Corporate sustainability goals can be something of a mystery. I am sometimes asked: why do companies set the sustainability goals that they do? I often answer that as a science company, DuPont focuses on developing science-based solutions to market problems. But for any company --- not just DuPont --- setting corporate sustainability goals is as much art as it is science. Developing the right goal means balancing the (not mutually exclusive) needs to grow the business, demonstrate shareholder value, incorporate oft-competing inputs of stakeholders, and contribute our fair share to protect the planet. Here’s the inside scoop on the evolution of corporate sustainability goal setting from the front lines.
“How Much By When”
Early on, companies pursued sustainability goals linked primarily to their operational footprint. DuPont, like many other companies, had goals to reduce toxic emissions, reduce energy and water use, reduce greenhouse gases, and reduce waste. This approach made sense. Companies should own what they control. The challenge always was, and in fact still is, “how much by when”. How much is my company going to improve its performance, using what metric, and by what date? Some companies simply established their targets based on business-as-usual projections. That is, they backed into their sustainability targets knowing they needed to do nothing to achieve them. Other companies tried to put some stretch into their targets, how much of a stretch was seldom a rigorous process.
Increasingly, non-traditional stakeholders like NGOs have recognized these flawed early approaches and attempted to provide tools and methodologies to help inform “good” corporate sustainability goal-setting. But, these stakeholder voices are often fractured, in disagreement, or evolving their own processes and expectations. For examples, a group of organizations recently developed a concept of “science-based targets” for greenhouse gas emissions. These tools attempt to reveal the “fair share” that a company should reduce its emissions based on the global goal to limit goal warming to 2 degree increase by 2050. At DuPont, we applaud and have actively supported this effort. However, we also know that there is significant uncertainty about whether there is a credible way to distill a whole world target for emissions reduction into a set of individual goals for companies operating globally in multiple supply chains. Suffice to say, companies setting such “science-based” goals today may soon find the methodology shifting.
Other NGOs are advocating for companies to make commitments to be carbon neutral, or even carbon positive, in the next decade or two. Companies setting footprint goals today must artfully balance the needs of their shareholders with those of an increasingly engaged society and recognize that inputs from all stakeholders will continue to evolve.
Up and Down the Value Chain
Around 2006, the conversation started to shift --- companies were no longer only expected to reduce their negative impact, they were also expected to increase their positive impact. Leadership companies began to make commitments that went beyond their immediate fence lines and resonated up and down their value chains, including increasing the sustainability attributes of the products that they were developing and reducing the impacts of their supply chains. For example, GE launched Ecomagination to drive product development and Walmart committed to improving their supply chain by developing an index to assess their suppliers on their sustainability performance. DuPont committed to grow revenues by $2 billion from products that reduced greenhouse gas emissions for our customers or the final consumer. In hindsight, the first wave of these new types of goals may have been conservative, but they required companies to start influencing their suppliers and their customers - potentially creating more impact.
Today, it’s all about impact and innovation. We are now hearing calls from investors and civil society for companies to demonstrate that they are embedding sustainability into their core business processes, ensuring that sustainability is not just a “nice to do” activity but an integral consideration in key business decisions. At DuPont, that has manifested itself very directly in our new 2020 Sustainable Innovation Goal. This goal challenges all new products in our pipeline to contribute to a safer, healthier, more sustainable world. It builds on our previous goal to double our R&D investment in products with quantifiable environmental benefits.
For science-based companies like DuPont, innovations are the result of a complex, multi-stage process that starts with customer needs, continues through early stage discovery, development and ultimately through launch and commercialization. Throughout each of these steps, myriad decisions are made about allocation of resources, prioritization of projects and market viability. Now, we will add to this mix the potential for our pipeline products to contribute to a safer, healthier and more sustainable world, as an explicit criterion in our decision process for major growth innovations.
Other companies with different operating models may seek to embed sustainability directly in their core processes in different ways. But, the goal is the same: to embed sustainability it in the hearts and minds of people across the company, including those most responsible for turning promising ideas into innovative solutions.