20[XX], we will implement measures to achieve operation specific targets for improvements in water use intensity and water quality

For nature:

By 20[XX], all operating sites will have implemented a plan to achieve a net-positive impact on nature that is based in their local context.

By 20[XX], we will engage with supply chain partners, educate them on nature concerns and opportunities, and collaborate on potential solutions and interventions to meet nature goals.

These are just a few of the process-based targets we’ve identified from our research. In the coming months, keep an eye out as we launch a series of issue-based guidebooks that will provide additional insights into systems thresholds, key goals and interim targets, key actors, and resources.