Set targets and plan
Make decisions and get ready for implementation and delivery
Description
Setting impact targets is a critical part of integrating impact management into an organisation’s
A term used by the Platform to group enterprises, investors and financial institutions of all types. Source: Impact Management PlatformOrganisation
In order to be meaningful, impact targets should be established in relation to the organisation’s significant impact topics, as established by the identification process and the subsequent collection of information on the organisation’s current (or baseline) levels of practice and performance. See Measure, assess and value for more information
For sustainability-focused organisations, significant impact topics will include those that are embedded into the organisation’s purpose and goals, and targets will be set according to those topics.
In order for impact targets to be integrated and aligned with the organisation’s broader strategy, organisations must consider and maximise the financial value that they carry.
Impact targets need to be supported by action plans to ensure that organisations implement and meet those targets.
Setting meaningful targets
The choice of impact topics and indicators against which to set targets should be informed by the prior identification, measurement, assessment and valuation processes. As such, the target-setting process should consider:
- the enterprise’s most significant opportunities to deliver positive impact and/or address negative impacts according to its impact profile (i.e. its specific set of strongly associated impact topics);
- the most pressing impact needs or gaps, at the appropriate geographic level (as revealed by the organisation’s context analysis);
- the areas where the organisation’s performance is particularly poor or unsustainable; As revealed in the Measure, assess and value action and
- the interlinkages between different impact topics, so as to prioritise in a way that enables multiple sustainability topics to be addressed and to avoid any unintended negative impacts.
Ideally, targets should be set in reference to a relevant societal or ecological threshold and reference value (when available), and whilst bearing in mind the organisation’s current level of performance. As established during the measurement and assessment process.
See the Measure, assess and value action for more information
Allocation methodologies can help organisations translate thresholds into organisation-specific targets.
Organisations may not be able to set targets in relation to all significant impact topics from the start, but they should aim to do so over time.
Example: A manufacturing company may have identified water and soil pollution as priority topics and, as a result, prepare to set circularity targets. Based on its specific activities, the company may need to set resource efficiency targets relative to a number of different resources (say, water and a number of chemicals, as well as waste reduction targets). It may, however, need to set these targets progressively. It could, for instance, firstly address water efficiency and improved water treatment, before turning to other resources and waste categories further down the line.
In some cases where there is significant distance between the enterprise and the impacts, See more information about distance to impact here setting or communicating impact targets may be difficult. This can be especially difficult in the early stages of implementing impact management processes, since significant distance to impact implies less access to data, and therefore less direct capacity and leverage to change outcomes. In such cases, a high-level impact objective should at least be stated.
Example: A bank has significant distance to impact, since the bulk of the impacts it is typically associated with are generated by its clients and/or investee companies. A bank with a portfolio containing a majority of industrial and manufacturing companies may have identified biodiversity and pollution as significant impact topics. However, setting specific impact targets may be challenging given the diversity of resources and pollutants its clients may be using, as well as the impossibility for the bank to directly measure them and the probable lack of disclosed information. It may nonetheless set high-level objectives, such as improved water treatment and/or reduced waste production, which it can embed in its lending policies and client engagement activities.
Sustainability-focused organisations will set targets in line with their theory of change, their expression of how actions and practice are hypothesised to generate results. A few further considerations can inform the target-setting process, namely:
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- Additionality or contribution: Some sustainability-focused organisations can strive towards additionality (i.e. the generation of positive impacts that would not otherwise occur) when setting their impact targets. This is, however, not always possible for investors due to their distance to impact, and limited ability to evaluate counterfactual. In lieu of additionality, investors can strive to make a specific contribution to impact objectives.
- The possibility of impact risk: Sustainability-focused organisations will have a particular interest in assessing the risk that a desired outcome or impact does not materialise (i.e. a positive impact would not happen, or a negative impact would not be addressed). Understanding and anticipating impact risk is a first step in mitigating this risk and guiding appropriate action.
Understanding these considerations enable sustainability-focused organisations to ensure their theory of change is robust.
Embedding impact targets in wider organisational targets
Impact targets should be integrated in the organisation’s wider strategic targets, including financial objectives. Sustainability targets can be supportive of an organisation’s overall financial targets as they serve to manage risks, both idiosyncratic and systemic For more information on idiosyncratic and systemic risk, read the thought piece The imperative for impact management: Clarifying the relationship between impacts, system-wide risk and materiality , and allow seizing business development opportunities.
