Thursday, December 12, 2019
In this week’s blog, I share perspectives from well-known ESG expert Robert Eccles, currently a visiting professor at the Harvard Business School and Said Business School at Oxford University, who kicked off the webinar. In typical fashion, Eccles didn’t hold anything back.
“The SDGs are influencing business in terms of rhetoric, but not too much else, especially in terms of action,” he said. “All this talk about the SDGs and the private sector …. I’m dubious how much will happen. The tension is that the SDGs are about achieving positive externalities, and materiality assessments are about financial materiality.”
He shared results of an analysis he worked on with other academics looking at the SASB materiality framework and the SDGs. Mapping the 77 industries in the SASB standard to the SDGs, he found some financial material issues touch most of the SDGs. An example is supply chain. Others not so much, such as data privacy. His analysis also found some industries – such as health care and natural resources – have the ability to make greater contributions to the SDGs than others, such as financial services.
The biggest challenge however facing companies he said is the lack of metrics to measure true impact of corporate performance on the SDGs. He cited three multi-stakeholder groups now working to develop impact metrics that would show how companies are positively contributing to the SDGs: The Impact Management Project, the Value Balancing Alliance, and the Impact-Weighted Accounts Project.
He believes these three efforts need to come together and reach consensus on standards and methodology for impact reporting, together with the private sector and investors. Only then will the clear impact be understood.
Stay tuned for my next blog with insights from Denise Weger, Senior Manager Strategic Initiatives Global Health & Corporate Responsibility, at Novartis.
Friday, December 6, 2019
This week has been a busy one after getting back from the Thanksgiving holidays. I had the good fortune to cover the launch of the Danone Institute North America’s inaugural One Planet. One Health. grant program Monday night at a special dinner event hosted by Danone North America and Top Chef Host Tom Colicchio. I had a chance to meet the winning recipients who represented transdisciplinary teams from across the United States and Canada charged with designing, implementing and evaluating actionable, community-based projects for sustainable food systems. I have to say I was equally impressed by the amazing meal served up by Colicchio’s team and by each recipient’s project. Read more in my post this week on TriplePundit.
That was followed early on Tuesday with Moving the Market: SASB’s 2019 Symposium. I am an FSA Credential II Candidate for SASB certification and was excited to join with others to discuss the standards and hear from companies, investors and other stakeholders who are using them. Below are a few nuggets from the various panels and keynotes.
Thank the heavens, is all I have to say. “We think that over time there will be fewer and fewer [ESG] surveys because there will be more disclosure [by companies] in financial statements. … and, the information that makes up [remaining] ratings is going to be more transparent so you can understand what factors are behind each specific rating. … analysts will be able to look at the granular details and dig into the details…. At the end of the day, the change [toward disclosure] will be driven by asset owners – those people who are Millennials and very interested in how their investments are being used. They are starting to put pressure on asset managers already, saying ‘I want my savings to be used in such a way that will be positive to climate change.’” – Doug Peterson, President & CEO, S&P Global
SASB continues to move forward on a project to develop a framework around human capital management (HCM), Jeff Hales, SASB Chair, reported. He said this was the No. #1 issue when SASB’s Investor Advisory Group was polled. SASB will track HCM issues that are reasonably likely to affect a company’s financial performance and work over the next 18 months to map them to industries before developing meaningful metrics.
Rakhi Kumar, Senior Managing Director and Head of ESG Investments and Asset Stewardship at State Street Global Advisors, gave a great TED-style talk on her vision for the future of sustainable capital markets. After getting frustrated with variation in how ranking agencies score companies, State Street created their own ranking, which they call the R-factor (as in Responsibility). It looks at corporate performance and governance as it relates to ESG issues by industry, based on SASB standards. Companies can ask State Street for their score – as well as scores of their peers. State Street will send companies a roadmap with suggestions for what more they can disclose to improve. R-Factor scores are shared with State Street’s investment teams and also power the Bloomberg SASB ESG Indices.
