While the usage of ‘alternative facts’ is becoming a legitimate political strategy, we strongly believe most people still rely on actual data and science to form opinions, facts and inform their strategy. Now more than ever, we need science and scientists if we are going to overcome the great global challenges of our time – from resource depletion to climate change and rising population. The perplexing choices currently being made by the Trump administration notwithstanding, the Paris climate agreement demonstrates the continued relevance of science, with 200 world leaders agreeing to take action to keep the increase in global temperature to below 2 degrees, itself a science-based target.
The challenge for companies then, is to set meaningful goals in the context of this science. Goal setting in the name of sustainability is commonplace, and goals vary in their level of ambition, but often these goals are arbitrary, and unrelated to a wider impact story or, informed by science. Enter the Sustainable Development Goals (SDGs), which reflect a recognition that consensus about the big tasks, based on objective evidence and context, is a crucial precursor to meaningful action. Businesses were involved in establishing the SDGs, demonstrating the pivotal role that the private sector must play, and the uptake since has been impressive, with many companies now aligning their sustainability ambitions with the global agenda.
Meeting the challenges
Being ambitious about closing the sustainability gap across any of the SDGs is a noble endeavor, but getting the evidence for how to set and achieve any one target is not always straightforward. Different methodologies are emerging to help companies set GHG emission reduction targets in line with climate science. However, beyond GHGs and the two degrees carbon reduction limit, some companies are struggling to identify a manageable approach. We’re picking up the challenge by bringing strategists, technical analysts, policy experts and industry/issue specialists together to develop science-based methodologies that bring in context to focus on the long term and develop these targets with evidence and a strategy to achieve them.
Our approach is based on four questions:
- What does the evidence tell us about the scale and significance of the challenge? What does the scientific literature tell us – from studies on global megatrends, to NGO research, Life Cycle Assessments, government statistics, academic research and cross-industry studies and tools?
- What does this mean for an individual organization? How significant is an issue for a particular business, in its operations, or supply chain, or the use phase of its products? How material is this issue to the success or failure of the business? What factors determine what share of the issue is the company’s responsibility, and what actions can it tangibly take which have a measurable impact?
- What targets are relevant? What is fair and meaningful, and what will motivate change and innovation? The right targets take into consideration factors such as feasibility, geographical context, timing, and use of current tools and frameworks to support the development and comparability of metrics and performance.
- Which of the targets can my organization contribute the most? While many organizations are able to demonstrate links to different ways of making a difference, initial views may not provide actual context to show what may create the most impact. Science-based materiality could provide this link.
The science-based approach in practice
Beyond these guiding questions to set the direction of a company’s goal setting process, we recognize that there is no one-size-fits-all approach, so we are working with our clients to meet this challenge in different ways
Where carbon is the focus, science-based target-setting means that a company will need to gather several company-specific baseline inputs, including: annual (and ideally a historical) GHG emissions, a range of business KPI’s and performance activities to understand any reduction efforts already in place, and to enable projecting the business into the future. Beyond this baseline data, several of the carbon-focused methodologies require that a company define the sector(s) they operate in and/or compare their contribution to national or global gross domestic product (GDP). Combined, this data allows a company to determine what share of the global emissions should be allocated to them in proportion to the economic productivity the contribute – this is often referred to as the ‘carbon budget’. One of the constructive features of using economic intensity metrics as a basis for targets is that they allow companies to achieve growth, while reducing their carbon emissions, which are usually more easily adopted by high growth companies.
Where companies are looking beyond carbon, using the SDGs as a rubric to evaluate where the business has impacts becomes more critical to enable the setting of measurable targets. This is because the company’s direct impacts are typically less obvious or immediately quantifiable and the creation of analogous ‘budgets’ becomes far more challenging. However, the framing questions we’ve outlined above remain applicable and will help tease out the most material of the 17 SDGs for your business. Then it comes down to gathering existing company information paired with science to identify potential program gaps and development of a roadmap to achieve performance improvements.
The investment case
We know most targets are not aggressive enough, and beyond greenhouse gas emissions, most companies are still failing to set targets within a global impact story, so it’s reasonable to ask if the actions being taken against those targets are making a significant difference.
The investor world is also taking note. The Interfaith Center on Corporate Responsibility (ICCR), a coalition of nearly 300 organizations, including companies and mutual funds, and union and other pension funds that collectively represent over $200 billion in invested capital have urged 100 publicly owned companies to honor the commitments that they have made to adopt science-based targets within the next two years.
Beyond the moral imperative, they also recognize that there are commercial benefits to science-based targets as they offer a better guide to what’s required over the long-term – a solid background to justify investment and action and a means of measuring total progress – and conversely, to avoid over-investing in action that is not truly required. Using science offers an opportunity to take proportionate action now, and avoid playing ‘catch-up’ with resource heavy strategy development later.
Would you like someone from our team to get in touch with you about this topic?