Webinar: ESG – Prepping for New Risks, Rules, and Disclosures

August 18, 2022

Transcript for ESG – Prepping for New Risks, Rules, and Disclosures

Giovanni Gallo: Hello, everybody, and welcome to the webinar today. We’re going to be talking about ESG today and we’re going to wait just a couple more minutes for everyone to get into the Zoom room here. So, with that, let’s talk about where we’re calling in from. I’m here in, it’s sunny today, sunny Charlotte, North Carolina. How about you, Mark? Where are you today?

Mark Meaney: I am in Boulder, Colorado.

Giovanni: All right. I love Boulder.

Mark: Yeah, it’s wonderful today, just beautiful.

Giovanni: Awesome. And Page, welcome. Where are you calling from?

Page Motes: I’m calling from today sunny Austin, Texas, but yesterday we were having a washout, so I’m glad to see the sun peak through.

Giovanni: Okay. Hopefully that yard dries up, huh? And Matt, where are you coming from?

Matt Kelly: Calling from Radical Compliance World headquarters at Cambridge, Massachusetts.

Giovanni: Awesome. Well, listen, everyone, thanks for joining us today. We’re gonna get in. I’m gonna do some housekeeping and some introductions. And as always, on ComplianceLine webinars, we want this to be something that serves you, the audience. We have some topics that we’re gonna talk about today, but we really love when you, the audience, can speak up, ask some questions and tell us what’s most important to you. If you want us to expound on anything, if something’s unclear or you’d like to throw out a comment for us to consider for the panel, if you hover your mouse over your screen, you should see a chat and Q and A window at the bottom, and feel free to throw it in there. We’re going to be monitoring that as we go. And we’ll work those questions in, if and as they’re appropriate and circle back to some at the end.

But, we love this to be as dynamic as it can be across the screen like this, so please speak up, give us some feedback and let us know what we can focus on. So, thank you for joining our expert ESG panel today. We’re going to be talking about prepping for new risks, rules and disclosures in this increasingly ESG-focused world. We really have a wonderful panel for you today, moderated and attended by Matt Kelly. But first, let’s hear from our expert panel. We have Mark Meaney with us. Welcome to the panel today, Mark.

Mark: Thank you, Giovanni. Again, Mark Meaney. I am on faculty at the University of Colorado in Boulder, lead school of business where I am a scholar-in-residence in social responsibility and sustainability. I also have an appointment with the United Nations, where I’m on faculty with the United Nations Institute for Training and Research and teach diplomats and staff ethical leadership.

Giovanni: Wonderful. So glad that you’re with us. It’s going to be an awesome discussion. And certainly, we want to welcome Page Motes to the panel today. Page, welcome. Thanks for joining us.

Page: Thanks so much, really excited to be here. For those of you that do not know me, I’m Page Motes. I’m actually the global head of sustainability for Dell Technologies. If the name might sound familiar in the ethics and compliance space, I actually spent a number of years in the space up until two years ago, when I left global ethics and compliance world and came over to sustainability in pursuit of more ESG knowledge. So, really excited to be here, but I love dipping toes back in. Now with ESG being so important, we’re all one big, happy family, so love engaging on the compliance and ethics side as well.

Giovanni: We sure are. And we are that big, happy family and we appreciate you joining us, Page, and offering some of your expertise to our panel and obviously to the audience. Now, we are super excited, as always, to have Matt Kelly joining us. He’s going to be moderating today, so I’m going to turn the floor over to you, Matt. Introduce yourself, anyone who’s been living under a rock for the past 20 years, and then you can kick us off.

Matt: Well, thank you very much, Gio, and yeah, this should be a great panel discussion. So, yes, I’m Matt Kelly and I am editor of the Radical Compliance blog and newsletter, where I write about a large range of things. However, the more and more I talk to other compliance and audit professionals, the more ESG seems to be on everybody’s mind. And in fact, just by coincidence earlier today, I was giving a talk to a bunch of compliance professionals at a larger insurance business, where the first question they asked when we got to the Q and A was what do I think will be happening with ESG? And we could talk a bit about that. 

If anybody listening has some thoughts or questions about ESG, it strikes me as very much a discipline and field that is a work in progress. So, I think anybody’s observations out there are gonna be just as valid as what we might discuss here. But really, I wanted to maybe start by actually, Page, I’ll put the first question to you, since you are the corporate representative here on the panel, working at a large business. So, what do you do at Dell exactly? What does the head of sustainability for a large corporation, what does that job actually entail on a practical basis?

Page: Yeah, I think obviously, the practical piece is really important. I love to say I just get to go and change the world every day, but I guess that’s not the practical answer. You know, the head of sustainability, it really depends on each company, on how they choose to structure it. At Dell, we have somewhat of a decentralized approach, but for the corporate sustainability team that I really lead, we are in charge of broad pan-Dell sustainability strategies, so not specific to, let’s say, products or specific to facilities. It’s the pan-Dell approach. We incubate and craft all of our public commitments. We actually help lead the governance structure that makes sure that those commitments have progress and that we report out on them properly with transparency and that they’re auditable.

And then, we also spend a lot of our time engaging with stakeholders. We really believe that deep engagement with our customers, investors, analysts, NGOs, a proactive engagement, not reactive engagement, understand their expectations because sometimes this work takes awhile to come to fruition, and those insights are critical. And then, the other really big piece is thought leadership. So, what alliances, what roots can we lock arms with so we’re all doing this together. This work is hard, but that’s really what our team does and we do it across the spectrum of a big aspect of sustainability, everything from social responsibility and human rights to things like circularity, materials, recycling, and then also obviously, all of the things that touch climate change.

Matt: Yup. Out of curiosity, so how large is your team or, like, how many direct reports to you our something like that?

