You already run your business on numbers: cost per unit, energy use, downtime, on-time delivery. You track them, review them and act on them. Targets work the same way. Every business sets growth targets.
Sustainability metrics and targets aren't that different. The main differences are that some figures rely on estimates, the financial impact is often indirect or felt later, and standards and frameworks tell you how to measure and set them:
The Greenhouse Gas Protocol sets out how to calculate Scope 1, 2 and 3 emissions.
The SASB Standards set out the metrics that matter most in your industry.
The Science Based Targets initiative (SBTi) gives you a science-based way to set targets, so they are ambitious enough, credible, comparable and tied to where the business is heading.
You don't have to make up the method. It already exists. It takes some new expertise, but no new way of managing. And where the data isn't there yet, estimates and assumptions are fine, as long as they are justified and transparent. Perfect data isn't the starting point. Progress is.
This article looks at what wasn't working, what the metrics and targets pillar is designed to fix, three questions to test where you stand, and five practical steps to make sustainability metrics and targets part of how you run the business.
What wasn't working: numbers for the report, not the business
In many organisations, sustainability data was gathered once a year for the report, and rarely used to run the business. The numbers existed, but nobody steered by them.
Five patterns come up again and again:
Incomplete metrics that couldn't be compared. Each company, and sometimes each site, measured in its own way, so results couldn't be compared over time or with peers.
Data collected manually, once a year. Spreadsheets were pulled together at reporting time, long after the numbers could have changed anything.
Numbers nobody checked, or fully trusted. Without review or sign-off, managers were reluctant to base decisions on them.
Value chain emissions left for later. Scope 3 was seen as too hard, even though it is often where most of the emissions sit.
Targets set without a plan to reach them. Ambitious dates were announced, with no milestones, budget or owner behind them.
What the metrics and targets pillar is designed to fix
The pillar asks you to measure what matters, and use it to steer the business. It sets out a common set of metrics, such as Scope 1, 2 and 3 emissions, exposure to climate risks, capital deployed and the share of executive pay linked to climate. It also asks for clear targets: the base year, the milestones, how progress is tracked and whether a third party has validated them.
You don't need perfect data from day one. The standard accepts reasonable estimates and expects data quality to improve over time. It's a journey:
Start: focus on metrics that track risks and opportunities with financial impact.
Build: review them monthly or quarterly, like your other KPIs.
Embed: link targets to plans, budgets and management decisions.
In other words, treat sustainability metrics like any other operational KPI. The method is set by the standards. The habit of measuring, reviewing and improving is one you already have.
Three questions to test your metrics and targets
How do you know whether your sustainability numbers steer the business, or just fill a report? These three questions are a quick, honest check.
1. Do your managers use these metrics to make decisions during the year?
A number you only look at once a year can't steer the business. When sustainability metrics sit on the same dashboards as cost, quality and delivery, they start to shape everyday choices: which supplier to use, which line to upgrade, where to invest.
2. Is your sustainability data controlled and reviewed like your financial data?
Financial data goes through clear definitions, a preparer and a reviewer, checks against source data and management sign-off. Sustainability data deserves the same discipline. Data that can't be checked can't be trusted, and with assurance on the horizon, it is easier to build the process now than to fix it later.
3. Do your targets have a credible pathway, with funding and milestones?
A target without a pathway is an ambition, not a plan. Credible targets come with interim milestones, an owner, a budget and regular reviews, so progress can be tracked and the plan adjusted along the way.
Three honest "yes" answers suggest your metrics and targets already steer the business. One or two means you are on the way. None means it is time to start, and that is a starting point, not a failure.
Five steps to make sustainability metrics and targets part of how you run the business
IFRS S1 asks companies to disclose the metrics they use to measure and monitor their sustainability-related risks and opportunities, and the targets they set, with progress against them. IFRS S2 applies this to climate, with specific requirements such as Scope 1, 2 and 3 emissions and details on climate targets. These five steps turn that into action.
Measure what matters. Start with Scope 1 and 2 and the industry metrics most relevant to your business. For Scope 3, get started with a structured approach.
Set your methodology. Document sources, estimates and assumptions, and improve data quality year on year.
Build the data process. Establish a clear process and the right software to collect and review data, so it's ready for assurance.
Set credible targets. Define the base year and interim milestones, and follow a science-based approach so targets are ambitious yet realistic.
Track and act on progress. Review performance against targets regularly, and use it in management decisions.
The standards don't ask you to invent a new way of measuring. They give you the method. What matters is using the numbers the way you use every other KPI.
Where to go from here
Metrics and targets are where the other three pillars become visible. Governance gives them an owner, strategy gives them a purpose and risk management tells you what to watch. The numbers show whether it is all working.
This concludes the series on the four pillars of the IFRS Sustainability Disclosure Standards: Governance, Strategy, Risk Management and Metrics & Targets. Together, they turn sustainability from a report into a way of running the business.
At Futuro Advisory, we help companies move beyond compliance and build sustainability into everyday decisions. Book a conversation to see where your risk management stands today.
Looking forward to hearing from you!