Success of any well-defined ESG strategy largely depends on the targets that are set and achieved within an ESG framework. No ESG strategy can be formulated without clear goals or targets in mind and businesses often have no clue how to set their ESG targets. In this article, we will share some tips on how companies should set their ESG targets within their ESG framework.
Define Scope and Boundary
You must clearly define the scope and boundary of your ESG goals and must know what you want to achieve in terms of ESG before clarifying your ESG targets. Well-thought out ESG targets integrate seamlessly with the overall ESG strategy of a business organization. If the focus of your ESG strategy is on improving the governance aspect of the business, then setting a goal that focuses on reducing carbon footprint may not be the right way to go as you need governance based goals in this scenario.
Set Measurable Targets
The adage “If you can’t measure it, you can’t manage it” is perhaps the best way to elaborate the importance of setting measurable ESG targets. By the very nature of ESG, businesses often fail to set measurable targets and many end up having abstract targets that are too difficult to measure.
Many businesses complain that as ESG puts significant emphasis on qualitative aspects of a business, it’s not possible to measure these aspects and express them in numeric terms. With the help of key performance indicators and other metrics you can try to at least accurately measure the targets. With a little bit of brainstorming, you can find the metric or KPI that will be quite close to the qualitative aspect that you want to measure.
Ask yourself how an ESG target is relevant to the overall ESG strategy adopted by your organization? If you can provide a simple answer to this question, then the target chosen by you will help you achieve the goals identified in your ESG strategy. An ESG target must not only help you achieve a higher ESG score, but must also be in syn with the overall ESG goals of your organization.
It’s too common for businesses to set unrealistic or unachievable ESG targets in excitement. Organizations often forget to take into account the obstacles in the way when formulating ESG targets. You must honestly check the prospects of achieving an ESG target. Carefully study the obstacles that can stop you from achieving a goal. Sometimes these obstacles are in the form of lack of resources, time, or manpower available to work towards a target. Only select the targets that are realistically achievable for your organization.
Your ESG targets must have a clear time frame in which the organization has to achieve the targets laid down in your ESG strategy. There is a high chance that any goal without a deadline or time frame may never be achieved as deadlines create pressure on us to achieve specific outcomes. So, you must have clear time frame for each ESG target selected by you.
Take top management in confidence
It’s a good idea to take top management of your company in confidence when formulating ESG targets for your organization. It’s the management that provides the resources for achieving specific ESG targets and goals and the success of these ESG targets will largely depend on the generosity of the management. So, include them in the deliberations and debate various aspects of your ESG targets so that they can be invited onboard for achieving the ESG targets.