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TRANSCRIPT
Setting Environmental Targets for
Success 5/15/2019
Ryan McMullan, John Friedman
What Are Your Current Targets? Activity
Your Current Targets
Consolidate tables to at least 4 per
table
Work with your table
Share your current environmental
targets
5 Minutes
Examples
Energy
Water
Waste
Carbon
Biodiversity/Habitat
Overview
Aligning Sustainability Targets to Organizational Goals
Six Styles of Targets
How to Handle Growth
Current State of Corporate Targets
Draft Your Future Targets
Aligning Sustainability Targets to
Organizational Goals Lesson
Aligning Sustainability Targets to Organizational
Goals
Making a Strategy Map
Recognizing Co-Benefits
7 –
Objectives License to
Operate
Cost
Reduction
Market
Opportunity Employee
Engagement Investment Capital
Financial
Reduce DSOs
Reduce
compliance costs
Reduce fines/
penalties
Ensure compliance
Enhanced reputation
Socially Responsible
Investment Funds
Favorable
guidance
Sales
Expand share of business with
existing clients
100 percent
retention of
existing clients
Increase market share
Expand premium offer
Increase sales volume to
existing
customers
Attract new
customers
Improve margins
Operational
Identify & integrate best practices
throughout
company
Maximize safety
Ensure compliance
Increase productivity
Reduce waste
Reduce
transportation costs
Reduce lost time
accidents
Reduce mediation
Provide the best and reliable
service
Be responsive
to customers
Culture of continuous
Improvement
Reduce raw materials costs
Ensure compliance
Cultural
Align HR processes and incentives with
desired outcomes
Reduce turnover
Attract / hire / retain and
engage the
best talent
STRATEGY MAP
8 –
Objectives License to
Operate
Cost
Reduction
Market
Opportunity Employee
Engagement Investment Capital
Financial
Reduce DSOs
Reduce
compliance costs
Reduce fines/
penalties
Ensure compliance
Enhanced reputation
Socially Responsible
Investment Funds
Favorable
guidance
Sales
Expand share of business with
existing clients
100 percent
retention of
existing clients
Increase market share
Expand premium offer
Increase sales volume to
existing
customers
Attract new
customers
Improve margins
Operational
Identify & integrate best practices
throughout
company
Maximize safety
Ensure compliance
Increase productivity
Reduce waste
Reduce
transportation costs
Reduce lost time
accidents
Reduce mediation
Provide the best and reliable
service
Be responsive
to customers
Culture of continuous
Improvement
Reduce raw materials costs
Ensure compliance
Cultural
Align HR processes and incentives with
desired outcomes
Reduce turnover
Attract / hire / retain and
engage the
best talent
Co-Benefits E N VI R ONM ENTA L S O C I A L & G O VE R NAN CE
In just 3 ½ days, 4,801 out of 10,872
accounts from customers who visited this
page got enrolled in Paperless Billing…that’s 44.2% sign up success!
What Organizational Goals Might
You Align With? Activity
What Organizational Goals Might You Align With?
Work with your table
Pick one of your current targets
Identify at least one organizational
goal or other department goal that
it aligns with
Discuss how you can collaborate
with that department
5 Minutes
Six Styles of Targets Lesson
Styles of Targets
Things We Measure
Types of Targets
Application of Targets
Picking a Baseline Year
Things We Measure
Targets
o Well-quantified
o Controllable
o Determine success of goals
Metrics
o Well-quantified
o Controllable
o Important for explanatory power
o Potential future targets
Indicators
o Well-quantified
o Out of your control
o Important for explanatory power 19
Components of a Target
Type
Absolute
Relative
Programmatic
Application
Consistent
Conditional
Baseline
Constant
Shifting
Types of Targets
Absolute Targets
Relative Targets (Intensity-based)
o Percentage (Part of the Whole)
o Past-referenced (Get Better)
o Plan-referenced (Part of Our Plan)
o Context-based (What The World Can Sustain)
Programmatic Targets
Absolute Targets
Absolute: Not normalized by business activity
Ex: Reduce MTCO2e by 20% from a 2010 baseline by 2020
Percentage Relative Targets
“Part of the Whole”
Percentage: Expressed as 0-100%
o Doesn’t require a baseline except to show progress
o Easy to communicate
Relative: Performance/Total Possible Performance (same
units)
Ex: Increase renewable energy to 30% of total energy by
2020
Past-Referenced Relative Targets
“Get Better”: How do we want to do better than we were?
Past-Referenced: Where has the company been in the past?
Relative: Performance/unit business activity
Ex: Reduce MMBtu/vehicle produced by 30% from a 2010
baseline by 2020
Plan-Referenced Relative Targets
“Part of Our Plan”: Where are we in our long-term plan?
Plan-Referenced: Where is the company going?