Understanding how an organisation’s stakeholders
An entity or individual that can reasonably be expected to be significantly affected by the organisation’s activities, products and services, or whose actions can reasonably be expected to affect the ability of the organisation to successfully implement its strategies and achieve its objectives. Source: Global Reporting Initiative (GRI); OECD Due Diligence Guidance for Responsible Business Conduct; OECD Well-being Framework; Value Reporting Foundation (VRF) Integrated Reporting FrameworkStakeholder
Organisations making decisions based on the sum of all available information, i.e. including information about the value the organisation creates for itself and for its stakeholders
An entity or individual that can reasonably be expected to be significantly affected by the organisation’s activities, products and services, or whose actions can reasonably be expected to affect the ability of the organisation to successfully implement its strategies and achieve its objectives. Source: Global Reporting Initiative (GRI); OECD Due Diligence Guidance for Responsible Business Conduct; OECD Well-being Framework; Value Reporting Foundation (VRF) Integrated Reporting Framework The active consideration by an organisation of the relationships between its various operating and functional units and the capitals (or resources) that the organisation uses or affects. Integrated thinking leads to integrated decision-making and actions that consider the creation, preservation or erosion of value over the short-, medium- and long-term. In considering value, the organisation recognizes that the value created for itself (and, by extension, its providers of financial capital) is linked to the value created for other stakeholders and society at large. Source: Value Reporting Foundation (VRF) Integrated Reporting FrameworkStakeholder
Integrated thinking
For sustainability-focused organisations, any sustainability topics embedded directly in the organisation’s purpose are inherently strategic. These organisations may be able to accept a lower financial return than they could otherwise obtain via products and/or services with similar risk, liquidity, and other financial characteristics (or, equivalently, by accepting the same financial return but with more risk, less liquidity, etc.) in order to generate certain kinds of impact.
Defining action plans
Organisations need clear plans that translate intentions and targets into action. This means planning how to adjust the organisation’s practice (i.e. its activities and processes) in line with the impact targets (which can also be thought of as performance targets) that were set See the Implement action for a list of organisations’ activities .
Action plans should specify practice targets linked to their performance targets See Measure, assess and value for more information and provide clarity on roles and responsibilities for achieving practice and performance targets. In this way, action plans provide the roadmap for implementation. See Implement for more information
Resources
Resources that set expectations on target-setting and planning
For all enterprises:
OECD Guidelines for Multinational Enterprises
The Guidelines for Multinational Enterprises are a set of voluntary principles and standards that promote responsible business conduct among multinational enterprises (MNEs). They cover various areas, including human rights, labour relations, environmental protection, anti-corruption and consumer protection, aiming to help MNEs align their business practices with societal expectations, and contribute to sustainable development.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Natural Capital Protocol
The Natural Capital Protocol is a framework designed to help businesses identify, measure, and value their impacts and dependencies on natural capital. It provides a standardised approach for organisations to integrate natural capital considerations into their decision-making processes, enabling them to better understand and manage their relationship with nature.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Social and Human Capital Protocol
The Social and Human Capital Protocol is a framework designed to assist organisations in identifying, measuring, and managing their impacts and dependencies on social and human capital. It provides a standardised approach for businesses to integrate social and human capital considerations into their decision-making processes, enabling them to better understand and manage their relationships with employees, communities and stakeholders.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
SDG Impact Standards for Enterprises
The SDG Impact Standards for Enterprises provide a practical guide and self-assessment tool for integrating the Sustainable Development Goals (SDGs) into organisational decision-making.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Principles of Social Value
The Principles of Social Value guide organisations in considering social value in decision-making, aiming to optimise value for all stakeholders materially affected by their activities. The practice standards help organisations to implement each principle to a point where they are accountable for their activities.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Maximise Your Impact: A Guide for Social Entrepreneurs
“Maximise Your Impact: A Guide for Social Entrepreneurs” proposes a practical approach for social entrepreneurs to understand and maximise the positive social value they create, supporting both the creation and development of impact-oriented organisations.
Use this resource for the following Actions of Impact Management:
- Strategy: Develop a strategy and business model that address the root causes of the problem that the organisation is trying to solve.
- Governance: Set the right governance structure and practices to serve the organisation’s mission.
- Identify: Identify the problems and solutions that the organisation will seek to address, including through qualitative research and stakeholder engagement.
- Measure, assess and value: Check whether the organisation has all the information it needs to assess its impacts. The guidance contains 10 questions that guide impact assessment, functioning as a checklist to ensure all necessary contextual information is collected.
- Set targets and plan: Create an impact goal (the core problem that the organisation is trying to achieve), set targets and forecast changes that the organisation is planning to make towards the impact goal and associated targets.
