Imagine if companies treated financial targets the way they treat climate targets

18 April 2024

Imagine a business landscape where companies treat financial goals with the same lack of weight they often apply to climate targets—would they still operate effectively? Probably not, as such an approach would likely result in disorganised strategies and unmet objectives.

Let’s paint the picture; Imagine if most companies:

Hadn’t set financial targets 5 years ago. And imagine that even after setting the goal, they developed no structured plan on how to achieve it.

Imagine if the companies’ way of achieving their financial targets was to assign responsibility to a person from HR or maybe, if they’re ambitious, hiring a single outside person to figure it out. And then imagine that, if said person suggests changes to grow financially, employees become frustrated because their ways of working are being affected.

Imagine if the employees whose work impacts financial targets the most have limited to no understanding of how to generate revenue to meet those targets. And then imagine that they’re not rewarded or penalised based on their performance to do so anyway.

Imagine if procurement teams had no information on the cost of the products they buy but chose to sign the contract anyway and accept that suppliers simply aren’t ready to deliver that kind of information.

Imagine that and then answer this: Would companies make any money?

The key to real progress is reducing your Scope 3 emissions

Global emissions are still rising. And though many companies with climate targets are making progress on reducing their Scope 1&2 emissions, few of them have managed to significantly reduce Scope 3 emissions, where most of their emissions actually come from. Maybe because of that I often get asked whether it’s feasible to achieve ambitious climate targets. 19 times out of 20 my answer is: “Yes. But only if you take the target seriously.”

The critical need for structured plans and informed teams

In my experience, the willingness to achieve a target is rarely the problem –– it’s usually the limited time and focus put in by the right people that ends up getting in the way. So, whether you are the CEO of your company or working in managing positions, ask yourself the following questions:

  1. Has the time for decarbonisation been set aside with the people who can most directly influence achieving the climate target (e.g. market leads and business unit leads)?
  2. Have they been given responsibility, resources, and incentives to make it happen – even if it comes with minor trade-offs for other priorities?
  3. Is it easy or hard to achieve the targets? If all employees follow their individual goals, will you achieve the targets or fail? If the underlying foundation for the company such as employee goals, policies, procedures, and strategies are not even referencing let alone supporting the decarbonisation of the company, can you succeed?

The time for assuming a one-person sustainability army can come up with technological fixes to achieve a company’s climate targets or that suppliers will automatically offer all the right solutions has passed. It’s less about doing something new, and more about doing something different. Whether it’s through different product designs, a change in business model, establishing different procurement requirements or a thousand other things, companies can take control over their own decarbonisation journey and achieve their climate targets. It only requires climate targets to be treated like financial targets.

Author details

Ole Høy Jakobsen