Hungarian Oil & Gas Company MOL Group recently whittled down their ESG report from 80 pages, which they suspected very few analysts were reading, to a mere 10 pages. “We tried something bold,” Mikkel Skougaard, Sustainable Development Senior Expert at MOL, said. In 10 pages, they were able to tell what happened in the past fiscal year in terms of risks and developments. They included one page with major indictors and the rest for context. Static information – policies, approaches, programs – lives on their website. The result: MOL’s scores went up by MSCI, DJSI, Bloomberg, showing that less really is more!
Caroline Flammer from Boston University’s Questrom School of Business shared research on the rise in integrating CSR into executive compensation. This is something I am constantly on the search of to share with clients. Examples she included in her study were Valero Energy, which ties 33 percent of executive comp to health, safety & environment; Intel, which links compensation to reductions in GHG emissions and energy use; and Excel, which also links to reductions in carbon emissions. She found that linkage was most prevalent in the mining industry at 57 percent, followed by agriculture, forestry & fishing at 53 percent. Her theory was that linking executive compensation to ESG will improve a firm’s overall performance. She found that, indeed, companies that did saw an increase in firm value of 4.1 percent.
For anyone responsible for ESG reporting who has ever been frustrated by their legal department, this one’s for you. Robert Jackson, a Commissioner with the U.S. Securities and Exchange Commission: “The idea that doing nothing [not disclosing] is safer than doing something, is such a mistake. If the last few years have taught us anything it is that not disclosing material risks gets you in trouble -- especially when it comes to climate-related issues. We need to back up and ask what is the role of lawyers?” And this is from a Harvard-educated former corporate lawyer! Maureen Jensen, Chair and CEO of the Ontario Securities Commission, agreed. “By not disclosing you are disclosing that the issue is not important to you, and people will notice. You have to be prepared for this discussion.”
Look out next year for a report from IASCO on sustainable finance.
Canada has mandated that companies must report the number of women on their board and if a company doesn’t disclose they need to disclose why. The mandate has moved the needle, with the number of companies with at least one woman on their boards jumping from 49 percent to 70 percent.
And perhaps my favorite: “Increasingly the interests of stakeholders are the interests of investors,” coming again from SEC Commissioner Rob Jackson.
All in all, a good day spent with former colleagues and meeting new ones. From there, it was a quick subway ride downtown to the UNICEF Snowflake Ball to bid goodbye to the formidable Caryl Stern, who is leaving at the end of the month to take the reigns at the Little Rock-based Walton Family Foundation. As in past years, the event was spectacular, with actress Priyanka Chopra receiving this year’s Danny Kaye Humanitarian Award for her philanthropic work with UNICEF in India.
One fifth-grade holiday band concert later, Friday found me, my husband and friends volunteering our time at Deirdre’s House, where I am privileged to serve on the board. Deirdre’s House is the center in the New Jersey county where I live for child victims of abuse and/or neglect and for children who have witnessed violence. It does yeoman’s work.
With that, I am ready for a weekend!
Wednesday, November 20, 2019
Earlier this month, I had the opportunity to speak with Andrew Mangan, co-founder and executive director of the United States Business Council for Sustainable Development (USBCSD). As a Global Network Partner of the World Business Council for Sustainable Development, USBCSD works to create and deliver value-driven sustainable development projects.
As Andrew explained to me, “the USBCSD is an action-oriented and member-led business association that gives U.S. businesses a platform to mobilize boots on the ground and work together to design, implement and scale sustainability solutions.”
The Council currently has four areas of focus:
· Facilitating company-to-company industrial reuse opportunities that support the culture shift to a circular, closed-loop economy
· Establishing regional cross-industry carbon reduction collaboratives aimed at reducing carbon emissions and impacts while preserving and enhancing economic vitality
· Creating replicable business solutions for improving watershed collaboration between stakeholders to reduce shared water risks
· Identifying and implementing member-led projects to conserve or enhance ecosystems while creating new business value and benefit to communities where they operate
In my discussion with Andrew, he shared how he has seen the sustainability field shift in the past 30 years, as well as what excites him the most about it today.