Relative: Performance/unit business activity
Ex: As part of our goal to reduce MTCO2e/Profit to zero by
2050, we will reduce MTCO2e/Profit by 25% from a 2010
baseline by 2020
Context-based Relative Targets
“What The World Can Sustain”: What does truly sustainable look like?
o AKA science-based targets
Context: Considers the context of a future sustainable society and the company’s role in it. What is a sustainable regeneration rate for the resource?
Relative: Performance/unit business activity, Our share is Profit/GDP
Ex: Scientific consensus is that to avoid greater than a 2℃ warming, we need to reduce emissions to X by 2050. Based on our company’s contribution to GDP our contribution to GHG reductions is Y MTCO2e/Profit by 2020.
Context-based Targets
Example of Context-based Carbon
Metric (CSO method)
Well-recognized
Affected by general economy
(GDP) and economic factors (gross
margin) in addition to performance
Nets out currency inflation
Recommends against including
scope 3 emissions
Programmatic Targets
Programmatic: Commit to implementing a program, plan,
pilot, study, assessment, etc.
Ex: Conduct a water balance and watershed study at our
largest water user
What activity will we complete?
Preparing for future quantitative targets, way of learning
Application of Targets
Consistent Targets
o The same in all locations (the default)
o Appropriate for widely dispersed impacts (e.g. GHG) or little difference between locations (e.g. waste landfilling in the U.S.)
Conditional Targets
o Adjusted based on local conditions, risk-based
o Appropriate for localized impacts (e.g. water scarcity) or large differences between locations (e.g. grid CO2e intensity)
o Ex: Reduce water use by 5% in regions with a water supply stress index of 0.4 or less, reduce by 15% in regions greater than 0.4.
o More work to manage
Constant Baseline Year
Reduce X by 20% from 2010
baseline by 2020
Reduce X by 40% from 2010
baseline by 2030
Reduce X by 60% from 2010
baseline by 2040
As early as you can get reliable
data for most metrics
Shifting Baseline Year
Reduce X by 20% from 2010
baseline by 2020
Reduce X by 20% from 2020
baseline by 2030
Reduce X by 20% from 2030
baseline by 2040
Picking a Baseline Year
Picking a Baseline Year
Constant Baseline Year
Gets to zero
Shows how for you’ve come
Not “punished” for early action
Easier to visualize long-term target
70
50
30
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
100,0
1 2 3 4 5 6 7 8 9 10 11
Tons
of
Wast
e G
enera
ted
Year
Waste Generated at 10%/year Constant Baseline
Picking a Baseline Year
Shifting Baseline Year
Asymptotic
Looses sight of earlier progress
Takes in to accounts undershoots
and overshoots
Doesn’t suggest a long-term target
Might mimic the diminishing
returns of efficiency gains
73
48
25
10
1
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
100,0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
Tons
of
Wast
e G
enera
ted
Year
Waste Generated at 10% reduction/year Shifting Baseline
Categorize Your Targets Activity
Categorize Your Targets
Work with your table
Review your current targets and categorize them into the Six Styles
Discuss
5 Minutes
Six Styles
Absolute Targets
Relative Targets (Intensity-based)
o Percentage (Part of the Whole)
o Past-referenced (Get Better)
o Plan-referenced (Part of Our Plan)
o Context-based (What The World Can Sustain)
Programmatic Targets
How to Handle Growth
Aligning Sustainability Targets to Organizational
Goals
Types of Size Change
Options for Handling Growth
Adapting to Size Change
Types of Size Change
Acquisitions & Divestitures
Market Share Gain/Loss
Market Growth
Target types respond differently to size change.
Absolute Targets
Absolute: Not normalized by business activity
Ex: Reduce MTCO2e by 20% from a 2010 baseline by 2020
How absolute targets react to changes in size
o Acquisitions & Divestitures: Add/remove from baseline
o Market Share Gain/Loss: Doesn’t account o Market Growth: Doesn’t account
Percentage Relative Targets
“Part of the Whole”
Ex: Increase renewable energy to 30% of total energy by
2020
How these targets react to changes in size
o Acquisitions & Divestitures: Total Possible Performance Changes
o Market Share Gain/Loss: Total Possible Performance Changes
o Market Growth: Total Possible Performance Changes
Past-Referenced Relative Targets
“Get Better”: How do we want to do better than we were?
Ex: Reduce MMBtu/vehicle produced by 30% from a 2010
baseline by 2020
How these targets react to changes in size
o Acquisitions & Divestitures: Add/remove from baseline
o Market Share Gain/Loss: Units of business activity increase
o Market Growth: Units of business activity increase
Plan-Referenced Relative Targets
“Part of Our Plan”: Where are we in our long-term plan?
