Sustainability 2020: Will Big Goals Bring Big Results?
What a difference five years can make.
As we now look to the 2020 horizon, companies are setting their new goals at a time when sustainability principles are being increasingly integrated into business operations, and disclosure is now more focused on connecting sustainability investments to bottom line results.
"What has really changed in the past years is how stakeholders, mostly shareholders and investors have started to look at sustainability goals," says Velislava Ivanova, Global Sustainability Practice Director with CH2M HILL. "They look at the sustainability goals and performance against these goals as a proxy for how companies are managed, which actually drives very new thinking in setting 2020 goals."
According to Bruno Sarda, Director of Global Sustainability Operations for Dell Inc., materiality was indeed, among the guiding principles for the development of the company's 2020 Legacy of Good Plan, its new sustainability road map.
"The overarching theme is this idea of really integrating [sustainability] into the core business so that it's no longer about us being good stewards or good managers," Mr. Sarda said. "It's about how do we run our business better?"
The company unveiled its answer last fall in the form of 21 goals, organized around the pillars of 'environment', 'communities' and 'people'. Incorporating stakeholder feedback into the process, Mr. Sarda said, helped the company prioritize the areas where it should focus its attention. So while Dell plans to make dramatic reductions in the energy intensity of the company's product portfolio, for example, it envisions more measured cuts in greenhouse gas emissions from direct operations.
"We do see some of our industry peers making 100 percent renewable energy commitments, [but] for us, operationally, we see it's a bit less material," he said. "Because we've moved so much of the work inside our supply chain, our Scope 1 and Scope 2 footprint are tiny compared to what is both upstream and downstream."
Sustainable packaging, on the other hand, rose to the top as an important area for Dell to make continued improvements; the road map therefore includes a target of ensuring that 100 percent of the packaging is recyclable or compostable.
"On a life cycle basis, it may not register nearly as high as you might think it would, but is it something that really matters to our customers and that our customers really appreciate? Customer needs and demands and perceptions are also part of our materiality context," he said.
The City of Denver has similarly used a materiality lens to establish the framework for its 2020 Sustainability Goals, according to Jerry Tinianow, Chief Sustainability Officer with the Mayor's Office. Like many companies, this began with a look at the city's known risk areas.
"The specifics of our location are that we have poor, nonproductive soils, low and unpredictable precipitation and we're a long way from everyone else," Mr. Tinianow said. "So if you put those three things together then your greatest vulnerabilities are going to be in the areas of energy, food and water."
Accordingly, the 2020 vision addresses these core challenges through goals such as reducing energy consumed in city-operated buildings by 20 percent and promising that at least 25 percent of the food purchased through the government is sustainably sourced.
The overall design of the plan — which features 12 mutually reinforcing goals — ensures that progress in an area such as 'mobility' could also help spur progress in 'energy' or 'air quality'
"If we're able to reduce single-occupancy vehicle travel from the current 70 percent for commuting down to 60 percent, then we will also be conserving energy and helping to meet the energy goal," Mr. Tinianow said. "We really designed the goals to be synergistic and make it possible to work on several goals with a single project."
The plan does more than just manage the city's vulnerabilities, however. The true intent, according to Mr. Tinianow, is to improve the quality of life in Denver.
"We've tried to reduce sustainability to a simple three-part formula that emphasizes lifestyle," he said. "Sustainable behaviors not only make our community more sustainable but they make your own life happier and more productive. They allow you to get closer to achieving your full potential."
In order to reach its own potential, Mr. Tinianow said the city will need to collaborate more with partners at all levels of the community, and with entities beyond its gates. Resource issues such as food security, air quality and water supply are all examples of areas where he said the solutions will come from coordinated regional efforts.
"Within our boundaries we have a lot of control, but obviously we're part of a region," he said. "If you're in the area of climate change and water quality, even if Denver does everything right, we're really at the mercy of what goes on upstream and upwind, so regional collaboration is absolutely essential."
While governments have a history of working together, Ms. Ivanova said companies are starting to do the same to drive systemic changes across sectors and within industries.
"Companies are recognizing that for them to be able to make transformational change in the world in which we live and they operate, they need to collaborate," she said.
She predicts that the new 2020 goals will likely include plans that rely on collaborative behavior.
At Dell, Mr. Sarda says that the company's visionary '10 x 20 goal' is an example of a step in that direction. Under this commitment, Dell seeks to generate 10 times the benefit through its technology than it takes to make and use it.
"Computing IT consumes between two and three percent of the world's electricity, but if we had better use of IT we could reduce energy consumption in the world by 30 percent," he explained. "If we put more technology out there in the right ways, for the right reasons it can actually have a positive impact on the world."
Mr. Sarda said this idea fits with Dell's new position in the marketplace.
"The last time we had set goals, we were primarily a company that sold technology as hardware," he said. "Fast-forward five or size years and now a third of our business is in the services and solutions and consulting side... We are now a company that really takes responsibility for the outcomes that we help others achieve."
To achieve this goal, however, the company will be need to work in non-traditional ways to influence events beyond its four walls.
"When you look at the goals that are in it, many of them cannot be met within Dell's operational span of control," Mr. Sarda said.
While Dell's promise to create a net 'good' may sound aspirational, Ms. Ivanova says that when it comes to setting goals, the more ambitious the target, the more likely the results.
"What we've seen in our research is that companies who have more aspirational goals achieve overall more successful performance improvements, she said. "They might not necessarily achieve the aspirational goal itself, but they make overall progress compared to those companies with less ambitious goals."
Beyond driving individual performance, what ambitious goals ultimately do, Ms. Ivanova says, is to create a momentum for change that ripples through the entire business ecosystem.
"We have these really, really progressive companies that are looking at financial metrics, looking at how to link sustainability goals with financial and business goals," she said. "When you have them leading the way, they influence their peers, they influence their suppliers, but more importantly, they influence their customers by their behavior, by their aspiration, by the way they communicate."