Is it better to set a target that you might miss, or never to commit to the goal in the first place? This question vexes companies around the world, not least in Singapore where I recently visited as part of a series of events to open Corporate Citizenship’s new office.
In an age of big, bold Sustainability Plans, many businesses are setting transformational goals for 2020, 2030 and even 2050. Long-term commitments aim to change the world as well as the business. But not everyone is happy about the move.
Our research into Singapore’s largest, local companies found that nearly everyone has embraced some form of integrated reporting (although practices vary widely). But one area stood out as clearly lagging behind the global benchmark: target setting. Whilst nineteen out of Singapore’s twenty largest firms have environmental and social programmes, only a third have set targets. How do we explain the gap?
The point of a stretch target is to turbo-charge the business towards a visionary end point. I’m not suggesting companies should set goals they cannot reach, but an element of ambition is essential
For leading multinationals, public goal-setting has become an essential component of a robust corporate responsibility programme. Walmart has over 40 short, medium and long-term metrics, including long-term “aspirational” goals to be powered by 100% renewable energy and generate zero waste. The Unilever Sustainable Living Plan has around 50 targets and an overall goal to halve the environmental impact of the making and use of products by 2020.
What happens when we get to 2020? Will all goals be met? Almost certainly not. The point of a stretch target is to turbo-charge the business towards a visionary end point. I’m not suggesting companies should set goals they cannot reach, but an element of ambition is essential. With ambition should come a recognition that not all targets can be met all of the time. As long as the business can demonstrate genuine effort, credit should be given where due.
By making a public commitment, the company is inviting stakeholders to hold the business to account. The message is that responsible business practices are for the long-term; corporate responsibility is not fluffy and fuzzy, but can be professionally managed like other aspects of commerce. Targets allow for better reporting: data needs to be gathered and presented in a way that is consistent across years. Comparable information allows the reader to trace the progress and to draw their own conclusions.
In other words, targets are a declaration of that holy grail of corporate sustainability: embeddedness. Practitioners can cry: “we may be a small department stuck down the end of the corridor (next to marketing) but at least we are embedding our commitments across the company!”
In Singapore, business leaders told me that it was the fear of having to confess to missing a target that may explain the country’s reluctance to set them. Local cultural norms play a part. Singaporeans strive for harmonious relationships and having what’s called “face” is a core component of personal dignity. Our discussions on target setting suggested that a fear of losing face was one of the main reasons why companies have shied away from public targets. The fear is that the finger will be pointed. It presents a risk for the individual whose idea the target was, as well as the company whose reputation is at stake if the target is ultimately not met.
Yet there are examples of companies missing targets very publicly which suggest that it is possible to miss a target and not lose face. Instead, businesses can take the opportunity to explain how they are moving forward and learning from the experience.
Starbucks made headlines in 2011 when it revealed that it had missed a target for energy reduction, and delayed the goal until 2015. But it also reported exceeding a goal for renewable energy. Two years later, Starbucks admitted failing to develop recycling solutions for its cups in all markets because infrastructure was lacking. The story was that Starbucks has done its bit, but stretching goals require working with others to change the system.
There are other examples of big brands missing big goals. The Coca-Cola Company missed a goal to return all the water it uses in manufacturing to nature by 2010 – but received credit for explaining transparently how it had reached 93 per cent. General Mills missed a target to cut energy consumption and greenhouse gases in 2010, but explained how it had exceeded targets on waste and water and set bolder ones for 2015.
In Singapore, business leaders told me that it was the fear of having to confess to missing a target that may explain the country’s reluctance to set them
All this suggests that a target can be missed elegantly, provided it is occasional, not systematic, and the explanation is clear. Why was the target missed? What are you doing to rectify it? Which other targets did you exceed or new goals have been set?
Of course, it would be foolish for any business make a commitment that it knows it cannot meet. A realistic roadmap is crucial to assure stakeholders that the aims are more than just warm words.
Singaporean companies should not fall into the trap of being too timid on targets. Conversely, Western companies missing too many targets could consider how Eastern values, such as respect and keeping face, could make for more authentic and realistic corporate responsibility programmes. By combining realistic ambition with honest transparency, companies can demonstrate how they are embedding responsible business practices for the long term, even if they miss the occasional goal along the way.