How To Set Realistic ESG Targets: A Guide For Borrowers

Singapore’s Green Plan 2030 has already set the bar high in terms of ESG targets, from quadrupling solar energy deployment to cutting landfill waste by almost a third. Ambitious? Yes. But they also set a clear signal of where the country and the economy are headed.

If your business is looking to borrow, this matters because lenders are no longer only interested in your profit-and-loss statements. They want to know how you’re aligning your organisation with ESG frameworks. In fact, ESG in finance is becoming one of the most practical levers for unlocking capital, winning trust, and ensuring your company thrives in a low-carbon, sustainability-focused world.

But here’s the challenge: how do you set your company’s ESG targets so they are ambitious enough to be credible yet realistic enough to deliver? Too soft, and you look uncommitted. Too bold, and you risk over-promising or, worse, greenwashing. Let’s walk through how you can strike the right balance.

IMAGE: UNSPLASH

1. Assess Your Current Position

Before you can set big targets like “carbon neutrality by 2030,” you need to first know your current position. This means doing a baseline assessment that measures your organisation’s emissions, energy use, water consumption, and waste.

This exercise can feel especially challenging to some. A logistics company, for instance, might discover that most of its carbon footprint comes from delivery trucks rather than warehouses. That revelation can sting, but it’s also incredibly useful because it reveals exactly where to focus. Tools like the UOB Sustainability Compass can simplify this process by helping businesses identify their readiness stage through a free online self-assessment, providing a step-by-step action plan for setting ESG goals.

The same goes for the social and governance parts of ESG. Analyse if your leadership team is diverse or check if your procurement practices are transparent. An honest analysis may be uncomfortable, but the answers will set the foundation of a credible plan.

2. Identify Your Key Priorities

A big mistake many companies make is trying to fix everything at once. That usually leads to stretched resources and disappointing results. Instead, ask yourself: which ESG issues really matter to my business and my stakeholders?

This is where a simple materiality analysis helps. Think of it as a two-way lens that determines what has the biggest impact on your business model, and what your customers, employees, and lenders care about most. For example, a property developer might focus on energy-efficient buildings, while a bank might put governance and data protection front and centre.

Additionally, since Singapore already has a whole-of-nation plan, you would also want to align your priorities with the five pillars of the Green Plan. A construction company, for instance, might contribute to the “City in Nature” agenda by designing greener developments. Meanwhile, an energy firm could commit to the “Energy Reset” with more renewables. Doing this helps you tick boxes and makes your targets feel relevant and authentic.

3. Set SMART Goals

Once you’ve picked your priorities, it’s time to turn them into concrete targets. This is where the SMART framework comes in—Specific, Measurable, Achievable, Relevant, Time-bound. Instead of saying, “We’ll go green,” a manufacturer could say, “We’ll cut scope 1 and scope 2 emissions by 15 per cent over five years by upgrading equipment and sourcing renewable energy.” That’s specific, trackable, and realistic.

Altogether, the best goals often combine quick wins with longer-term commitments. Small, early successes keep momentum high, while bigger goals show lenders and stakeholders you’re serious about the future.

4. Turn Promises into Action

Action plans make targets real and bring ESG into the everyday running of your business. Take, for example, a mid-sized retailer in Singapore that pledges to cut plastic packaging by half by 2027. An action plan might include renegotiating supplier contracts for biodegradable packaging, retraining staff, and rewarding customers for bringing reusable bags. Suddenly, the pledge becomes a set of tangible steps.

This is a critical step for borrowers. Banks increasingly want proof that sustainability commitments are more than marketing fluff. Therefore, having a detailed action plan may make the difference between getting standard financing and securing preferential loan terms.

5. Tell Your Story Honestly

Communication is everything. Internally, your team needs to understand what the company is aiming for and how their daily work fits into the bigger picture. Externally, lenders, customers, and investors want to see progress.

The trick to transparent reporting is balance. Celebrate wins, but don’t be afraid to admit where you’re still working on things. For example, a food manufacturer could publish its water-saving achievements while openly sharing areas for improvement. That kind of honesty builds far more trust than a too-perfect narrative.

6. Review, Learn, And Adapt

ESG isn’t a project you set and forget. Instead, it’s a fluid strategy that adapts and transforms as new technologies emerge, regulations tighten, and customer expectations evolve. That’s why regular reviews, whether quarterly or annual, are essential.

Think about a construction firm that initially aims to cut embodied carbon by 10 per cent in five years. If low-carbon concrete becomes widely available after two years, why not incorporate it into the company’s action plan? Updating targets keeps them relevant and shows lenders you’re agile and not stuck in old ways.

7. Borrow With ESG In Mind

Here’s the bottom line: ESG targets are no longer just window dressing when it comes to borrowing. In fact, sustainability-linked loans now reward companies for hitting agreed ESG milestones, sometimes with lower interest rates. That creates a win-win cycle as better ESG performance reduces costs, freeing up capital for even more sustainability initiatives.

Put simply, borrowing is no longer just about your balance sheet. It’s about your credibility as a forward-looking, responsible business. Are you ready to take up the challenge? Then start setting your company’s realistic ESG targets.