Ex: As part of our goal to reduce MTCO2e/Profit to zero by
2050, we will reduce MTCO2e/Profit by 25% from a 2010
baseline by 2020
How these targets react to changes in size
o Acquisitions & Divestitures: Add/remove from baseline
o Market Share Gain/Loss: Units of business activity increase
o Market Growth: Units of business activity increase
Context-based Relative Targets
“What The World Can Sustain”: What does truly sustainable look like? (AKA science-based targets)
Ex: Scientific consensus is that to avoid greater than a 2℃
warming, we need to reduce emissions to X by 2050. Based
on our company’s contribution to GDP our contribution to GHG reductions is Y MTCO2e/Profit by 2020.
How these targets react to changes in size
o Acquisitions & Divestitures: Add/remove from baseline
o Market Share Gain/Loss: Profits increase/decrease
o Market Growth: Profits increase/decrease
Programmatic Targets
What activity will we complete?
Ex: Conduct a water balance and watershed study at our
largest water user
Changes in Size Scope
o Acquisitions & Divestitures: N/A
o Market Share Gain/Loss: N/A
o Market Growth: N/A
How to Handle Growth
How to Handle Growth
You’re half way to your target … when suddenly you’re back where you were at the end of year 1
How to Handle Growth Promise same trajectory and timeframe for new operations as heritage? Revise trajectory and timeframe based on your actual trend, promising to leverage the learning from your last few years of efforts? Promise to hit the same absolute target in the original timeframe? Promise to hit absolute target but in a faster timeframe for new operations (6 years instead of 10)? How long do you report ‘heritage’ and ‘new’ separately? Does it matter if they’re in different geographies? Is your promise local or universal?
How Would You Do It? Activity
How Would You Do It?
Work with your table
Review different growth scenarios
Decide how you’d change the metric
Discuss
5 Minutes
What happens to the baseline?
What happens to the target?
What’s included?
Current State of Corporate
Targets
Current State of Corporate Targets
Target Trends
Topics for Sustainability
Example of Styles
Target Trends
Leading Edge
Solid Performers
Falling Out of Favor
Leading Edge
Focusing on a vision for a sustainable future
Target Types
o Context-based Targets
o Plans for Net Zero
o Conditional Targets (risk-based)
Solid Performers
Focusing on real gains for environment/communities
Target Types
o Percentage Relative Targets
o Plan-Referenced Relative Targets
o Absolute Targets
o Programmatic Targets (if supplemental and part of plan for the
future)
Falling Out of Favor
Sometimes abused, less trusted
Target Types
o Programmatic-only Targets
o Past-Referenced Relative Targets
o Shifting Baselines without a Long-term Plan
Topics for Sustainability Targets
Energy
Carbon
Water
Materials
Waste
Others for Consideration
Energy
Target Type Future Target Options
1 Context-based Targets No protocol developed (see Carbon)
1 Plans for Zero • 100% renewable by 2050. Target 30% by 2030.
• Net Zero energy by 2075. Target 40% by 2030.
1 Conditional Targets Higher targets where grid CO2e intensity is higher
2 Plan-Referenced Targets Project total possible MMBtu/sq ft reductions of 60%
from 2010 baseline. Target reaching it by 2035.
Target 30% reduction by 2025.
2 Absolute Targets Reduce MMBtu by 50% from 2010 baseline by 2035
2/3 Programmatic Targets • Conduct energy audits at 50% of facilities by 2025
• Pilot 4 renewable energy technologies by 2030
3 Past-Referenced Targets Reduce MMBtu/sq ft by 50% from 2010 baseline
Energy
Alternatives
o Shift focus to Net Energy to subtract onsite generation (reduced demand on grid)
o Drop energy as a sustainability target and just focus on carbon
o Consider embodied energy of water for comparison (not in scope)
o Shift renewable energy to % of whole instead of absolute consumption
3rd Party Certifications/Programs
o Energy Star Certified Building
o ISO 50001 EnMS
o LEED O+M (more than just energy)
o LEED Net Zero Energy (coming soon)
o RE100 Commitment
o BREEAM In-Use (UK/Europe)
Carbon
Target Type Future Target Options
1 Context-based Targets Science-based carbon targets (e.g. CSO)
1 Plans for Zero Net Zero carbon by 2050. Target 55% reduction of
MTCO2e/revenue from 2010 baseline by 2030.
1 Conditional Targets Higher targets at facilities with higher emissions
2 Plan-Referenced Targets 60% carbon reduction by 2050. Target 45% reduction
of carbon from 2010 baseline by 2030.
