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Strategy

Strategic objectives & kPIs

Strategic objectives help investors and other stakeholders understand where the company is heading, and how it plans to get there, and by when. Targets and KPIs are important for accountability and give investors and other stakeholders the ability to assess strategy implementation and progress against strategic objectives.

Recommended Disclosure

01
Strategic Objectives

Companies should describe objectives which are most relevant for the realization of their strategy.

Strategic objectives can be primary objectives, which often include profitability, market position or innovation, or enabling objectives, which are necessary to achieve the primary objectives.

02
Targets and KPIs

The report should introduce financial and nonfinancial targets and KPIs with links to the high-level priorities and long-term strategy.

⇒ Best practice suggests that strategic objectives should be translated into specific and measurable targets or goals.

⇒ Companies can use KPIs to evaluate performance and provide accountability to investors and stakeholders

Best Practice

using smart goalsDisclosing internal kPIs

Using Smart Goals

Companies can translate strategic objectives into specific and measurable targets or goals, using the “SMART” goal approach:

  • Specific: Target a specific area for improvement.
  • Measurable: Quantify, or at least suggest, an indicator of progress.
  • Assignable: Specify who will do it
  • Realistic: State what results can realistically be achieved given available resources.
  • Time-related: Specify when the result can be achieved.

Disclosing internal KPIs

The greatest transparency and accountability can be achieved by disclosing the same KPIs that are used internally to strategic management, board oversight and executive performance assessment and remuneration.

Examples Of Reporting
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Strategic Objectives—Olam 2019 Annual Report

Olam, a global producer of agricultural commodities based in Singapore, discloses its strategic objectives along with their strategic enablers, which includes sustainability.

Targets—EDP Sustainability Report

In this example, EDP, a Portuguese energy company, has set targets towards one of its key strategic pillar of “Leading the Energy Transition.”

KPIs— Nedbank Report

In the example below, Nedbank reports on performance against KPIs with links to long-term targets and executive remuneration. It also indicates the assurance basis for each of the KPIs.