Set and revise objectives

Organisations set and revise their objectives and set targets to guide their strategy

Last updated: July 7, 2022

Overview

Setting a level of ambition

How sustainably an organisation is acting is defined by how it positively or negatively affects the well-being of people and/or the condition of the natural environment. This assessment informs the objectives the organisation sets. New organisations may set objectives from scratch.

An organisation is contributing to:

  • Unsustainable outcomes: if people’s well-being and/or the condition of the natural environment falls outside of the sustainable range, as defined by a societal or ecological threshold
  • Sustainable outcomes: if people’s well-being and/or the condition of the natural environment falls within the sustainable range, as defined by a societal or ecological threshold

Organisations determine their overall level of ambition for reducing unsustainable outcomes and contributing to sustainable outcomes, which in turn influences the specific objectives they set.

An organisation can summarise its level of ambition using three broad categories of objectives (sometimes referred to as the ABC):

A. Organisations may try to cause no harm to people and the natural environment and act to reduce harm: by identifying where the organisation is causing harm to people’s well-being and the condition of the natural environment and improving those outcomes so that they are getting nearer the sustainable range established by the societal or ecological threshold. This objective is set when the organisation will improve performance on the outcome, but will not achieve a sustainable outcome within the period for which the objective is being set.

B. Organisations may further aim to be ‘sustainable‘ by benefitting stakeholders: by not only Acting to reduce harm for all stakeholders, but also maintaining or causing improved well-being for one or more groups of people and/or the condition of the natural environment, so that it is within the sustainable range established by the societal or ecological threshold.

C. Some organisations will research a social or environmental challenge and design a business model to contribute to solutions: by not only Acting to reduce harm for all stakeholders, but also improving the well-being of a group of people or the condition of the natural environment so that the outcome is within the sustainable range, where the outcome had been unsustainable prior to engaging with the organisation through no fault of the organisation itself. These unsustainable outcomes might have been the result of market or policy failure, leaving a group of people without access to something they need for their well-being or putting the availability of natural resources at risk.

The ABC classification methodology can also be used to set more specific objectives. For example, at the level of:

  • Individual departments or business activities
  • Individual stakeholders, such as the customer or a specific customer segmentation;
  • Individual sustainability topics, such as carbon emissions.

Setting objectives

Organisations set sustainability objectives with regard to specific parties that they affect and that affect them.

These parties are usually referred to as stakeholders and the resources they use and produce are often referred to as capitals.

Stakeholders can be both internal (e.g. employees) and external to an organisation (e.g. local communities, natural resources, investors, suppliers). Some of an organisation’s stakeholders are not directly affected by the organisation, but can themselves affect the organisation’s ability to operate (e.g. governments).

In order to set meaningful objectives, organisations seek to understand the interests and objectives of each stakeholder group. This might include reviewing local or national regulation.

Figure 1: Types of stakeholder

Target-setting

Organisations will set targets once they have identified a realistic level of performance that will constitute meeting an objective, or that will indicate progress towards an objective over time. Sustainability targets will often be set with reference to the relevant societal or ecological threshold, but many standard-setters make clear that these are the minimum bar for organisations to reach and do not necessarily represent optimal performance from the stakeholder’s perspective.

Thresholds are a level or range of performance, agreed by best available science or research, that separates positive/sustainable performance on a measure from negative/unsustainable performance.

The nature of a threshold varies by type of sustainability topic. Some thresholds:

  • are based on planetary limits as defined by scientists who set goals – such as a 2-degree scenario – that enable resource budgets to be set. These budgets require translating into a organisation-specific target;
  • are based on best-available research by other experts e.g. racial equity;
  • need to be contextualised to make the threshold locally applicable, e.g. wage level;
  • are binary, where a positive outcome is the absence of harm, e.g. injury rate;
  • will be universally applicable based on science, e.g. biometric measures like HbA1c level for diabetes; or
  • are qualitative (criteria-based) e.g. UNICEF criteria for “safely managed” water for SDG 6.1.1.