- Implement: Integrate information on social value into management decision-making.
- Monitor, learn and adapt: Understand how to use the collected information to decide whether to change, stop or scale-up activities, and learn how to develop a set of recommendations about adapting targets.
B Corp certification
The B Corp Certification is an assessment process that evaluates a company’s social and environmental performance, as well as governance and transparency. Organisations that achieve B Corp Certification demonstrate a commitment to meeting a high standard of responsible business practices and accountability.
Use this resource for the following Actions of Impact Management
- Verification, assurance and certification: Achieve B Corp certification by meeting the standards set by B Lab, demonstrating a commitment to social and environmental performance, accountability and transparency.
- Benchmarking and rating: Compare impact scores and metrics with those of other organiations within the same industry or sector.
For investors and financial institutions:
Investing with SDG Outcomes: A Five-part Framework
The “Investing with SDG Outcomes: A Five-part Framework” provides a high-level framework for investors to shape real-world outcomes in line with the Sustainable Development Goals (SDGs).
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Responsible Business Conduct for Institutional Investors
The Responsible Business Conduct for Institutional Investors helps institutional investors implement the due diligence provisions of the OECD Guidelines for Multinational Enterprises.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Core Characteristics of Impact Investing
The Core Characteristics of Impact Investing define the growing approach of impact investing, and offer the financial markets greater clarity on what constitutes credible impact investing.
This resource is for the following Actions of Impact Management:
- Strategy: Intentionally contribute to positive social and environmental impact by using evidence and impact data in investment design, enabling the investor to manage impact performance and contribute to the growth of impact investing overall.
Operating Principles for Impact Management
The GIIN Operating Principles for Impact Management provide a framework for investors and fund managers to manage and measure their impact. The principles outline best practices for impact management across the investment lifecycle, from strategy development to implementation, monitoring and reporting.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
SDG Impact Standards for Private Equity Funds
The SDG Impact Standards for Private Equity Funds provide a decision-making framework for integrating the Sustainable Development Goals (SDGs) into one or more funds.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Principles for Responsible Banking
The Principles for Responsible Banking (PRB) guide banks in aligning their business strategies with society’s goals, as well as promoting sustainability. These principles aim to encourage banks to play a crucial role in achieving global sustainable development objectives, including addressing climate change, promoting financial inclusion and fostering sustainable economic growth.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Impact Standards for Financing Sustainable Development (IS-FSD)
The Impact Standards for Financing Sustainable Development (IS-FSD) is a framework for donors, development finance institutions (DFIs) and their private partners to make financial decisions that maximise their positive contribution to the SDGs. The Standards are harmonised with the UNDP SDG Impact Standards.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Guidance and resources for target-setting
For all enterprises:
How To Guide For Setting Science Based Targets
This guide briefly introduces a leading methodology for translating planetary thresholds related to greenhouse gas emissions into company-specific targets. It also provides further links to more detailed implementation guidance.
Use this resource for the following Actions of Impact Management:
- Set targets and plan: Set a company-specific target for greenhouse gas emissions that incorporates an ecological threshold for a given global warming scenario.
Financial Sector Science-Based Target Guidance
The Financial Sector Science-Based Target Guidance helps financial instituions to set science-based targets related to climate.
Use this resource for the following Actions of Impact Management:
- Set Targets and plan: Set a portfolio target for greenhouse gas emissions.
Science-Based Targets for Nature: Initial Guidance for Business
This guidance helps organisations to set nature-related science-based targets. More generally, SBTn is embarking on a multi-year strategy to develop guidance for translating planetary thresholds and societal goals into company-specific targets for air, water, land, biodiversity and ocean.
Use this resource for the following Actions of Impact Management:
- Set targets and plan: Set a company-specific target that references an ecological threshold for nature.
SDG Impact Standards for Enterprises
The SDG Impact Standards for Enterprises provide a practical guide and self-assessment tool for integrating the Sustainable Development Goals (SDGs) into organisational decision-making.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
SDG Action Manager
The SDG Action Manager is a digital tool designed to help organisations measure their impact across various sustainability areas, set goals aligned with the SDGs, and track progress over time. The questionnaire, which draws from B Lab’s B Impact Assessment and the UN Global Compact’s 10 Principles, enables organisations to collect performance information on the SDGs that are most relevant to manage, based on its size, sector and geography. It was developed through research and public consultation and so provides an evidence-based starting point for identifying sustainability topics to measure.
Use this resource for the following Actions of Impact Management:
- Governance: Prioritise governance mechanisms that address the organisation’s key sustainability risks and enhance its resilience against potential challenges.
