FOOD BUSINESSES must be careful not to see target-setting as a competition.
One of the most difficult tasks facing sustainability managers is how to set targets. “The first time you set them you’re never quite sure,” admits Inder Poonaji, the head of environmental sustainability at Nestlé UK & Ireland. “When we set ours [in 2009/10], we thought they were pretty ambitious, but we actually achieved some of our goals pretty quickly so we’ve realigned them.”
A target to cut water consumption by 30% by 2020, based on 2006 levels, has already been met. So now it’s 40% by 2015 and 50% by 2020 – both of which will be “an incredible stretch”, says Poonaji. “But the good news is that we’re on the journey.”
A sustainability target is not the end but very much the beginning. But what makes a decent target and where does the balance between “ambitious” and “achievable” lie?
Twelve months ago, Accor announced a sustainability plan that it said would change the face of the hospitality sector. Planet 21 identifies 21 areas of the hotel group’s activity where improvements will be made, each with a specific policy for action and a measurable goal for 2015. The global undertaking will span its hotel brands, which include Ibis and Novotel, and involve all of the group’s 145,000 employees and many millions of its guests.
The first year’s results are expected any time now, but the monitoring has been ongoing, as Sophie Flak, the company’s executive VP for sustainable development explains. “Even though we only publish results once a year, we adapt the frequency to suit the objectives. For instance, energy and water consumption levels in our hotels are monitored monthly. This allows immediate analysis and appropriate response if trends are not in the right direction.”
So what happens if any of the targets are not met?
“Whenever we see a case where the country action plan is not going the way it should, then we discuss it with our local Planet 21 co-ordinator to analyse the causes and set up a corrective action plan. We also make sure we involve the local teams and the right level of management in the country.”
This will ensure targets are met. As an added sweetener, team bonuses will be in part linked to the plan. “Teams will not get their full bonus if these targets are not hit,” Flak explained at the launch event. “We’ve also introduced a new algorithm that accounts for changes in the weather so no one can blame missing an energy target on the weather.”
The Scottish government blamed cold weather in 2010 for Scotland’s failure to meet its recently published emissions reduction targets for that year. There are signs that the Westminster government is already sceptical about its targets under the Climate Change Act: the environment minister, Owen Paterson, reportedly said that the act may have legally binding targets – to cut emissions by 80% by 2050 – but whether it’s possible to meet them is a different question.
Paterson may well believe that the bar has been set too high. Environmentalists would argue to the contrary. So where’s
the balance? When it comes to corporate sustainability goals, Nestlé’s Poonaji says: “Over-ambitious targets can demotivate, but make them too easy and staff won’t take them seriously”.
Richard Felgate, the head of energy, environment and sustainability at the pub and restaurant company Mitchells & Butlers, admits that some of the targets he sees set by others are “that easy to achieve that there’s not a lot of point to them”. He prefers a more flexible approach.
“You have got to keep an open mind and not constrain yourself by being too specific,” he adds. “Sometimes, when you set targets you can be constrained and lose sight of everything else.”
There’s also the fact that innovation is always around the corner. Ramon Arratia is European sustainability director at the carpetmaker Interface, which led the way in sustainability targets. Its “Mission Zero”, set in 2006, is to eliminate any negative effect the company may have on the environment by 2020. Mission impossible? Possibly, but that doesn’t faze Arratia and his team.
“Companies often look at what’s possible when they set targets, so if a 20% reduction in carbon is possible, they’ll set the target at 15%,” he says. “But those targets are set based on what the technical guys know today, which means you are also ruling out innovation. Our target means we have to explore some pretty radical stuff. After all, what’s the point of a target if you know you’ll hit it?”
PepsiCo is another that admits it is pushing the bounds of possibility. In an interview with the 2degrees network last year, its sustainability director, Martyn Seal, highlighted the manufacturer’s target to be “fossil-fuel-free by 2023”. He said: “We know how to get halfway there, but we’re not sure about the other half yet. That will take new innovation and new business partnerships, but it’ll be worth it. If we can make that target then we’ll be in a strong position. It would be a strategic advantage for us.”
There are other external factors that can help companies hit their sustainability targets – not least the right policy drivers. Accor’s Flak says that France’s new regulations on sustainability data transparency make it mandatory from this year (based on 2012 data) to externally audit more social and environmental indicators – just like financial data. Carbon footprints will also have to be published for all French subsidiaries with over 500 employees. October should see a similar scheme launched in the UK, albeit just for the largest companies at first (see page 22). “Regulation on sustainable development topics needs to be designed to really foster progress, and not only give another source of taxes to governments in this hard economic context,” says Flak.
Some have had to adjust their targets after changes to government policy. Richard Gillies, the director of Marks & Spencer’s sustainability programme, Plan A, admits in the company’s “How We Do Business Report 2011” that the retailer has “had to evolve our plans to become carbon-neutral in response to changes in government policy on renewable energy, during this administration and the previous one”. But now it’s “on plan” to meet the target to become carbon-neutral.
Plan A is often held up as not just any sustainability plan, with 180 different targets across the business. To date, 138 have been met, with 30 on track and 12 either not met or behind plan. M&S’s most recent update doesn’t shy away from that dirty dozen, either. “If you’re meeting all your targets all of the time, then you’re not stretching yourself,” says Mike Barry, who heads up the Plan A project.
When it comes to sustainability targets, the bar is constantly being raised, but that doesn’t mean it’s a competition, says Poonaji. “Target-setting should be an analysis of your organisation and the commitments put in place by external stakeholders in your sector. We all have different challenges so you need to set smart targets.”
An analyst once admitted to me that he had an addiction to sustainability targets. “Some people have got target fatigue, but not me – I’m a bit of a target junkie,” he said. “They can empower and drive innovation.” I’d agree, but to do so they have to be ambitious, yet achievable; far-reaching, yet flexible. They also have to be relevant and rewarding. If you can achieve that mix, then there’s a chance your targets will drive change, both internally and up and down your supply chains.