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:
-
- 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
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.
This resource calls upon organisations to:
- Strategy: Align strategy with the expectation to avoid and address negative impacts of their operations, while contributing to sustainable development in the countries where they operate.
- Governance: under construction
- Identify: 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.
- Measure, assess and value: under construction
- Implement: Embed due diligence across business operations and in the value chain in order to identify, assess, mitigate, cease and prevent adverse impacts on people
- Communicate: under construction
Natural Capital Protocol
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:
- Strategy: under construction
- Governance: under construction
- Identify: Identify stakeholders in order to set objectives for a natural capital assessment and 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).
- Measure, assess and value: 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.
- Set targets and plan: Use the guidance on how to identify and engage with stakeholders in order to set objectives for a natural capital assessment.
- Implement: under construction
Social and Human Capital Protocol
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:
- Strategy: under construction
- Governance: under construction
- Identify: 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)
- Measure, assess and value: 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.
- Set targets and plan: Use the guidance on how to identify and engage with stakeholders in order to set objectives for a social and human capital based assessment.
- Implement: under construction
SDG Impact Standards for Enterprises
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.
Principles of Social Value
The Principles provide the basic building blocks for organisations that want to make decisions whilst taking social value into account. They are intended to help organisations optimise value for all stakeholders materially affected by an organisations activities. Practice Standards are available to help organisations implement each principle to a point where they are accountable for their activities and are making decisions to optimise value.
Use this resource to:
- Set up processes to include social value data in management decision-making.
Maximise Your Impact: A Guide for Social Entrepreneurs
Guidance to help an organisation maximise the positive social value it creates.
Use this resource to:
- Strategy: Engage stakeholders and understanding their objectives and needs in order to design a business model around delivering these objectives.
- Governance: under construction
- Identify: under construction
- Measure, assess and value: 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.
- Set targets and plan: Use the guidance on engaging stakeholders and understanding their objectives and needs in order to design a business model around delivering these objectives.
- Implement: Integrate information on social value into management decision-making.
B Corp certification
Certification awarded when an organisation achieves a score of 80 on the B Impact Assessment.
Use this resource to:
- Become B Corp Certified. Organisations undergo verification including interviews, submitting documentation, and as necessary site reviews, to increase confidence that the company’s score is accurate and the required 80-point score has been achieved.
For investors and financial institutions:
Investing with SDG Outcomes: A Five-part Framework
A high-level framework for any investors looking to shape real-world outcomes in line with the Sustainable Development Goals (SDGs).
Use this resource to:
- Strategy: under construction
- Governance: under construction
- Identify: Identify and understand the unintended outcomes of an investors’ investments and their own operations. This assessment involves identifying positive and negative real-world outcomes related to investees’ operations, products and services.
- Measure, assess and value: under construction
- Set targets and plan: Move from identifying and understanding unintended outcomes towards taking intentional steps to shape outcomes.
- Implement: Explore examples of how investors shape outcomes through investor actions including: investment decisions, stewardship of investees and engagement with policy makers and key stakeholders.
Responsible Business Conduct for Institutional Investors
Guidance that explains the application of the OECD Guidelines for Multinational Enterprises in the context of institutional investors. The report highlights key considerations for institutional investors in carrying out due diligence that will help to identify and respond to environmental and social risks.
Use this resource to:
- Strategy: under construction
- Governance: Embed responsible business conduct into policies and management systems.
- Identify: Understand the responsible business conduct expectations for institutional investors, including a discussion of key considerations when identifying negative impacts and risks.
- Measure, assess and value: Understand the key considerations for institutional investors in carrying out due diligence as recommended by the OECD Guidelines for Multinational Enterprises (OECD Guidelines). This helps institutional investors to prevent and address adverse impacts related to human and labour rights, the environment, and corruption caused by companies in their investment portfolios.
- Implement: Cease, prevent or mitigate negative impacts and provide for or cooperate in remediation where appropriate.
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 calls upon organisations to:
- Intentionally contribute to positive social and environmental impact, use evidence and impact data in investment design, manage impact performance, and contribute to the growth of impact investing
Operating Principles for Impact Management
Principles describe essential features of managing investments into companies or other organisations with the intent to contribute to measurable positive social or environmental impact alongside financial returns.
