Here is how targets give meaning and relevance to sustainability reporting

Targets, when properly set, offer insights into an organisation’s ambitions, demonstrating accountability that enables benchmarking and comparability. Failing to set targets can reflect poorly on an organisation’s management team, as stakeholders lack a yardstick against which to hold management accountable, even before comparing it to peers.

While an organisation might have performed credibly well in a particular period, if the targets against which it has performed are not disclosed, users of its reports will find it difficult to understand how to view the performance, the context, and overall credibility.

For sustainability reporting, the absence of targets could render these reports meaningless and of little value to stakeholders. Organisations must ensure that sustainability reports disclose their performance and targets.

Targets provide context for an organisation’s performance, first by indicating the relative assessment against the target and helping users understand the organisation’s context.

For organisations, these targets provide the business rationale for viewing sustainability. An organisation that sets a yearly target for cutting emissions and transforming its business model can highlight its achievements each year towards the goal, giving users a perspective on the level of efficiency and effectiveness, including the speed of transformation, compared to its peers.

Targets must be specific, measurable, achievable, relevant, and time-bound (SMART) to demonstrate accountability and effectiveness. Too often, organisations prepare sustainability reports that have vague and ambiguous targets, preventing stakeholders from gaining a clear understanding of their performance.

Achieving accountability is what targets enable for sustainability reporting, and organisations should ensure that their sustainability reports include SMART targets to increase their utility and relevance.

Taking such an approach results in the sustainability reports being viewed as inauthentic and irrelevant. For organisations, sustainability needs to have a business case attached to its implementation.

For accountability, management needs to be held responsible for delivering the business benefits associated with embedding sustainability across the organisation.

The writer is a partner at PricewaterhouseCoopers. He is an author who writes and speaks widely on corporate reporting topics.