MK: At USBCSD, you are facilitating a culture shift among organizations toward a circular closed-loop economy. Where is the U.S. in this shift? What more is needed to accelerate the shift?
AM: Here in the U.S., there is a lot going on; it’s a major shift and will require a lot of understanding from within companies – not just by the sustainability team but also the procurement, legal, and acquisitions teams. They are needed to actually implement the shift.
It is going to take a while, but a lot of good things are happening already. I’m seeing support from the top – from CEOs – for the concept of circularity. Government is also intrigued by the concept – especially State-level government given that they are the ones tasked with implementing the Federal Waste Management Regulations and submitting 2030 Waste Strategies to the U.S. EPA. Also, none of the States want to permit another landfill, and some states are really struggling with limited landfill space. The Council has been working with three states – Ohio, Michigan and Tennessee – with their State Environmental Commissions and State Economic Development Corporations and the private sector to establish systems that promote circular economies. Together, we are looking at recycling infrastructure, government funding incentives, and whether current regulations are preventing desired outcomes.
MK: Many of the initiatives that USBCSD has incubated have been regional – not sector-specific – in scope. What is the value of this approach?
AM: We find this approach works really well because companies that are in a region feel ownership of that region, whether its’s the Gulf Coast, Great Lakes, or New England – we find there is a real affinity for collaboration. It’s also a lot easier to get a company focused on a sub region of the U.S. than on the whole country. A lot of our regional efforts are bringing together companies that have common objectives – whether on water, materials, or carbon – but that aren’t organized to work together in an effective way. An example is in the Gulf Coast where we are bringing together companies around decarbonization. They have done a lot internally but not across industries, which is key to moving ahead.
MK: During your time with USBCSD, how have you seen the field of sustainability change?
AM: In the late 1980s, people weren’t really sure what sustainability was … it took 10 to 15 years to get agreement on what the issues, challenges, and opportunities were. Then, the discussion shifted to what do we do about it. A lot has been done internally within companies, but now there is a growing recognition that you can’t do it on your own or even within an industry. There has been an evolution in external engagement and finding effective ways to bring in other sectors – including the academic sector – to solve major challenges.
MK: Is there a greater sense of urgency than in the past to tackle sustainability?
AM: A big change recently is seeing the investment community really stepping up – from communications to CEOs on carbon, the circular economy, and natural resources. They are telling CEOs that if they don’t see their companies moving on this, they will pull them out of their investments. That is accelerating and making it more urgent for companies.
MK: What in the work among your members excites you the most and why?
AM: The Gulf Coast Carbon Collaborative. We will be launching in New Orleans in early December. It will be business-led, business-organized and business-driven.
MK: What impact will the US’ decision to leave the Paris Agreement have on the efforts of U.S. companies?
AM: It’s disappointing to see the U.S. pull out of a global agreement. But, it’s not impacting what we are doing. Companies are moving ahead and are driven by other forces. There is still strong corporate commitment to the agreement.
Thursday, November 14, 2019
This week, I connected with Jennifer Evans, a principle at the CKP group, a woman-owned integrated communications firm in Houston – which, by the way, is a city I’m eager to visit given that everyone I speak with is so passionate about what a wonderful place it is!
As for Jenn, she has spent 25 years as a marketing and communications professional, during which time she has witnessed the shift in corporate social responsibility (CSR) from a “nice to have” to a “must have.” She also believes that Houstonians place a particular emphasis on community investment, which has been borne out by the number of Houston-based businesses consistently ranked on the Chronicle of Philanthropy’s annual Charity Navigator index.
She shares her insights here. Enjoy!
MK: How do you define CSR?
JE: At CKP, we define Corporate Social Responsibility as "an entity’s responsibility to operate in an ethical and sustainable way and be responsive to its community impact—whether the impact or potential impact be environmental, social or economic.” This is our collective leadership team worldview and it permeates every aspect of our business.
MK: How have you seen CSR change over the past two decades?
Today, smart companies have tenured professionals who lead all or most of these functions under one stand-alone umbrella and basically in service to the company and its many departments. Sure, there have always been global brands that were pacesetters for these changes, but regulations and public scrutiny have changed the rules of engagement.