This resource has mandatory requirements for signatories.
This resource calls upon organisations to:
- Strategy: Define strategic impact objectives consistent with the investment strategy alongside managing strategic impact on a portfolio basis.
- Governance: Commit to following the principles and periodically having progress of adoption independently verified. The Principles can be applied to an entire investing organisation or an individual fund.
- Identify: under construction
- Measure, assess and value: Assess potential negative impacts of each investment.
- Set targets and plan: under construction
- Implement: Respond appropriately to information on actual and potential impacts.
- Communicate: Use Principle 9 to enable public disclosure of alignment with the Principles.
SDG Impact Standards for Private Equity Funds
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.
This resource calls upon organisations to
- Measure, Assess and Value: Develop an impact management and measurement framework
- Set targets and plan: Set portfolio level impact goals.
- Implement: under construction
- Verification, assurance and certification: Disclose how the SDGs and sustainability are integrated into decision-making and report on performance
Principles for Responsible Banking
Principles for Responsible Banking (PRB) are designed to ensure that signatory banks’ strategy and practice align with the vision society has set out in the Sustainable Development Goals and the Paris Climate Agreement.
This resource calls upon organisations to:
- Strategy: Commit to aligning the bank’s activities and portfolios to global goals, namely the Sustainable Development Goals (SDGs) and the Paris Agreements, by embedding sustainability at the strategic, portfolio and transactional levels, across all business areas. This initiative involves a fee for participation and requires periodic disclosure of progress made towards enforcing the Principles.
- Governance: under construction
- Identify: under construction
- Measure, assess and value: under construction
- Set targets and plan: under construction
- Verification, assurance and certification: Use the PRB Assurance Guidelines to assure adherence to the Principles.
Impact Standards for Financing Sustainable Development (IS-FSD)
Practice standards to support donors in the deployment of public resources through DFIs and private asset managers, in a way that maximises the positive contribution towards the SDGs. The Standards are harmonised in approach with the UNDP SDG Impact Standards suite, the IS-FSD constitute a framework, ensuring that collectively (with the SDG Impact Standards for PE Funds, Bond Issuers and Enterprises) they help to connect actors across the system using a common language and approach for integrating SDG impacts in the investment strategy and throughout the investment process and governance structures.
This resource calls upon organisations to:
- Strategy: Set impact objectives framed in terms of the SDGs and country priorities
- Governance: Set up processes and embed practices that are aligned with the SDG Impact Standards.
- Measure, assess and value: Understand whether all relevant information is being actioned to understand impact. The Standards outline how baselines, social/ ecological thresholds and other contextual information should be included in assessment of whether an underlying asset is contributing to the SDGs.
- Set targets and plan: under construction
- Implement: under construction
- Communicate: Disclose how impacts are managed and measured
Guidance and resources for target-setting
For all enterprises:
How To Guide For Setting Science Based Targets
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:
- Measure, assess and value: Assess performance against a company-specific target for greenhouse gas emissions that references an ecological threshold.
- 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
Guidance for setting science based targets related to climate, specifically for financial institutions.
Use this resource to:
- Set Targets and plan: Set a portfolio target for Greenhouse Gas Emissions
Science-Based Targets for Nature: Initial Guidance for Business
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:
- Measure, assess and value: Assess performance in context of ecological thresholds.
- Set targets and plan: Set a company-specific target that references an ecological threshold for nature.
SDG Impact Standards for Enterprises
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.
SDG Action Manager
Tool designed to help organisations measure and manage their impacts in relation to the Sustainable Development Goals.
Use this resource to:
- Identify: Understand the SDGs most relevant to manage, based on the organisation’s size, sector, and geography. The questionnaire draws from B Lab’s B Impact Assessment and the UN Global Compact’s 10 Principles. It was developed through research and public consultation and so provides an evidence-based starting point for identifying sustainability topics to measure.
- Measure, assess and value: Obtain a set of metrics. The questionnaire enables organisations to collect performance information on the SDGs that are most relevant to manage, based on the organisation’s size, sector and geography.
For investors and financial institutions:
SDG Impact Standards for Private Equity Funds
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.
