April 21, 2021
Add capital value and reduce risk through specific, measurable, attainable, relevant & time-based sustainability goals
Sustainability efforts are increasingly important to a company's business practices in the eyes of many stakeholders. When choosing and setting sustainability goals, companies should consider their primary business objectives while being mindful of the potential enterprise risks of failing to meet specified goals. False or misleading statements can lead to both stakeholder disappointment and legal liability.
The most effective goals will satisfy regulatory requirements and provide local environmental and societal benefits while simultaneously adding value to a company's business. Such goals can expand value through the creation and preservation of capital — natural, human, social, manufactured, and financial — which is important for any business to deliver products and services and operate sustainably. Companies are already realizing significant financial, social, and environmental success through a rigorous scientific approach to developing, executing, and measuring sustainability goals.
SMART (specific, measurable, attainable, relevant, and time-based) goals can help companies focus their sustainability targets and take action towards meeting them. Each element of a SMART goal, however, is complicated by the uncertainty of future regulations, numerous evolving disclosure frameworks, and technological advances that have yet to materialize but are expected in the next 5, 10, or 20 years.
This is the first in a series of six short discourses on selecting scientifically defensible and technologically feasible sustainability goals. The following five pieces will explore each letter of the SMART acronym to show how science and engineering expertise can help focus and implement sustainability actions to create corporate capital value and reduce risk, including physical risk to facilities and infrastructure, transitional risk related to changes in processes and formulations, and liability risk.
Specific: Sustainability goals should define what action will be taken and how the action will create value in the organization. Vague, non-specific goals are easy to draft but do not help companies realize the benefits that come from scientific, business-specific, targeted actions. Well-crafted goals can help address climate resiliency, greenhouse gas emissions, and water conservation, while also protecting critical business elements, such as supply chain resources or operations assets. The process of setting sustainability goals should incorporate recognition of existing corporate capabilities and culture as well as industry-specific development goals, frameworks, and metrics. Defining specific targets is the crucial first step towards SMART sustainability actions.
Measurable: After specific sustainability actions are defined, stakeholders will need to gauge progress made towards these goals. But what metrics will measure success? How precisely can they be measured? How will data be collected and reported? Will the measurement methods be accepted by other stakeholders and regulators in the future? If necessary, will the measurement methods be defensible in court? Choosing and defining appropriate and scientifically defensible measurement methods, data collection strategies, and success criteria will enhance the credibility of a company's goals and the confidence of stakeholders.
Attainable: Creating capital through transformative sustainability goals can be challenging and uncertain over 5-, 10-, or 20-year timeframes. But failure to attain publicly stated sustainability targets could create undesirable liability, including financial, legal, and reputational risks. Companies benefit from understanding the science, technology, and regulatory environment when establishing these goals. Companies that set and achieve ambitious goals stand to gain a marketplace advantage by adapting more quickly than their peers.
Relevant: Capital creation is maximized when sustainability goals are relevant to the processes of individual facilities and industries, to local environmental conditions, and to the needs of the local community. For example, purchasing carbon credits from a distant reforestation project may reduce net emissions but does not generate a direct asset for the company or provide benefits to either the local environment or the local community. Instead, a more relevant goal may be to invest in the development of an adjacent wetland that sequesters carbon and protects against flooding, thereby creating value to the company, the environment, and the community. Identifying, assessing and maximizing the potential of relevant goals involves scientific and engineering analyses of industry-specific and site-specific conditions to identify opportunities for action, measure progress, quantify benefits, and report results. By defining relevant sustainability goals that have a direct connection to business operations and objectives, companies can generate and preserve capital and realize sustainability value.
Time-based: Sustainability goals should define the period over which benefits will be realized. Setting deadlines, however, can be particularly challenging and create enterprise risk because success may depend on future technologies, future climate, or future regulations. Short-term goals may generate long-term liability if the methodology used to achieve those near-term goals is not aligned with long-term sustainability expectations from stakeholders. For example, companies are wise to scientifically assess whether methods and technologies that are "certified" today will stand the test of time and legal scrutiny. Goals should be evaluated for short-term and long-term durability to avoid creating unwanted legal, financial, or reputational risk.
How Exponent Can Help
Exponent is a recognized and trusted engineering and scientific consulting firm that has, for more than 50 years, advised and assisted clients in addressing their most challenging, interdisciplinary, and technologically complex business goals and problems. Today, as companies rapidly pivot operations and corporate culture to meet sustainability goals in response to changing climate conditions, changing stakeholder expectations, and evolving technology, Exponent applies its scientific and engineering expertise to help our clients transition operations for the future. SMART sustainability goals informed by Exponent's rigorous analysis and reporting can help businesses reduce physical, transitional, and liability risk while building an organization's capital and creating stakeholder value.
Exponent's interdisciplinary sustainability team is composed of industry experts in environmental science, polymer science, data sciences, and chemical, electrochemical, mechanical, and civil engineering who regularly support the research, development, and assessment of breakthrough technologies that are enabling the current and future sustainability transformations of companies.