What makes a change of direction credible, beyond how well we explain it?

In 2022 my partner Oli and I took a six-month sabbatical with a plan to sail to the Lofoten islands in the Arctic Circle. Our timeframe was ambitious, so it was unfortunate when, two months in, we were still trying to locate a problematic leak in the torrential rain on a bleak Scottish boatyard.

 

Our trip shortened drastically. After crossing the North Sea, we turned South, rather than North, and explored the Norwegian Fjords and the Gothenburg archipelago. Changing course was sensible but it was a vastly different adventure to the one we’d planned. And it raises the question, which was the ambition that mattered most: the destination to reach the Lofoten islands, or to spend time together on a sailing adventure?

 

My experience here is mirrored in the corporate world, particularly when it comes to companies’ sustainability goals and the increasing need to change tack.

 

From intent to scrutiny

In the early 2020s, companies rushed to set bold sustainability goals. Microsoft pledged to become carbon negative. BP committed to net zero and a 40% reduction in oil and gas production by 2030. Coca Cola pledged to use 50% recycled material in packaging. Heads turned and, feeling the lure of reputational gain from the promise of progress, businesses scrambled to keep pace.

 

But what was missing was the substance. The transition planning. The detailed work to determine what actually needed to change to reach the goal. Many goals had been set without fully accounting for the dependencies they relied on: technological advances, consumer demand, regulation and policy change, industry-wide systemic change and supply chain capabilities. It sometimes felt more like a hope-for-the-best, wing-and-a-prayer situation.

 

The pledges became a delivery test. Stakeholders challenged the legitimacy of companies’ goals, SBTIs failed to convert into validated targets, and greenwashing accusations came thick and fast.

 

Now, with 2030 rapidly approaching, many companies are at an inflexion point: continue to pursue with commitments they’re unlikely to meet or restate them to reflect reality?

 

But the question isn't simply how to communicate that decision. It's whether the change itself is credible. To answer that, we need to distinguish between what is changing and what still holds.

 

What is actually changing?

We need to distinguish between changing the Method, extending the Deadline, and reducing the Ambition.

 

The language of ‘recalibration’ is often used to describe all three but there are very different consequences.

 

Changing the delivery method might still deliver the same outcome, and is often perceived as the least damaging option of the three. However, a change in method doesn’t always retain the original integrity of the plan, for instance adopting a mass-balance approach.

 

In contrast, extending an emissions, biodiversity or water consumption deadline by a decade could have far-reaching consequences for our planet and society. And reducing the ambition altogether means compromising on the intent entirely: something is being given up.

 

In 2023, Lego abandoned its prototype brick made from plastic from recycled bottles, after realising the scheme emitted more carbon dioxide than it would save. Instead of failure, Lego saw the setback as an important learning and part of its ongoing innovation process. In pursuit of its goal to make all its products from sustainable materials by 2030, Lego’s method changed, and its deadline extended by two years, but its ambition remained.

 

And what still holds?

When any of these three – the method, deadline or ambition – are changing, it often occurs at a particularly pressurised time within an organisation. External forces might be doing their worst, or business performance is under scrutiny. That’s when the underlying governance becomes the acid test of the integrity of the company’s sustainability commitment. If the appropriate resources to deliver against the revised goals aren’t in place, or meaningful accountability doesn’t exist, the ‘commitment’ lose all real credibility.

 

Consider Diageo’s recent decision to strip back executive-level remuneration linked to non-financial KPIs, at the same time as reining back its sustainability commitments. Diageo argued that sustainability is so embedded, it’s no longer necessary to incentivise it. Critics argued that non-financial metrics are essential to assess the health of a business, and Diageo’s actions reinforce the notion that sustainability is a drain on long-term business value. It was seen as a retreat from sustainability rather than a recalibration, and illustrates that while targets matter, so does the system supporting them.

 

How to re-calibrate well

If you’re being challenged to revise your organisation’s sustainability commitments, consider these five questions:

1.    What changed, and/or what did we get wrong? 
What challenges have led to this point, and what have we learned? Separate external developments from any assumptions or choices made within the business.

2.    Why is this the right decision? 
Show the alternatives considered and acknowledge the consequences. Does our restatement demonstrate a better understanding of the complexity of execution than when the original goals were set?

 

3.    What are we still committing to? 
Be clear about any lost ambition and the resources behind the revised plan. What external factors are we relying on? How are we enabling these? And does the revised plan still demonstrate genuine commitment to sustainability?

 

4.    How will people judge our progress? 
Establish ownership, interim milestones and reporting that allows meaningful comparison. Speak up in a transparent and authentic way, to avoid greenhushing or greenwashing. And secure solid governance around sustainability to withstand the changes.

5.    How will we make sustainability stick? 
What will actually change inside the business that’ll give this plan a better chance of succeeding?

 

In essence, does the change represent a genuine recalibration, or is a retreat – or even a defeat – in disguise?

 

Changing course, not abandoning ship

Sustainability presents a similar challenge to my sailing conundrum. The clock is ticking but climate change won’t wait until our businesses and governments feel ready to act perfectly. Nor will it concede when we fail to fulfil our promises.

 

It’s time to end the era of big pledges backed by superficial stories that ignore the complexities and imply pathways to progress that are predictable and linear.

 

Changes of direction are inevitable as we move with increasing urgency towards an ever-evolving sustainability challenge. So, before we ask people to believe our revised commitment, what have we changed that gives them a reason to?