1 – Make sure the baseline isn’t too old (i.e. more than a few years ago), or if it is best to ensure there is a good reason i.e. start date for science-based targets etc.
2 – Best if a KPI covers most of the issue you are trying to measure – i.e. if it only covers 1% of emissions, then probably not very robust.
3 – The KPI should be able to measure performance, not just a commitment.
4 – Ensure that there’s a good methodology that underpins the KPI. i.e. GHG methodology, SBTi, GRI, SASB etc.
5 – Best for the definition of the KPI to be clear and robust = particularly for social KPIs. Ensure that the definition is extremely clear.
6 – As best as possible, make sure that the KPI can be compared to other companies (is bench-markable) and is not too bespoke (although social KPIs are inevitable bespoke).
7 – Really important – ensure that the KPI measures a material and key area of sustainability for the company. You can check MSCI on- line tool, the company’s own reporting, industry best practice reporting, SASB and even Google for key issues in a respective industry.
8 – Best to ensure that you are not just maintaining something (unless it is really, really hard to do and the company is top in class on the issue already).
9 – Just meeting regulatory compliance or implementing something that is basic risk management generally doesn’t cut it.
10 – Ideally the KPI is not just an input metric – i.e. capex spent on something (although can be measured) and the more quantitative generally better to measure output/outcome of performance.
