Are Your Sustainability Goals SMART? Part 3

Trees surrounded by high rise buildings on a sunny day

June 1, 2021

SMART (specific, measurable, attainable, relevant, and time-based) goals can help companies focus their sustainability targets and take action towards meeting them. This is the third in a series of six short discourses on selecting scientifically defensible and technologically feasible sustainability goals (see the first here and second here). Using each letter of the SMART acronym, we show how science and engineering expertise can help focus and implement sustainability actions that create corporate capital value and reduce physical risk to facilities and infrastructure, transitional risks related to changes in processes and formulations, and legal liability risks.

Measurable sustainability goals are most productive when they use scientifically rigorous methods to collect reliable and defensible data for current and future reporting, progress tracking, and risk reduction. Developing a measurable goal benefits from a scientific and engineering understanding of what is being measured, knowledge of the current industry metrics and regulatory frameworks, and insight into where industry metrics and regulatory policies are likely headed. A goal measured by today's metrics and regulations may not satisfy metrics and regulations in 5 or 10 years.

In addition to future regulatory and industry shifts, companies should consider future liability when developing measurement strategies. Robust measurement approaches can support a rigorous and objective defense if sustainability efforts and progress metrics are challenged. For this reason, it is helpful to recognize that once a program starts, information that goes unmeasured may not be recoverable years later. Thoughtfully considering how to measure sustainability progress can reduce transitional risk and liability by considering future industry requirements, stakeholder expectations, and the requirements of future regulations.

Having an interdisciplinary team that, together, can address the following questions can be beneficial in developing measurable sustainability goals:

  • Which industry metrics and regulations should I consider? (Industry Acceptance)
  • What is the scope of my sustainability target? (Direct or Indirect Impacts)
  • How credible are my data? (Validation)
  • When could reporting requirements change? (Future considerations)

To explore how these questions can be incorporated into setting measurable sustainability goals, consider the broad hypothetical sustainability goal posed below.

Hypothetical sustainability goal: reduce plastic creation through increase in renewable content

The release of plastics and other synthetic polymers to the environment presents a set of complex, globally diffuse, and persistent environmental challenges now receiving considerable attention from scientists, governments, and the public. Recent initiatives have banned specific uses of plastics (e.g., microbeads in cosmetics) and supported the use of recycled, compostable, or recoverable plastics. The use of bio-based polymers as an alternative to petroleum-based polymers has also gained traction over the past decade. However, substantial challenges remain in understanding and implementing technologies that facilitate waste minimization, reuse, and recycling in the current plastic economy.

Which metrics? Industry Acceptance:

Measure and disclose industry-specific SASB and GRI metrics as well as more detailed business-specific data.

The Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) both provide a range of metrics that can be used for reporting. SASB has created a Materiality Map that provides suggestions on which metrics are likely to be material for specific industries. Industry-specific guidelines help businesses understand the type of data expected to be collected within specific industries, typically data that can be collected relatively easily across diverse companies within the same industry. Other broadly requested metrics are "industry-agnostic," meaning they do not correspond to any particular industry. These types of data are often used in financial risk models to assess a business's resilience to climate change. Both industry-specific and industry-agnostic metrics are important, but sustainability goals based on these metrics may not accurately reflect whether a company is achieving its business objective for setting the goal. SMART sustainability goals identify measurable attributes, or metrics, that correspond to the specific objectives of the target while providing the necessary industry-specific and industry-agnostic reporting data.

For example, current industry metrics for the packaging and container industry include the fraction of recycled content or raw material from renewable sources but do not address more complex and company-specific metrics such as what fraction of the renewable material was locally sourced or what fraction of the recycled content was from a previously unrecyclable source. While recycled content may be appropriate as a metric to gauge progress, using materials that would not have been otherwise recyclable may signify a greater achievement and be less susceptible to price fluctuation. Collecting and reporting this more specific information provides further, measurable support for sustainability progress.

What scope? Direct or Indirect Impacts:

Consider feedstock suppliers and product recycling and disposal.

Companies frequently develop sustainability goals and reporting based on direct facility emissions (Scope 1) and emissions from their utility providers (Scope 2). Depending on the industry, however, the majority of emissions may be upstream of the company in their supply chain or downstream in product recycling and disposal (Scope 3). While reporting Scope 1 and Scope 2 emissions currently may meet the requirement of a regulatory or industry metric, stakeholders are increasingly interested in understanding the full picture, including Scope 3 emissions. However, industry-specific metrics do not necessarily evaluate supply chain businesses and downstream users.

Rigorous evaluation of Scope 3 emissions from products or processes requires a scientific and engineering assessment of how feedstocks are produced, recycled, and disposed of. For a renewable biopolymer, for example, the energy and water intensity of the biomass feedstock may vary significantly based on the climate of the agricultural area (e.g., is rainfall sufficient or is irrigation needed), farming practices (e.g., fertilizer use, deforestation, cover crops, etc.), or the processing of the biomass. End-of-life analyses may be even more complicated, especially for products such as batteries that can contain heavy metals and have specific disposal requirements. A scientific and technological assessment of the supplier's industry and location can help companies manage risks introduced by suppliers who do not provide transparent sustainability metrics. If needed, audits can be performed to validate a supplier's claims or assumptions.

How credible? Validation:

Use appropriate reference for current emissions and plastic usage to obtain a reliable baseline for comparison to future performance and engage third-party validation of results.

Sustainability goals are often equally focused on absolute emissions and metrics (e.g., tons per year of carbon emissions) and relative metrics (e.g., 50% reduction in carbon emissions from 2018). Relative measurements require not only the absolute values but accurate baseline emissions rates, and they may require controlling for factors that could cause misleading comparisons if not appropriately considered. A scientific and technological assessment of processes, products, supply chains, and end-of life considerations is necessary to develop appropriate measurement techniques and identify and control for confounding factors. To accurately report the confidence and uncertainty of a data set, the analysis should be performed using accepted statistical methods by those appropriately skilled in data science techniques. Engaging the services of third-party validators to examine data, assumptions, and conclusions may further increase the credibility of reporting.

When could reporting change? Future Insight:

Measure additional water and air quality parameters that are not required today but may be subject to regulation and liability in the future.

Sustainability goals are intentionally focused on the long-term and may extend 5, 10, 20, or even 30 years. Therefore, it is beneficial to identify not only today's required metrics but those likely needed over the lifetime of the sustainability program. For example, if data are not collected in the first ten years of a program, there may be no way to recover the information if processes, feedstocks, or other critical parameters change. The absence of important data may create significant risk if the absence of the data limits progress reporting or credit accrual and exposes a company to legal liability or claims of wrongdoing. Considering scientific, technological, and regulatory trends in light of business-specific objectives can help companies prepare for the future when developing their measurement methodologies.

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.