As ESG — environmental, social, and corporate governance — continues to pick up steam, here's a look at how organizations can set benchmarks.
Today’s consumers, investors, and regulators care deeply about organizations’ efforts to show accountability and responsibility in their business practices, especially in regard to environmental and social issues. To help an organization understand and align on environmental, social, and corporate governance matters, they must set and establish ESG goals.
But just setting the goals isn’t enough. The proof is in establishing a tangible data-driven ESG strategy and sharing the progress with key stakeholders to show the ability to manage risks, remain profitable, and operate responsibly.
Read on to learn more about setting ESG goals, important ESG metrics, and how board portal technology helps boards govern responsibly.
What are ESG Goals?
Environmental, social, and corporate governance are the three pillars of a modern, all-inclusive framework that helps stakeholders understand how organizations manage risks and opportunities related to the three criteria (sometimes called ESG factors).
Stakeholders evaluate ESG criteria by looking at the following:
- Environmental: How is the company improving and protecting the environment? What conservation measures is it taking to reduce its energy consumption, pollution, and ecological footprint?
- Social: Today’s companies must be responsible for their overall impact on the social fabric. This includes how they treat employees and show support for local communities.
- Governance: Do organizations behave ethically? Do their actions match their policies? Are they compliant? Organizations must show diversity and structure that supports social and environmental initiatives.
Effective ESG requires outcomes and accountability, which is why it’s important to set and measure ESG goals. Without ESG goals and policies, companies face ESG risk, such as loss of investors, damaged reputation, and even fines for violating environmental regulations.
Types of ESG Goals
ESG goals are objectives businesses set to help them effectively manage their impact on the environment and society. They revolve around the three ESG categories discussed above and define an organization’s vision and direct strategy while holding it accountable.
Common goals include reducing greenhouse gas emissions, investing in sustainable energy, increasing workplace diversity, and providing transparent financial practices.
The United Nations Department of Economic and Social Affairs sets the bar when it comes to social and environmental goals, and companies can look to them as a model for setting goals that help make a real impact.
Here are some examples of their sustainable development goals.
1. Environmental Goals
- Take urgent action to combat climate change and its impact.
- Ensure access to affordable, reliable, sustainable, and modern energy for all.
2. Social Goals
- Ensure healthy lives and promote wellbeing for all at all ages.
- Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
3. Corporate Governance Goals
- Ensure sustainable consumption and production patterns.
- Promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.
Setting ESG Goals
The following 4 steps explain how to establish your organization’s ESG goals.
1. Conduct a Baseline Assessment
Before setting any targets, it’s best to understand how your organization operates by conducting baseline assessments to compare current performance against key ESG criteria. The results can help you track the progress made toward your sustainability goals.
Collect and analyze relevant data such as energy bills, carbon footprint measures, business landfill waste by weight, and the volume of water consumed.
2. Set SMART Goals
Each of the United Nations objectives above were broken down into SMART (specific, measurable, attainable, relevant, and time-based) goals. For example, the goal of promoting health and wellbeing had a target goal: By 2030, reduce the global maternal mortality ratio to less than 70 per 100,000 live births.
Using the SMART criteria to set your ESG goals allows you to establish attainable objectives within a predetermined timeframe. The following are the SMART criteria:
- Specific: Clearly define what you need to do and how to do it.
- Measurable: Include measurable and trackable benchmarks.
- Achievable: Make sure the goal is achievable within your available resources.
- Relevant: Ensure your ESG goals are appropriate and connect to business objectives.
- Timely: Give your goal a deadline.
3. Monitor Progress to Goals
Always ensure you track and monitor your progress internally and remain accountable to your stakeholders and the relevant regulators. Use qualitative and quantitative data to define each goal’s key performance indicators (KPIs). Finally, obtain feedback and ensure detailed ESG reporting.
4. Share Goals Across Teams
Once you identify and set your ESG goals and have an attainable framework, share them internally (and externally, if you choose). Remain transparent to boost accountability and credibility throughout your journey. Additionally, share how and why your organization chose the specific ESG goals, disclose the processes and KPI measures you have to track progress, and clarify how they support your mission and vision.
Understanding the Board's Role in ESG
Boards are responsible for learning and understanding ESG standards and guiding their organizations in adopting an ESG policy. In addition, they should prepare for ongoing discussions with regulators and investors to understand key ESG concerns to prioritize.
Store your ESG policy and goals securely and digitally using a proven board management platform that grants your entire organization access. Tools like OnBoard’s board management software use intuitive data and analytics to help boards build board materials, get work done faster, and communicate effectively. Within the platform, boards can facilitate online discussions and share crucial documentation to move ESG initiatives forward.
Ready to level up your board business with board portal technology? Check out our Board Management Software Buyer’s Guide for more information on selecting the right vendor.
About The Author
- Adam Wire is a Content Marketing Manager at OnBoard who joined the company in 2021. A Ball State University graduate, Adam worked in various content marketing roles at Angi, USA Football, and Adult & Child Health following a 12-year career in newspapers. His favorite part of the job is problem-solving and helping teammates achieve their goals. He lives in Indianapolis with his wife and two dogs. He’s an avid sports fan and foodie who also enjoys lawn and yard work and running.
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