Even sustainability targets with seemingly similar scopes can be quite different. Carbon, gender split, recycling rates – all of these can be measured in various ways, leading to different sustainability trajectories.
Firms will often tweak calculations to suit the distinct nature of their business, sector or geographic profile. For instance with carbon reduction, some may include supply chain emission costs, while others decide to exclude it. Or for gender split the focus could be on senior management or all staff.
Just comparing a particular % change is hence insufficient. When assessing ESG goals, make sure you understand the way the metric is calculated. With ESGRoadmap, you obtain access to the underlying source of the goal. Typically this is a page in the annual report or a press release. Through accessing this primary source, you will generally be able to find further information on the exact parameters of the goal. This may be in the main body, the footnotes or a separate annex.
Over time, these disparities should reduce. There are various initiatives underway to harmonise ESG metrics. The most prominent is the launch of the IFRS Foundation’s International Sustainability Standards Board. This seeks to set a common baseline for global sustainability reporting. National and regional initiatives in the area of environmental metrics, such as the EU Taxonomy, should also facilitate harmonisation in this area.
However it is unlikely that they will ever disappear. Even in the world of financial goals it is common for companies to view profitability or return on investment differently.
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