MK: Who is driving the push for greater focus on social and environmental performance amongst your clients?
JE: In our work with clients, particularly those in heavily regulated industries like energy and manufacturing, we see priority and focus coming from all aspects of the internal organization. Mitigation and remediation certainly put pressure on businesses and more so in industries such as energy, health and bio-tech.
What we see in our brand management role with clients in multiple markets is a voracious appetite in the court of public opinion—which now plays in social media—for disclosure and pro-active communications. Consumers and customers in general—whether B2B or B2C—are going to be the loudest group and will ask questions sooner or later. Issues management strategy can help in managing activist groups. But if your potential or existing clients challenge you, be prepared to lose them to other brands if they don’t like what you say. That’s not to say that employees and investors don’t play key roles in managing your risks and being responsible. But when you remove or reduce the power of financial gain to win favor, we are all consumers and we vote with our feet.
Footnote: Gen Z, our youngest marketplace-viable generation, is unbelievably astute, and I expect their demands and expectations of accountability to have a stronger impact than Millennials. Social and political demographers continue to forecast that this next generation will have the rage of Gen Y, the tenacity of Gen X and the loyalty (and lack of forgiveness) of the Boomers. Their role as consumers will overshadow the rest. And their advocacy will make or break brands. Best be prepared.
MK: What advice do you have for creating successful partnerships?
JE: Regardless of whether you work for a global business or a single stand-alone shop, you should collaborate with partners that are open and willing to support you. I often see businesses make social investments that don't align with one or more of these groups' passions and engagement. This usually results in a one-time engagement and a failed relationship.
We recommend first doing the internal work to identify the values you want to promote, the social impact you may have and where, and the categories of nonprofits and public/private groups that make sense. Once you've got that strategy in place, it's much easier to research and identify potential partners.
Treat it like hiring an employee. Get to know each other and transparently discuss your challenges and concerns. Then, the magic happens. Real, vibrant partnerships develop and they are much bigger and better than a cookie cutter sponsorship package that a random organization asks you to fund.
MK: What is your advice for brands and businesses in industries that aren't heavily regulated? What's the ROI in being bold about your business position on CSR for such companies?
JE: CKP was founded in Houston, Texas, which consistently ranks at the top of the Chronicle of Philanthropy’s annual Charity Navigator index. I have lived in several large and small communities, and I’ve not seen the attention to which people doing business in Houston pay to how others invest in the community.
We work with large global brands and small start-ups, and the single thing all businesses have in common is the need for third-party endorsements. Whether a business produces cookies, renewable energy, marketing and public relations services (like CKP) or something else, savvy business leaders know that your close rate is higher and reputation is more protected when others with strong brand reputation back you. Our team at CKP counsels many clients in their sponsorship, CSR and partnership negotiations and communications.
In any household or business, we must budget to protect, care for and to give to the things that matter to us. Defining what matters early on and having it resonate with internal and external stakeholders is just good business. We’ve got some excellent case studies at CKP and the consumer marketplace at large too—from small emerging industry, locally owned, as well as reputation-challenged large businesses—that show how real partnerships and social investments benefit everyone.
Regulations are present in all industries, and stakeholders are a given no matter what kind of business you run. We frequently hear from clients that wish to begin organizing their reporting and messaging, in anticipation of public exposure and changing politics. Preparedness is key. Don’t wait to be called out to communicate your community impacts.
Thursday, November 7, 2019
It’s not every day you meet someone who turns away 80 percent of business that lands on her desk. But that is just what Melissa Orozco, founder of Vancouver-based Yulu Public Relations, does to ensure she stays true to her values and those of her company. Started in 2011, Yulu champions socially innovative organizations that are making a positive social and environmental impact.
Melissa is also a driving force behind the emerging field of
MK: First of all, can you explain why you called your firm Yulu? Is there a meaning behind this?
MO: Contrary to popular belief, Yulu is not an acronym. Yulu has Chinese origins, meaning “the journey of words.”
MK: You are very involved in the Impact Relations field. Can you share what this is and how you got involved?