- Identify: Understand the most relevant SDGs to manage based on the organisation’s size, sector, and geography.
- Measure, assess and value: Obtain a set of metrics.
- Set targets and plan: Set specific, measurable, achievable, relevant, and time-bound (SMART) targets related to sustainable development. Organisations can align their targets with the specific indicators and targets outlined in the SDGs.
For investors and financial institutions:
SDG Impact Standards for Private Equity Funds
The SDG Impact Standards for Private Equity Funds provide a decision-making framework for integrating the Sustainable Development Goals (SDGs) into one or more funds.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Impact Protocol for Banks
The Impact Protocol provides a step-by-step guide of how to analyse and manage a bank’s portfolio impacts, as per UNEP FI’s holistic impact approach and in alignment with the requirements of the Principles for Responsible Banking. The Protocol provides an overview of the impact management process as a whole and is complemented by other UNEP FI resources including the Impact Management Tool and the Thematic Target-Setting Guidance, which can be used to operationalise the Protocol.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
PRB Target Setting Guidance
The Principles for Responsible Banking (PRB) provide target-setting guidance on topics such as Resource Efficiency & Circular Economy, Biodiversity, Financial Health & Inclusion, Climate and Gender Equality.
Use this resource for the following Actions of Impact Management:
- Set targets and plan: Set targets in line with the requirements of the UN Principles for Responsible Banking.
Portfolio Impact Analysis Tool for Banks
This tool is designed to help banks and investors holistically understand and manage the actual and potential impacts of their portfolios.
Use this resource for the following Actions of Impact Management:
- Identify: Understand the impact areas and topics associated with a bank’s portfolio, based on portfolio composition and context; and identify the bank’s most significant impact areas.
- Measure, assess and value: Assess current practice and performance vis-à-vis most significant impact areas, by combining the tool’s ‘Identification’ outputs with additional data; use the assessment as a basis for target-setting and defining the bank’s action plan.
- Set targets and plan: Define relevant and meaningful targets and action plans.
- Implement: Inform and carry out impact management process.
- Monitor, learn and adapt: Monitor practice and performance; and use the assessment to make improvements and adjust targets.
Guidance on Transition Finance
The Guidance on Transition Finance provides recommendations and best practices for financial institutions, policymakers, and other stakeholders on how to transition to a low-carbon, sustainable economy. The guidance offers insights into how transition finance can be mobilised to finance projects and activities that facilitate the shift towards environmental sustainability and climate resilience.
Use this resource for the following Actions of Impact Management:
- Set targets and plan: Establish clear and measurable objectives for transition finance initiatives, aligning them with the organisation’s sustainability goals and transition pathways.
Impact Standards for Financing Sustainable Development (IS-FSD)
The Impact Standards for Financing Sustainable Development (IS-FSD) is a framework for donors, development finance institutions (DFIs) and their private partners to make financial decisions that maximise their positive contribution to the SDGs. The Standards are harmonised with the UNDP SDG Impact Standards.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Guidance and resources for valuation and integrated thinking
Natural Capital Protocol
The Natural Capital Protocol is a framework designed to help businesses identify, measure, and value their impacts and dependencies on natural capital. It provides a standardised approach for organisations to integrate natural capital considerations into their decision-making processes, enabling them to better understand and manage their relationship with nature.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
Social and Human Capital Protocol
The Social and Human Capital Protocol is a framework designed to assist organisations in identifying, measuring, and managing their impacts and dependencies on social and human capital. It provides a standardised approach for businesses to integrate social and human capital considerations into their decision-making processes, enabling them to better understand and manage their relationships with employees, communities and stakeholders.
This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.
The Guide to Social Return on Investment (SROI)
This guidance document provides a framework for calculating Social Return on Investment (SROI), which can be used by anyone interested in measuring, managing and accounting for social value or social impact
Use this resource for the following Actions of Impact Management:
- Measure, assess and value: Monetise the social value an organisation creates, preserves or erodes for its stakeholders. This methodology guides an organisation through the process of valuing impact from the perspective of all affected stakeholders.
Integrated Thinking Principles
The Integrated Thinking Principles are a set of guidelines promoting integrated thinking in corporate reporting. Integrated thinking encourages organisations to consider how financial, as well as environmental, social and governance (ESG) factors are interconnected and affect long-term value creation.
Use this resource for the following Actions of Impact Management:
- Communicate: Provide disclosures that explain how financial and non-financial factors are considered in decision-making processes and contribute to long-term value creation.
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