Define Metrics and Targets to Drive Progress

To effectively demonstrate your company’s climate ambition and progress, you must identify indicators that will paint a comprehensive picture of your climate action. This should include key metrics and targets for governance and business operations, financial planning, greenhouse gas profiles, and carbon credits. Metrics may vary depending on the structure of your company and its overall business strategy.  

Transition plans incorporate a combination of quantitative and qualitative information. Both are critical to showcasing your company’s climate strategy, but this complexity can make it difficult to effectively communicate about your company’s climate action. Specific and consistent metrics and targets are critical tool to help you showcase ambition and progress.  

Metrics should be established in your transition plan, and then measured and reported on annually. Disclosures should include any underlying tools, baselines, methodologies, and definitions relevant to the chosen metrics. 

EDF encourages you to complete the following steps to determine your metrics and goals.

The below guidance from EDF aligns with other key frameworks in the ecosystem, including Ceres’ Blueprint for Implementing a Leading Climate Transition Action Plan and the TPT Disclosure Framework.   

Step 1: Assess, set, and disclose short-, medium- and long-term business, governance, engagement, and operational metrics, targets, and milestones

Governance, engagement, business, and operational metrics can help you track how your company is executing its climate strategy. Business metrics might include: 

• Is board or senior-level compensation linked to climate performance indicators? 
• Does the board or senior-level management possess climate-related capabilities or expertise? 
• How frequently does the Board review progress toward emissions reduction targets? 
• Does your company have a public statement describing how advocacy efforts are consistent with Paris Agreement goals? 

For more information, visit the NZAA’s “Set Science-Based Goals” pathway

Step 2: Assess, set, and disclose short-, medium- and long-term financial metrics, targets, and milestones

Financial metrics are a helpful indicator of your company’s efforts to take climate action. This may include quantitative information about the financial expenditures and effects of your transition plan. Financial metrics may include: 

• Percentage of annual revenue dedicated to GHG mitigation during the most recent reporting year.  
• Percentage of capital expenditures (CAPEX) and operational expenditures (OPEX) dedicated to GHG mitigation in the most recent reporting year.  
• Percentage of planned annual revenue earmarked for GHG mitigation across the value chain.  
• Percentage of capital expenditures (CAPEX) and operational expenditures (OPEX) that will be dedicated to GHG mitigation across the value chain.  

Companies should also disclose any targets they have set, and any targets they are required to meet by law or regulation. 

Step 3: Assess, set, and disclose short-, medium- and long-term greenhouse gas emissions metrics, targets, and milestones 

It is best practice to report any targets your company has set, as well as any targets you are required to meet by law or regulation. GHG metrics and targets build upon your emissions measurements and science-based targets. More granular emissions metrics within each Scope category may vary, but all businesses should report Scope 1, 2, and 3 emissions. GHG metrics should include: 

• Gross Scope 1 emissions in metric tons of CO2e for the base year and most recent reporting year.  
• Gross Scope 2 emissions in metric tons of CO2e for the base year and most recent reporting year. 
• Gross Scope 3 emissions in metric tons of CO2eby category for the base year and most recent reporting year. 
• A list of Scope 3 GHG categories included and excluded for the base and reporting year.  Exclusions must be justified. 
• Near-term emission reduction target base year, target year, target boundary, and target ambition.  
• Long-term net zero definition.  
• Validation status of targets and underlying methodologies.  

The Transition Plan Task Force recommends that for each target, a company discloses:  

• The metric used to set the target 
• The objective of the target 
• The part of the entity or its activities to which this target applies 
• The period over which the target applies  
• The base period and value from which progress is measured 
• Any milestones or interim targets 
• If the target is quantitative, whether it is an absolute or an intensity target 
• How the latest international agreement on climate change, including any jurisdictional commitments that arise from that agreement, has informed the target 
• Whether and how the target aligns with any pathways disclosed under 1.1.c including, where possible, the expected trajectory of how this target will be achieved 
• Any underlying taxonomy, tools, methodologies, or definitions on which this metric relies

Step 4: Assess, set, and disclose key metrics related to carbon credit usage

While carbon credits should never be used as a substitute for direct emissions reductions within your value chain, they can serve as a valuable complement to a science-aligned decarbonization strategy. It is best practice that if your company utilizes high-integrity carbon credits as part of your transition plan, you must disclose key metrics to track how your purchased credits contribute to your goals. Carbon credits metrics may include: 

• Host country 
• Credit vintage 
• Methodology 
• Project type 
• Host country authorization 
• Association with any integrity labels or certifications 
• Claims made based on credit purchase and/or retirement. 

For more information on carbon credits, visit the NZAA’s “Understand the Role of Carbon Credits” pathway and then the “Source, Vet, and Purchase Carbon Credits” pathway. 

Continue to Action Step 5: Align Advocacy Efforts to learn how to support the essential policies that will allow companies to achieve their climate goals.

We’d love to hear from you! Please take a few moments to fill out this survey and provide feedback on our CTAP Pathway.