MO: Yulu’s roots were with nonprofits and social enterprises, including the Vancouver Farmers Market and Fuck Cancer, from the start. While we recognized the public’s growing hunger to support brands that were built on transparency, positivity, solutions and authenticity, it was still a time when terms like “social impact” and “social innovation” were considered aspirational and bad for the bottom line. In 2014, this inspiration and hunger began to take on the undeniable shape of a new industry, a new way of doing PR. That was when we developed Impact Relations. One year later, we committed to a portfolio of 100 percent cause-based clients –- the same year we became the first PR agency in Canada to become a certified B Corporation and recognized by PR Daily as North America's Top PR Agency for Corporate Social Responsibility.
MK: As a communications professional, you help clients raise awareness of their positive impacts on society and the environment. However, there is always the risk of green washing, blue washing, etc. What is your approach and counsel when you suspect this may be happening with a client?
MO: Yulu has a strict client-vetting process, which results in us turning away about 80 percent of the new business opportunities that come in our door. One of the ways we establish authenticity from brands and companies that come to us to build a purpose-lead strategy is by ensuring we have access and complete buy-in from the leadership team. It is also important that while building out our strategy, we allow time for implementation throughout the company so that the strategy is not positioned or executed as a standalone PR initiative. Our process always begins with a deep-dive assessment where we explore how the company is already creating a positive impact within the communities that they serve. We follow this process by reviewing the issues that are impacting their target audience groups to determine how the brand or organization can add the greatest value and impact.
MK: Have you seen a shift or evolution in how your clients are approaching CSR or sustainability in recent few years?
MO: Consumer demand and customer behavior have absolutely influenced the organizational brand purpose movement. Companies are increasingly seeing that having an authentic social purpose and positive impact is not only a “nice to have” but it's a “need to have,” in order for them to stay relevant, competitive and engaging with their customers. You can find many examples of this on the Impact Relations website here.
MK: Do you notice a difference in approach by sector?
MO: Brands are implementing social and environmental strategies around the globe in response to the climate crisis that is affecting all nations and communities. When it comes to social justice issues that brands are tackling, strategies will vary significantly depending on the issues that are impacting the communities around them. For instance, in the U.S. you will see brands championing issues such as prison reform, gender equality, and racial justices, while other markets such as Canada may have a heavy focus on issues like indigenous rights and immigration reform. Of course, that’s not to say there isn’t cross-over of support from brands looking to solve issues that are universal in scope.
MK: Are companies taking a different approach given the particular urgency in addressing ESG issues?
MO: Climate change is at the top of the agenda for many organizations, more than ever. Through the UN’s Global Compact initiative, brands are rallying and collaborating to address climate action-related SDGs.
If there’s ever been a time to use our voice and communications to inspire and move people to action, it’s now. The good news is there is a groundswell of businesses using their expertise, resources and influence to positively impact social and environmental change. Realizing we can’t rely solely on government, nonprofits and NGOs to solve all of the issues impacting society and the environment, corporations are stepping up to play a critical role in building a more prosperous and regenerative economy. Global brands like Ben & Jerry’s, Tesla and Patagonia are among the thousands of companies placing “social” at the forefront of their enterprise – putting purpose alongside, or even ahead of, profit. Brands are collaborating with competitors more than ever for collective action to address global issues and improve industry standards. It’s no longer about philanthropy; it’s about creating systemic and meaningful change.
In terms of CR, what should corporate leaders do more of?
Lead with their values and be comfortable advocating for what’s right, not just what’s going to drive sales or satisfy investors.
\What should they do less of?
Don't wait on advocating for an important issue until other brands are leading the way – pave the way!
What CR trend will we continue to see more of in 2020?
Climate action and collective action.
What are two to three companies leading the way in integrating purpose with corporate strategy?
Name a corporate leader you admire.
Ben & Jerry's chief executive officer, Matthew McCarthy
Thursday, October 31, 2019
I attended this week’s 3BL Forum themed Brands Taking Stands – What’s Next and heard from more than 90 corporate responsibility professionals and NGO experts over two amazing days.