This resource calls upon organisations to
- Measure, Assess and Value: Develop an impact management and measurement framework
- Set targets and plan: Set portfolio level impact goals.
- Implement: under construction
- Verification, assurance and certification: Disclose how the SDGs and sustainability are integrated into decision-making and report on performance
Impact Protocol for Banks
The Impact Protocol provides a step-by-step overview of how to analyse and manage bank portfolio impacts.
Use this resource to:
- Understand how to manage bank portfolio imapcts as per UNEP FI’s holistic impact approach and in conformity with the requirements of the Principles for Responsible Banking.The Protocol provides an overview of the impact management process as a whole; it is complemented by further UNEP FI resources such as the Impact Management Tool and the Thematic Target-Setting Guidance, which can be used to operationalise the methodology.
PRB Target Setting Guidance
The Principles for Responsible Banking (PRB) have released a set of target-setting guidance on topics such as Resource Efficiency & Circular Economy, Biodiversity, Financial Health & Inclusion, Climate, and Gender Equality.
Use this resource to:
- Set targets and plan: Set targets in line with the requirements of the UN Principles for Responsible Banking.
Portfolio Impact Analysis Tool for Banks
Tool to help banks and investors holistically understand and manage the actual and potential impacts of their portfolios.
Use this resource to:
- Identify: Understand the impact areas and topics associated to your bank’s portfolio based on portfolio composition and context, identify the bank’s most significant impact areas.
- Measure, assess and value: Assess current practice and performance vis a vis most significant impact areas by combining the tools ‘Identification’ outputs with additional data; use the assessment as a basis for target-setting and to define the bank’s action plan.
- Set targets and plan: Define relevant and meaningful targets and action plans.
Guidance on Transition Finance
This resource sets out elements of credible corporate climate transition plans, which aim to align with the temperature goal of the Paris Agreement.
Use this resource to:
- Obtain a comprehensive overview of existing transition finance approaches, identifying the main challenges and solutions.
Impact Standards for Financing Sustainable Development (IS-FSD)
Practice standards to support donors in the deployment of public resources through DFIs and private asset managers, in a way that maximises the positive contribution towards the SDGs. The Standards are harmonised in approach with the UNDP SDG Impact Standards suite, the IS-FSD constitute a framework, ensuring that collectively (with the SDG Impact Standards for PE Funds, Bond Issuers and Enterprises) they help to connect actors across the system using a common language and approach for integrating SDG impacts in the investment strategy and throughout the investment process and governance structures.
This resource calls upon organisations to:
- Strategy: Set impact objectives framed in terms of the SDGs and country priorities
- Governance: Set up processes and embed practices that are aligned with the SDG Impact Standards.
- Measure, assess and value: Understand whether all relevant information is being actioned to understand impact. The Standards outline how baselines, social/ ecological thresholds and other contextual information should be included in assessment of whether an underlying asset is contributing to the SDGs.
- Set targets and plan: under construction
- Implement: under construction
- Communicate: Disclose how impacts are managed and measured
Guidance and resources for valuation and integrated thinking
Natural Capital Protocol
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:
- Strategy: under construction
- Governance: under construction
- Identify: Identify stakeholders in order to set objectives for a natural capital assessment and 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).
- Measure, assess and value: 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.
- Set targets and plan: Use the guidance on how to identify and engage with stakeholders in order to set objectives for a natural capital assessment.
- Implement: under construction
Social and Human Capital Protocol
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:
- Strategy: under construction
- Governance: under construction
- Identify: 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)
- Measure, assess and value: 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.
- Set targets and plan: Use the guidance on how to identify and engage with stakeholders in order to set objectives for a social and human capital based assessment.
- Implement: under construction
The Guide to Social Return on Investment (SROI)
Guidance on conducting identifying, measuring and valuing social impact to calculate Social Return On Investment (SROI).
Use this resource to:
- Monetise the social value an organisation creates, preserves, or erodes for stakeholders. This methodology guides an organisation through the process of valuing impact from the perspective of all affected stakeholders.
Integrated Thinking Principles
A strategic planning tool for boards and management.
Use this resource to:
- Help embed sustainable business practices into an organisation and provide a foundation for long-term value creation.
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