2 Absolute Targets Reduce carbon by 50% from 2010 baseline by 2030
2/3 Programmatic Targets Establish 7 new PPAs by 2030
3 Past-Referenced Targets Reduce MTCO2e/sq ft by 45% from 2010 baseline
Carbon
Alternatives
o Other science-based target method (Sectoral Decarbonization
Approach, 3% Solution, BT-CSI, etc.)
o Consider embodied carbon of water and waste
3rd Party Certifications/Programs
o RE100 Commitment
o LEED Net Zero Carbon (coming soon)
Water
Target Type Future Target Options
1 Context-based Targets Still nascent
1 Plans for Zero Net Zero water by 2075. Target 45% reduction of
water from 2010 baseline by 2030.
1 Conditional Targets Higher targets in water scarce regions
2 Plan-Referenced Targets 70% water reduction by 2050. Target 45% reduction
of water/occupant from 2010 baseline by 2030.
2 Absolute Targets Reduce water use by 40% from 2010 baseline by 2030
2/3 Programmatic Targets • Conduct water balance study at largest water user
in each business unit.
• Conduct water risk assessment.
• Convert one facility to Net Zero Water.
3 Past-Referenced Targets Reduce Mgal/occupant by 45% from 2010 baseline
Water
Alternatives
o Shift measurement from water to potable water (allows reclaimed
water, rainwater, etc.)
o Shift measurement from water to Net Water to account for onsite
treatment and rainwater capture
o Compare embodied water of electricity to onsite use
3rd Party Certifications/Programs
o LEED O+M (more than just energy)
o LEED Net Zero Water (coming soon)
Waste
Target Type Future Target Options
1 Context-based Targets Still nascent
1 Plans for Zero All facilities Zero Waste Certified by 2035
1 Conditional Targets Increased targets on coastal facilities
2 Plan-Referenced Targets Target 70% avoidance rate by 2050. Target 45%
avoidance by 2030.
2 Absolute Targets Reduce waste generation by 40% from 2010 baseline
by 2030.
2/3 Programmatic Targets • Conduct 4 reverse logistics recycling pilots.
• Add 17 remanufactured products.
3 Past-Referenced Targets • Reduce Waste Disposed/Profit by 45% from 2010
baseline by 2025.
• Increase 3R Rate to 92% by 2030.
“90% Diversion from Incineration, Landfill,
and the Environment” plus Zero Waste Policies
and Programs
Waste
Alternatives
o Avoidance Rate (Reduce/Reuse as %)
o 3R Rate (Reduce/Reuse/Recycle as %)
o Salable Waste (separate recycling paid for)
o Packaging Reduction
3rd Party Certifications/Programs
o TRUE Zero Waste (US GBC) [Northrup Grumman, Raytheon]
o Zero Waste to Landfill (ULE, NSF, Green Circle)
o LEED Net Zero Waste (coming soon)
Other Topics for Consideration
Biodiversity/Habitat Protection
Elimination of Substances of Concern
Alignment to UN Sustainable Development Goals (SDGs)
o Goal 7: Affordable and Clean Energy
o Goal 11: Sustainable Cities and Communities
o Goal 12: Responsible Production and Consumption
o Goal 13: Climate Action
o Goal 14: Life Below Water
o Goal 15: Life On Land
Putting It All Together
Topics vary by the company’s
o Impact (materiality)
o Sophistication
o Outside Perception
Don’t have to pick the same target components for every topic
Good to have the same baseline year for every target
Consider your target development and deployment process
Where Are Your Targets? Activity
Where Are Your Targets?
Work with your table
Review your current targets and categorize them into Leading, Solid, or Falling
Discuss
5 Minutes
Leading Edge
o Context-based Targets
o Plans for Net Zero
o Conditional Targets (risk-based)
Solid Performers
o Percentage Relative Targets
o Plan-Referenced Relative Targets
o Absolute Targets
o Programmatic Targets (part of plan for the future)
Falling Out of Favor
o Programmatic-only Targets
o Past-Referenced Relative Targets
o Shifting Baselines without a Long-term Plan
Draft Your Future Targets Activity
Draft Your Future Targets
Work with your table
Pick one current target
Draft a future target for the same
topic
Discuss
Continue to another target if time
permits
15 Minutes
Consider
Aligning Sustainability Targets to
Organizational Goals
Six Styles of Targets
How to Handle Growth
Current State of Corporate Targets
Thanks
Thank you for your participation
Thanks to Dr. McElroy for clarifications on the CSO Context-
based Carbon Targets
Conclusion and Questions?
Aligning Sustainability Targets to
Organizational Goals
Six Styles of Targets
How to Handle Growth
Current State of Corporate Targets
Draft Your Future Targets
Ryan McMullan
Strategic Sustainability Consulting
o www.linkedin.com/in/ryan-mcmullan
o Twitter: @LeanGreenRyan
John Friedman
Sustainability Manager at WGL
o www.linkedin.com/in/johnfriedman/
o Twitter: @JohnFriedman
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