Given this is the height of conference season and we can’t all be everywhere, I wanted to share a few of the learnings and comments that I found particularly insightful. Enjoy!
Does it ever feel like you are being pressured to sign on to every petition and join in every cause? Well Eileen Boone, EVP of Corporate Social Responsibility, CVS Health, thinks differently. She shared with attendees her perspective: “Just because it’s the issue of the day doesn’t mean you have to jump in…If you can’t bring resources to the issue , don’t do it. People will see it’s not authenticate.“
Whoever said CSR was easy? “Being in the CSR space, is a challenge. Every side of every issue is going to get more sophisticated going forward,” said Tim McClimon, President, American Express Foundation and SVP, American Express.
Timberland shared details of its recently launched What’s different about the campaign is that it involves consumers. “The campaign is a call-to-action to engage people in small, everyday actions that make a difference and help create a greener world,” Atlanta McIlwraith, Senior Manager of Community Engagement and Communication, Timberland, shared. "The small actions add up, and as many people do small actions, you get a movement—and it is movements that change the world."
Is it possible for a perfume to solve the world’s greatest challenges? According to Kip Cleverley, Vice President of Global Sustainability at International Flavors & Fragrances (IFF), it is. Speaking during the first day of 3BL Forum, Cleverley shared his company’s pursuit to focus not simply on doing less bad – for example, by reducing water use, something they have done – but by doing more good. And what’s really cool is he’s working with actress and environmentalist Michele Pfeiffer to do it. Curious? Read more in my Triple Pundit coverage.
Perhaps my favorite speaker of the Forum – and not just because he gave out free ice cream to all attendees, although that certainly helped – was Matthew McCarthy, CEO of the iconic brand Ben & Jerry’s, who said “If your company is not doing something to deal with a global issue it is probably dead.”
While I am all for plant-based diets, I was interested to hear from Stewart Leeth, VP of Regulatory Affairs and Chief Sustainability Officer at Smithfield Foods, that they are working with local farms in their supply chain to convert manure into biogas to create a second revenue source for struggling U.S. farmers.
Amanda Gardiner, Director of Social Responsibility at Verizon, announced that the company is working on a new CSR framework that will be based on “radical transparency” and partnerships and will include new targets. Not surprising given the refreshing focus on CSR by their new CEO Hans Vestberg. Watch out for an announcement next year.
According to the new 2019 Porter Novelli/Cone Gen Z Purpose Study shared at the Forum, Gen Zers believe they are the key to pushing forward on the world’s top social and environmental issues, from climate change to gun control. And they are willing to roll up their sleeves and participate. Around three-quarters stand ready to support companies that care in a variety of ways, including: sharing their positive opinion about a company doing good (85 percent), buying a product with a social or environmental benefit (84 percent) and learning what they can do to make a difference (also 84 percent). Check out my article on Triple Pundit for more details.
Kimberly Davis, EVP, Social Impact at the National Hockey League, shared how the League is helping local ice rink operators and owners invest in new sustainable, energy efficient technologies so they can stay open. And the NHL is offering tips on how fans can be more sustainable in their lives. Very cool.
And last but not least, I loved a quote from Mona Amodeo, Author of Beyond Sizzle: The Next Evolution of Branding, who said she likes to think of the shift in focus from “looking at a company’s environmental footprint – measuring negative impacts -- to focusing on their environmental handprint – measuring positive impacts.”
Monday, October 21, 2019
It’s always interesting, I think, to speak with someone involved in corporate responsibility who did not start off in the corporate sector. Often they bring a different perspective to the conversation and expertise to their work. That was certainly the case when I spoke recently with Jane Madden, Managing Partner of Global Sustainability and Social Impact at Finn Partners.
Jane is a former World Bank staffer and NGO board member with 25 years of experience in 30 countries. From her office in Chicago, Jane talked with me about how her past work has influenced her, the role of business in addressing global issues, and trends that she believes are here to stay.
MK: You worked for nearly 12 years at the World Bank before jumping into the corporate world. How did that shape your vision of business in society and lead you on this path?
