Setting sustainability targets isn’t always straightforward. Ambitions can evolve, data may be limited, and organisations may be unsure about how far or fast they can realistically go. Still, expectations around transparency are growing. 

The Corporate Sustainability Reporting Directive (CSRD), for example, requires companies to go beyond identifying material issues, they must also set measurable targets. This shift moves target-setting from a voluntary step to a regulatory expectation. 

Well-crafted key performance indicators (KPIs) and targets provide direction and accountability. They help translate strategy into delivery and offer stakeholders, from investors to regulators and peers, a clearer view of where a business is heading on its sustainability journey. 

Aligning KPIs and targets with strategic priorities 

Clear, relevant metrics are essential to turning sustainability strategy into action. KPIs and targets each play a distinct role in this process: KPIs track current performance on key issues, while targets define the intended direction and ambition. Used together, they create the structure needed to guide progress, inform decisions and enable transparent reporting. 

To be meaningful, these metrics must reflect what matters most, both to the business and to its stakeholders. This typically stems from a materiality assessment, broader business strategy or sustainability-focused strategic analysis. Topics such as climate change, resource use, supply chain resilience or human rights can often emerge as priorities. 

By grounding KPIs and targets in these material topics, organisations can focus on what’s most impactful, rather than defaulting to what’s easiest to measure. For example, if human rights or workers in the value chain are identified as material topics, relevant indicators might include supplier audit coverage, engagement levels or responsible sourcing practices, rather than just internal operational metrics. 

This approach helps ensure that sustainability remains anchored in real-world outcomes. It also supports credible, focused reporting, particularly as frameworks like the CSRD, TCFD or even GRI, SASB and Ecovadis increasingly demand metrics that are both material and forward-looking. 

Building effective and accountable targets 

Effective targets are not just well-intentioned, they’re well-designed. In the context of ESG, this means being clear, measurable and time-bound, but also practical and aligned with organisational priorities. The SMART principle (Specific, Measurable, Achievable, Relevant, Time-bound) remains a helpful guide. 

In practice, not all targets need to be outcome-based from the outset. Starting with enabling actions, such as developing policies, collecting baseline data or mapping risks, can provide early momentum. These actions are often easier to define and deliver, while laying the groundwork for more ambitious long-term goals. Crucially, they also offer structure for reporting and disclosure. 

Establishing meaningful KPIs and targets can involve a range of challenges. Addressing these early is key to building a framework that drives both progress and credibility. 

• Lack of alignment with strategy: When metrics aren’t grounded in material issues or core business objectives, they can drift from decision-making processes. This weakens their relevance and limits their ability to influence outcomes. 

• Overload of metrics: Tracking too many indicators may seem comprehensive, but it often dilutes focus. A targeted set of metrics that reflect strategic priorities is more actionable and more useful for reporting. 

• Unclear ownership and weak governance: Without clearly assigned responsibilities, even strong targets may not be implemented effectively. Embedding metrics into governance structures, including performance management, reporting lines and board oversight, helps ensure accountability and follow-through. 

• Delays driven by perfectionism: Waiting for ideal data or complete certainty can stall progress. Phased target-setting, where directional goals are established early and refined over time, enables delivery without compromising rigour.
   

A pragmatic, focused approach is often the most effective. A small number of well-governed, strategically aligned KPIs and targets can do more to embed sustainability than a long list of loosely connected metrics. In more mature organisations, these indicators are integrated into planning cycles, performance reviews and even incentive structures, creating a direct link between ambition, action and accountability 

Where to begin 

For organisations still building their ESG maturity, the first step is to revisit their material topics or sustainability approach. Whether through a double materiality assessment or sustainability-focused strategic analysis, identifying what matters most and understanding what is already being measured provides a strong foundation for setting meaningful KPIs and targets. 

From there, focus on a small number of realistic, time-bound targets, supported by enabling actions where needed. Early steps such as developing policies, collecting baseline data or piloting new approaches can help build momentum and confidence. Just as importantly, targets should be reviewed regularly to ensure they continue to reflect the organisation’s ambition and evolving context. 

Target-setting supports both internal progress and external clarity, providing stakeholders, including investors, regulators, peers and customers, with visibility into where the business is heading and how it plans to get there. Under CSRD and other disclosure frameworks, target-setting is no longer optional. It is a signal of a credible, impact-led strategy and a necessary part of transparent reporting. 

Targets do not need to be perfect from day one, but they should be intentional and grounded in what matters most. Whether based on available data, material issues or planned actions, they need to be clear, purposeful and aligned with the organisation’s overall direction. The key is to start, build progressively and stay focused on delivering real, measurable outcomes. 

To explore how KPIs and target development can support your organisation’s ESG approach, contact our Head of ESG and Sustainability Strategy, Joaska Mischke, here.