Why Relative Reduction Targets May Be More Meaningful

Most companies aspire to grow in size and increase profitability each year. In some cases, through divestitures or restructuring, a company may also choose to decrease in size based on its annual business strategies. In both cases, financial success is not exclusively evaluated, internally or externally, based upon an absolute comparison to the previous year’s results. Like these financial measures, shouldn’t business sustainability targets be evaluated in the context of business growth?

Business stakeholders and analyst typically take into account a variety of changes that have occurred over the course of the year when determining corporate success. When it comes to business sustainability targets, like emissions reduction, evaluating absolute year-to-year reduction may not be measuring true performance.

Many of the companies we work with in our sustainability consulting are linking business sustainability to traditional financial metrics. Specific to climate change, one measurement model endorsed by the Carbon Disclosure Project is the Climate Stabilization Intensity (CSI) Target. It is designed to create an interdependent relationship between company CO2 emissions and financial performance.

“It is a powerful tool for embedding sustainability into organizations worldwide and critical in effecting change”, says model creator Chris Tuppen of the UK telecom company BT.

Last year BT announced a long-term goal to cut its carbon emissions intensity 80 percent below 1996 levels by 2020. The company said it will meet its goals through:

•    Energy efficiency
•    Low-carbon power and renewable energy
•    Using wind energy to power a quarter of its U.K. electricity needs by 2016.

At Taiga Company, our professional consulting finds that a commitment to sustainability uncovers opportunities to explore, develop, collaborate, and innovate within your organization and your industry. By linking business sustainability targets to financial metrics, companies create a representative framework for performance evaluation and a basis for communication to business stakeholders.