Let’s talk about Sustainability Targets!
CSRD and ESRS will require many new companies to report on sustainability. We introduce reporting topics and comment on how companies can comply and generate value from them. Today, let’s talk about Sustainability Targets.
Companies need to report on their sustainability ambition level with sustainability targets.
- 𝗪𝗵𝗮𝘁 𝗮𝗿𝗲 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝘁𝗮𝗿𝗴𝗲𝘁𝘀
Sustainability targets are the objectives a company wants to achieve in its sustainability strategy expressed in measurable numbers. Targets are typically defined in the material action areas, e.g. Climate, Circular Economy or Supply Chain. Targets are composed by an indicator, target values and a reference period, e.g. CO2 emissions in tons with target values of 50% by 2025 and of 100% by 2030 compared to a baseline year.
- 𝗪𝗵𝘆 𝗮𝗿𝗲 𝘁𝗮𝗿𝗴𝗲𝘁𝘀 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁
Targets are important for stakeholders and investors to decide if they invest in or do business with the company. Specifically investors want to know if investments in the company contribute to a sustainable transformation and climate-neutrality in the logic of the EU Taxonomy.→ 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝗹𝗹𝘆
Targets are required to decide appropriate actions for reaching the targets, to steer the implementation, and for controlling. Targets are also increasingly linked into the bonus system for management and employees.
- 𝗪𝗵𝗮𝘁 𝗮𝗿𝗲 𝘁𝗮𝗿𝗴𝗲𝘁 𝗿𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁𝘀
In the #ESRS draft, companies report on overall “targets, progress, and tracking effectiveness” right at the beginning under “general principles” (ESRS 1) and in each material area, e.g. on “climate change (ESRS E1) measurable targets for climate change mitigation and adaptation”. #ESRS defines further requirements such as measurable outcome-orientation oriented at people and the environment.
- 𝗛𝗼𝘄 𝘁𝗼 𝗱𝗼 𝗶𝘁
Derive targets from your strategy and material action areas, which are aligned with the sector requirements from #ESRS that you have at least one target indicator and target value for one action area. Measure the baseline and define at least three target values for next year, 2025 and 2030. Consider science-based targets, e.g. from SBTi and context-based targets linked to the SDGs, to derive appropriate target values.
👉 Mid-sized companies should specifically consider targets for CO2 and two further material action areas. On climate,the world needs to become climate-neutral as soon as possible. If possible, aim for zero CO2 emissions in your company (scope 1+2) by 2030 at the latest.