Setting ESG Goals and Targets: A Practical Framework for Australian Businesses

Vague ESG commitments don’t inspire or drive change. “We’re committed to sustainability” is meaningless. Real commitment requires specific, measurable, time-bound goals and targets that hold you accountable and guide action.

This guide shows you how to set effective ESG goals and targets for your Australian business. You’ll learn the difference between goals and targets, how to make targets science-based and achievable, how to ensure they’re meaningful, and how to track progress. For context on overall ESG strategy, see our complete ESG strategy building guide.

Goals vs Targets: What’s the Difference?

Goals are strategic directions. They describe what you want to achieve across a material ESG issue.

Example: “Achieve leadership in climate action within our industry, reducing emissions while transitioning to renewable energy.”

Goals are qualitative and strategic. They set direction and intent.

Targets are specific, measurable, time-bound commitments. They quantify progress toward a goal.

Example: “Reduce Scope 1 and 2 greenhouse gas emissions by 50% by 2030 against 2020 baseline.”

Targets are quantitative and specific. They enable measurement and accountability.

The hierarchy: Vision (long-term, 2050) → Goals (medium-term strategic direction) → Targets (specific, time-bound metrics) → KPIs (annual or quarterly metrics tracking progress).

Characteristics of Effective ESG Targets

Specific and Measurable

Vague targets don’t work. “Reduce emissions significantly” is vague. “Reduce Scope 1 and 2 emissions by 50% by 2030 (baseline 2020)” is specific and measurable.

Questions to test specificity:

• Could someone verify if this target was met? If not, it’s not specific enough.
• Is it clear exactly what’s being measured?
• Are units, baselines, and scope clear?

Time-Bound

Targets need deadlines. Deadlines create urgency and accountability. “Reduce emissions by 50%” without a deadline is meaningless. “By 2030” creates accountability.

Typical timeframes:

• Near-term targets: 2025-2026 (1-2 years away). These are intermediate milestones showing progress toward longer-term targets.
• Medium-term targets: 2030 (5-7 years away). This is the typical medium-term horizon for business planning. Aligns with climate Paris Agreement scenarios.
• Long-term targets: 2050 (20+ years away). These are often aspirational (net zero, net positive). Provide long-term direction.

Use a mix: near-term (keep momentum), medium-term (primary accountability), long-term (directional).

Ambitious But Achievable

Targets should stretch you—that’s what creates change. But they must be achievable with reasonable effort and resources. Impossible targets demotivate.

How to test if target is right level of ambition:

• Is it achievable with investment and effort over the timeline? If yes, it’s reasonable.
• Would achievement require fundamental changes to operations? If yes, it’s appropriately ambitious.
• Do peers and industry leaders think this is achievable? If yes, it’s aligned with what’s possible.

Aligned with Business Strategy

ESG targets shouldn’t conflict with business strategy. They should support it. A carbon-intensive business with a target to transition to renewables might conflict with traditional revenue growth—requiring business model shift. But this shift might be the right strategy to future-proof the business.

The point: think through how ESG targets align with (or require changes to) business strategy. Don’t set targets that undermine business viability.

Science-Based Where Relevant

For environmental targets, especially climate: Use scientific frameworks to set targets. IPCC science says we need net zero by 2050 (1.5°C pathway) and interim 50% reduction by 2030 to limit warming. Science-based targets ground your strategy in climate reality.

Science-based target (SBT) framework: If you want credibility, consider Science Based Targets initiative (SBTi). They validate that your targets align with climate science. This is increasingly expected by investors.

For water: Water targets should reflect water scarcity in regions where you operate. Reducing water use in water-stressed regions is more important than in water-abundant regions.

For social targets: Gender pay equity: target is typically less than 5% gender pay gap. Health and safety: targets often benchmark to leading industry performance.

Transparent and Publicly Committed

Publicly committing to targets creates accountability. If stakeholders know about your targets, you’re more likely to deliver. Public commitment also builds reputation and stakeholder trust.