Allocation

Whenever an organisation uses a shared and finite resource, a further step is required to establish a fair allocation of responsibility to maintain the resource at a sustainable level. This becomes an organisation-specific threshold.

Baseline data

Baseline performance data is used to assess performance on a topic prior to an organisation engaging with – or otherwise affecting – people or the natural environment. Organisations whose business models have been designed specifically to address a social or environmental challenge rely on baseline data from existing evidence bases to learn about the problem they are seeking to address. These data can help organisations identify and target the demographic or specific geographies most affected.

Revising objectives and re-setting targets

After organisations have carried out all actions at least once and have information on their performance and relevant societal or ecological thresholds, organisations may revise their objectives and re-set targets for the following performance period.


Resources

Identifying and understanding stakeholders

Natural Capital Protocol

Last updated: 2016

Guidance that outlines a process organisations should follow to identify, measure and value their impacts and dependencies on the natural environment.

Use this resource to:

  • Set and revise objectives: Use the guidance on how to identify and engage with stakeholders in order to set objectives for a natural capital assessment.
  • Identify sustainability topics: Use the guidance on how to map the links between significant impacts and the business activities that affect or rely on them. This process helps organisations determine whether each impacted stakeholder is likely to affect their business model (and therefore enterprise value).
  • Estimate value created: Use the guidance to value impacts and dependencies on natural capital. This methodology draws on organisational data, data collected from stakeholders and publicly available country- or sector-level data.

Social and Human Capital Protocol

Last updated: 2019

Guidance that outlines a process for organisations to follow so they can identify, measure and value their impacts and dependencies on social and human capital.

Use this resource to:

  • Set and revise objectives: Use the guidance on how to identify and engage with stakeholders in order to set objectives for a social and human capital based assessment.
  • Identify sustainability topics: Use the guidance to map the links between significant impacts and the business activities that affect or rely on them. This process helps the organisation determine whether each impacted stakeholder is likely to affect the business model (and therefore enterprise value).
  • Estimate value created: Use the guidance to value impacts and dependencies on social and human capital. This methodology draws on organisational data, data collected from stakeholders and publicly available country- or sector-level data.

Standard on Applying Principle 1: Engage Stakeholders

Last updated: 2019

Standard and guidance on how to apply the first of SVI’s Social Value Principles.

Use this resource to:

  • Set and revise objectives: Use the guidance on identifying stakeholders, engaging with them, and collecting information to help shape strategy and objectives.
  • Identify sustainability topics: Use the guidance on identifying stakeholders and engaging with them to understand actual and potential significant impacts.

Setting objectives to uphold minimum safeguards

There are many sector- or stakeholder-specific safeguarding and human rights standards and related performance standards and certifications not listed here (e.g. International Labour Organization, Marine Stewardship Council, Rainforest Alliance).

OECD Guidelines for Multinational Enterprises

Last updated: 2011

One of the main (and government-backed) international instruments on Responsible Business Conduct (RBC) setting out principles and standards on RBC. Regulators reference them in regulation.

Use this resource to:

  • Set and revise objectives: Set objectives with reference to minimum safeguards on topics such as: human rights, labour relations, employment practices, public health and safety, bribery and extortion, science and technology and taxation.

Ten Principles of the UN Global Compact

Last updated: 2000

Principles that list how organisations should, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption. The Ten Principles apply across all geographies in which the enterprise operates, and good practices in one area do not offset harm in another. They draw on several international declarations and other authoritative documents.

Use this resource to:

  • Set and revise objectives: Set objectives with reference to minimum safeguards on topics, such as human rights, labour, environment and anti-corruption. This initiative involves a fee for participation and requires organisations to produce an annual ‘Communication On Progress’ (CoP) that details their efforts to embed the Ten Principles into their strategies and operations, as well as to support societal priorities such as the SDGs.

Setting sustainability thresholds and targets

Science-Based Targets for Nature: Initial Guidance for Business

Last updated: 2020

Guidance for setting science based targets related to nature. More generally, the 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 to:

  • Set and revise objectives: Set a company-specific target that references an ecological threshold for nature.
  • Assess impact: Assess performance in context of ecological thresholds.