JM: My work at the World Bank not only shaped my view but it drove my decision to move from the public to the corporate sector. I experienced first hand how companies are crucial to economic development by providing jobs and services. But I also saw that businesses weren’t always working in the best interest of society — some where not providing health services to employees, some were not taking care of workers on the front line [eg, in high-risk industries such as mining]. Moreover, this behavior was not in the best interest of the companies themselves. It dawned on me that there was much to be done to help companies and using the power of the private sector to drive positive economic, social and environmental results. Integrating sustainability into the business model and bottom line would ensure that it would be long-lasting and not a collection of one-off projects. So the evolution from advising governments on emerging ESG issues to advising companies has actually been very linear.
MK: As a communications professional, you help clients raise awareness of their positive impacts. But, there is always the risk of green washing, blue washing, etc. What is your approach when you suspect this may be happening?
JM: We see green, blue, pink, SDG [Sustainable Development Goals] washing … a lot comes out of good intentions. But for this [corporate responsibility] to work, it has to be integrated into the business. My approach is always to, first, talk to the client and ask for the data — It’s all about data. Clients need to support their ESG or SDG claims with performance numbers. I ask them “Do you have goals? How does this program help achieve those goals?” The second part, I always counsel clients to be honest and modest when making their claims. That includes being transparent and talking about challenges when they don’t make their goals. If you didn’t [make your goal], you should say why you didn’t, what happened, and what you are doing to change — just like when a company doesn’t make its financial goals, it needs to be the same approach. You actually get a lot of credit when you talk about challenges — it ultimately builds trust.
MK: Have you seen an evolution in how clients are approaching CSR?
JM: Ten years ago, clients said to us “We do all these great things but we don’t get any credit.” We saw a lot of cause marketing and one-off corporate giving and community programs that were not integrated into the business. Now, clients are saying they need to develop a strategy because their board of directors, CEO, or investors are asking for this. It’s not only about the communications, but about integrating ESG performance into their business — this has been a huge shift.
We are also seeing more mainstream investors looking at sustainability. If you look at materiality analyses, philanthropy is a much lower priority than say cybersecurity, climate change and resiliency and attracting and retaining the best talent. There remains an expectation of community engagement and giving, but it’s not critical to the core business. We’re seeing more focus on and interest in ESG strategies that are integrated into the business and operations. For corporate responsibility to get results, it needs to achieve business goals by mitigating risk and maximizing opportunity.
MK: What are effective ways for companies to bring the voice of stakeholders into their businesses? Why is it so important?
JM: It depends, of course, on the company, but I always say engage with your stakeholders early and often to understand the needs of a particular group. NGO’s will have different questions, demands, and concerns than employees, investors, unions or regulators. Companies need to map their stakeholders and develop an engagement calendar to share information and to listen. You learn so much by listening. Engagement has to be a two-way street — it’s not just sending out email alerts. Of course, you can’t meet with everyone, but by prioritizing your stakeholders and their issues, you can develop your strategy. It’s also important to engage with your critics. You may not like what you hear, but you need to hear it.
MK: Let’s turn to the environment. What corporate actions stand out? What more is needed?
JM: Corporations —not all, but many -- are making changes and certainly Fortune 500 companies were a strong force behind the Paris Accord. They saw it as beneficial to their business. After President Trump was elected, we saw dozens of CEOs write to him urging him to stay in. These companies are not going back on their commitments. They want a level playing field and more companies to make climate commitments.
But companies need to do more. Policies and commitments are the first step. Then there must be action — and it must be more than carbon credits and planting trees. It has to be integrating environmental goals into business strategy. We are seeing companies taking steps to reduce their carbon emissions and also produce products with lower environmental impacts — low-carbon products, or products that use less water. And we also see real leaders such as Microsoft, which has put a price on carbon, and Adidas, which has been practicing environmental accounting for years.
- Name an industry that needs to do more in ESG: Extractives
- What should leaders do more of? Integrate ESG performance into their business.
- What should they do less of? Take stands on issues not central to their core business.
- What trend will continue in 2020? Interest from mainstream investors in ESG.