Publish targets in sustainability reports, on your website, in investor communications. Make them visible and transparent.

How to Set Effective ESG Targets

Step 1: Establish Baselines

You can’t measure progress without knowing where you started. For each material issue, establish a baseline.

Baseline definition: A specific year of measured performance. Example: Baseline 2020 (selected because strong measurement data available and pre-COVID for some issues).

Baseline assessment: Measure actual performance in baseline year. For emissions: total Scope 1 and 2 emissions in 2020. For gender pay: gender pay gap in 2020. For safety: lost time injury frequency rate in 2020.

Good baselines require good data. If historical data is weak, invest in improving measurement systems before setting targets.

Step 2: Identify Reduction Pathways

How will you achieve targets? What changes will drive progress?

For climate targets: Pathways might include:

• Energy efficiency improvements (LED, HVAC, process improvements)
• Renewable energy transition (solar, wind, power purchase agreements)
• Supply chain emissions reduction (supplier efficiency, sourcing changes)
• Product redesign for lower emissions
• Business model shifts (circular economy, service-based models)

For social targets: Pathways might include:

• Inclusive recruitment practices (expanded pipelines, reduced bias)
• Mentoring and development programmes for underrepresented groups
• Pay equity remediation
• Culture change work

Understanding pathways helps you assess achievability. If a target requires pathways that aren’t feasible, lower the target or extend the timeline.

Step 3: Set Near, Medium, and Long-Term Targets

Long-term (2050-2060): Aspirational direction. Often net zero, net positive, or transformational (e.g., 100% renewable, zero waste to landfill). These set long-term direction but aren’t specific action plans.

Medium-term (2030): Primary accountability point. Specific, measurable, achievable within 5-7 years. This is what you’re building strategies and budgets to achieve.

Near-term (2025): Milestone showing progress toward medium-term target. These create momentum and accountability in short-term planning cycles.

Example climate target architecture:

Step 4: Assign Accountability

Who owns each target? Unclear accountability means targets don’t get met. Assign specific owners:

• Executive sponsor (usually functional leader: CFO for finance-related, CHRO for social)
• Operational owner (person responsible for day-to-day delivery)
• KPI owner (who tracks progress and reports)

Build accountability into performance management. Target owners should have targets in their scorecards and variable remuneration should be tied to achievement (or significant progress toward achievement).

Step 5: Integrate into Budgeting and Planning

Targets without resources don’t get met. Translate targets into specific initiatives and budget them:

• What investments are needed? (LED retrofit, renewable energy, equipment upgrades, training)
• What’s the budget required? (capital and operating spend)
• What’s the timeline?
• Who’s responsible for execution?

Include ESG-related initiatives in capital budgeting process. Fund them as you would other strategic priorities.

Step 6: Build in Flexibility

Markets change, technology advances, regulations shift. Targets should be robust but not so rigid they become irrelevant. Build in annual review and adjustment capability.

When to revise targets:

• Technology breakthrough makes higher targets achievable (increase ambition)
• Business model shift changes baseline or pathways (recalculate targets)
• Regulatory changes create new constraints (adjust scope or timeline)
• Early progress shows targets are too conservative (increase ambition)

Annual review and adjustment keeps targets relevant and credible.

Common Target-Setting Mistakes

Mistake 1: Setting targets without understanding pathways. If you don’t understand how you’ll achieve a target, it’s probably unrealistic. Understand mechanisms before committing.

Mistake 2: Setting targets that conflict with business strategy. If ESG targets require business model changes stakeholders aren’t ready for, they’ll resist. Ensure targets are aligned with where business is heading.

Mistake 3: Overcomplicating target architecture. One net zero target plus 2-3 interim targets is clear. Twenty-five different targets across dozens of metrics is confusing and unmanageable.

Mistake 4: Failing to resource targets. Targets without budget and people don’t get met. Budget for achievement, not just setting.

Mistake 5: Not tracking progress.**Targets you don’t measure become irrelevant. Build measurement and reporting into your systems.