How To Guide For Setting Science Based Targets

Last updated: 2021

Guidance that provides a brief introduction to 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 to:

  • Set and revise objectives: Set a company-specific target for greenhouse gas emissions that incorporates an ecological threshold for a given global warming scenario.
  • Assess impact: Assess performance against a company-specific target for greenhouse gas emissions that references an ecological threshold. 

SDG Ambition Benchmark Reference Sheets

Last updated: 2020

Recommendations on how to set ambitious objectives in relation to each Sustainable Development Goal.

Use this resource to:

  • Set and revise objectives: Use this guidance to consider the information and processes needed to set and achieve ambitious objectives.

Sustainable Development Goals

Last updated: 2015

A set of internationally agreed goals that are required to create a more sustainable future for all people and the environment.

Use this resource to:

  • Set and revise objectives: Categorise objectives according to internationally agreed Sustainable Development Goals.

Setting objectives to Contribute to solutions

Organisations may consult evidence bases to identify specific geographies or demographics most in need of a particular outcome.

Maximise Your Impact: A Guide for Social Entrepreneurs

Last updated: 2017

Guidance to help an organisation maximise the positive social value it creates.

Use this resource to:

  • Set and revise objectives: Use the guidance on engaging stakeholders and understanding their objectives and needs in order to design a business model around delivering these objectives.
  • Assess impact: Check whether the organisation has all the information it needs to assess impact. The guidance contains 10 questions that guide impact assessment and function as a checklist to ensure all necessary contextual information is collected.
  • Integrate and act: Follow the guide to integrate information on social value into management decision-making.

Corporate Impact Analysis Tool

Last updated: 2021

Tool to help banks and investors understand the actual and potential impacts of their clients and investee companies, as part of their impact management strategies and processes.

For organisations

Use this resource to:

  • Set and revise objectives: Financial institutions can use the tool to co-define relevant and meaningful objectives for their clients and/or investee companies. It provides an impact analysis and management workflow that starts from the identification of impact associations and needs, facilitates the collection and assessment of impact performance data, and accordingly enables an action plan and specific objectives to be set and monitored over time.
  • Identify sustainability topics: Use the tool to identify impact areas and topics (economic, environmental and social) associated with corporate clients and/or investee companies, based on an objective review (cartography) of the company’s sectoral and geographic breakdown. The tool contains collated research on the association between sectors (ISIC – International Standard Industrial classification) and 22 Impact Areas that cover all the SDGs, as well as a framework to enable a contextualisation of impact associations vis-à-vis the impact needs present in the company’s country(ies) of operation.
  • Measure sustainability performance: Use the Indicator Library embedded within the tool to review existing metrics for impact measurement. UNEP-FI has collated metrics from reporting standards and frameworks (GRI, SASB, CDP, TCFD), impact investor and development bank resources (IRIS+ and HIPSO), government taxonomies (EU Adaptation and Mitigation Taxonomies) and other sources to support indicator selection and interoperability between frameworks. This indicator library primarily supports use of the tool, but is also a useful standalone resource.

For investors and financial institutions

Use this resource to:

  • Identify: Understand the impact areas and topics associated with a corporate client/investee based on company type, sector and context; identify the company’s most significant impact areas.
  • Assess: Assess the company’s current practice and performance vis-à-vis its most significant impact areas, by combining the tool’s ‘identification’ outputs with additional data; determine the company’s overall ‘impact status’ as a basis for engagement.

SDG Impact Standards for Enterprises

Last updated: 2021

Practice standards that provide a common language and a system for integrating sustainable development issues, the Sustainable Development Goals and impact management into business and investment decision-making. These practice standards also outline the ‘ABC’ classification methodology, which helps organisations assess whether an impact ‘Acts to reduce harm’, ‘Benefits stakeholders’, or ‘Contributes to solutions’ in relation to the SDGs.

Use this resource to:

Set up processes and embed practices that orient an organisation towards achieving the SDGs. The SDG Impact Standard contains practice indicators that are relevant to several actions. Use the links below to access guidance for different practice indicators. Alternatively, view the whole guidance document here.

OECD Statistics

Database of the OECD’s publicly available statistics.

Use this resource to:

  • Set and revise objectives: Use the database to identify areas of need in relation to specific sustainability topics. Especially useful for organisations designing business models to meet the needs of a group of people or the natural environment.

World Bank Open Data

Database of the World Bank’s publicly available statistics.

Use this resource to:

  • Set and revise objectives: Use the database to identify areas of need in relation to specific sustainability topics. Especially useful for organisations designing business models to meet the needs of a group of people or the natural environment.

Definitions

Allocation

Apportioning to organisations or other human populations fair, just and proportionate shares of the responsibility to produce and/or maintain a resource at no worse than the level set by social or ecological thresholds. Learn more about Thresholds and allocations.

Source: Adapted from Global Thresholds and Allocations Council

Baseline

A starting point used for comparisons.

Source: Oxford English Dictionary

Capitals

The resources and relationships affected and transformed by an organisation. The capitals are characterised in the Value Reporting Foundation’s Integrated Reporting Framework as financial, manufactured, intellectual, human, social and relationship, and natural. The OECD’s Well-being Framework groups financial, manufactured and intellectual capital into one category: economic capital. Capitals Coalition do not include intellectual capital, and use the term produced capital, instead of manufactured capital.

Source: Capitals Coalition; Value Reporting Foundation (VRF); OECD

Objective

Something that efforts or actions are intended to attain or accomplish. Objectives are SMART if they are: specific, measurable, achievable, realistic and time-bound.

Source: Cambridge English Dictionary; Management Review

Outcome

The resulting level of well-being experienced by a group of people, or the condition of the natural environment.

Practitioners should be aware that some available standards and guidance (e.g. OECD, IFC, Capitals Coalition) define outcome as a change in-, rather than a level of-, well-being. Whilst collecting data about performance over time usually involves measuring the level (e.g. wage paid in prior period relative to wage paid in current period), it is not always the case that this data is disaggregated for decision-making (e.g. if management or the board of a company are only provided with a figure about the change, such as ‘percentage increase in wages paid’). Using information about the change alone prevents comparison of performance against a social or ecological threshold, and therefore determination of whether the level of performance is ‘sustainable’ or ‘unsustainable’.

Additionally, if an outcome is defined as a broad aspect of well-being (e.g. ‘health’) it may be too general to inform which metric should be used. To help with accurate measurement, a well-defined outcome is needed. See Glossary term Well-defined outcome.

Source: Impact Management Platform

Societal or ecological threshold

A level or range of performance that divides sustainable from unsustainable performance. These ranges are set with reference to social norms or planetary limits that have been identified through scientific research. Learn more about Thresholds and allocations.

Source: United Nations Environment Programme Finance Initiative (UNEP FI); United Nations Conference on Trade and Development (UNCTAD) (The Cocoyoc Declaration, 1974); Kate Raworth

Stakeholder

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

Sustainable

Meeting the needs of the present without compromising the ability of future generations to meet their needs or overshooting Earth’s ecological limits (Brundtland Commission). In context of impact measurement, outcomes for people are sustainable if they are within the acceptable range determined by societal thresholds, and outcomes for the natural environment are sustainable if they are within the acceptable range determined by ecological thresholds (Science-Based Targets Initiative and Kate Raworth). Sustainability is the quality of being able to continue over a period of time (Cambridge English Dictionary).

Source: Brundtland Commission; Science-Based Targets Initiative; Kate Raworth; Cambridge English Dictionary

Well-being

The state of being or doing well in life; happy, healthy, or prosperous condition; moral or physical welfare. The OECD Well-being Framework states that the 11 dimensions of well-being are comprised of the outcomes that matter most to people.

Source: Oxford English Dictionary, Organisation for Economic Co-operation and Development (OECD)

Impact

A change in an aspect of people’s well-being or the condition of the natural environment caused by an organisation.

Source: Impact Management Platform; Well-being defined as in OECD Well-being Framework

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