Page: So, I’m at a whopping six direct reports now, but that is okay because we have really deep tentacles within various parts of Dell’s business. So for example, there’s a group of people, I think over 30 now, that are specific sustainability folks that sit in supply chain that work directly with our suppliers, both in the environmental side as well as the human rights side. So, we decided that we would have people embedded with their roles at the point of need in various parts of the business similarly, within the product development space, within the facilities organization. So, we work in a pan-Dell way, and then when there’s something specific to those groups, we turn around and partner because they’re the experts in those business processes and that work. And we all have a governance structure where we have to operate really well together.

Giovanni: That’s really exciting to hear. If you don’t mind if I jump in, Matt, I just want to underline that it’s such a thoughtful way that you do that, Page, you know, that pan-Dell approach, that embedded parts of the team. You know, I think that ESG is learning and launching with the intelligence and the lessons from the past 20 and 30 years of compliance and CSR and things like that. And, you know, I think we see it across our client base that people who have that, you know, have embedded kind of thought leaders and allies throughout the organization are gonna allow ESG hopefully not to just be, you know, a poster on a wall and a commitment that goes out once and never is followed up on, but it’s actually something that transforms the strategy of the whole company, which is really what we all are trying to do is compliance leaders, as ethics experts, as ESG professionals. I think it’s really great that, you know, you’re kinda leading the curve and setting an example for all of us, Page.

Page: Thank you on that. I’d say it really depends on the company, right? It’s what works for the type of organization you have, if you’re highly regulated or not, there’s lots of factors. It’s what works for Dell and we’ve had a long history of doing it that way. But, I love that our leadership and all parts of our business have really embraced this. They feel there is an accountability to it. And so, people at all levels of the company understand what our commitments are and the work that we’ve gotta go do. So for us, it works really well.

Giovanni: Wonderful.

Matt: Mark, let me ask you for maybe a bit of a wider perspective here, about how should corporations define sustainability or ESG programs or whatever else they might call this, because it seems to me like, that defining the scope of ESG and how you’re gonna oversee it, clearly that’s important, but it seems like it’s gonna be hard to do. What’s your thoughts?

Mark: Yeah, I mean, just to build off of what Giovanni was talking about, mainly that, you know, the ESG is indebted to entire history, which dates back to the early 1920s, right, in corporate social responsibility. And depending on the maturity of the organization, you’ll have different approaches, right? And that’s the same with ethics and compliance. So, in the early days, we had kind of checkbox approach, where deterrence was the kind of coin of the realm, and then as we evolved in our understanding of the nature of ethics and compliance, we move from a deterrence approach to a commitment approach where culture was most important.

And now we see beyond culture, how it is that ethics and compliance is being integrated into strategic planning and operations. And so too with corporate social responsibility, sustainability, and now the nomenclature, we’re evolving around ESG. It’s gonna depend on the nature of the maturity of the organization. I think this is what Page is talking about, right. You’re gonna have those in the early stages who are still grappling with definitions, right? What does this mean, what does that mean with respect to sustainability? This is an indication of immaturity on the part of the organization.

And then, we’ll have those who now are tempting to embed the topic into culture and for those people, you know, they will have a nomenclature around an understanding of corporate social responsibility, an understanding around sustainable development and an understanding around ESG, where the definitions are quite clear, the functions have been developed and they are also quite clear, and now we’re having organizations who have progressed to a level where they are integrating their commitment to corporate social responsibility, sustainability, ESG into strategic planning and into operations. And there are many corporations, I think Dell is an example of one of them.

Matt: It’s funny, as I was listening to you and Page describe various approaches here, one of the words I circled was maturity curve. And I understand that how you are actually going to climb up that maturity curve is going to be very different for an ethics compliance versus ESG. But, I think a lot of the same sort of milestones you’re going to hit, it does feel very familiar, you know, in talking about checking the box and deterring versus embedding it and actually deciding to be much more active in how you integrate these disciplines into operations. So, I am not at all surprised, Page, frankly, that you made the shift from ethics and compliance into ESG. It strikes me, there must be a lot of parallels in that kind of career shift. Am I right?

Page: Yeah, there are. I mean, obviously in ethics and compliance, I had already done some work cross functionally with things like human rights and social responsibility, because you can’t say you’re an ethical company and then work within a situation where you’re, you know ignoring what’s happening in a supply chain, for example, with respect to human rights. So, there were places that I played in pretty deeply and then there was all the science. Well, let’s be honest, you know. I didn’t know how to calculate in greenhouse gas emissions, you know, before I came into the job. Did a lot of TED Talk reviews and a lot of deep diving with experts on the team and they still laugh when I try to talk about it. But, there are a lot of parallels.

I think the biggest difference that I saw coming from ethics and compliance into sustainability, but I think ENC is seeing it more and more now, is that in sustainability, our customers want to talk to us all the time, because they wanna know, “You make technology products. How are you decarbonizing them? How are you taking back the products and responsibly recycling?” You know, when I would talk to customers on occasion in the ethics and compliance space, it was more values-based conversations. It wasn’t deep programmatic work. You know, I meet with 50 customers a quarter now directly. They care, right? And it’s not just, “Let’s talk what we both care about at a values level.” They want info. And so, that’s really exciting to me.

But, I’d say another piece that was interesting is that in the ethics and compliance space, a lot of the work that we do is around risk mitigation, risk management. And you know, broadly, ESG is also about opportunity identification, opportunity management, right? Investors want to know you got a handle on risk, they also want to know are you growing the company by doing new things knowing what people care about within the ESG space. And so, for me in sustainability, there’s some new things I’m doing there too. But yeah, there’s still a lot of parallels and we still engage deeply with ethics and compliance because for us, we call all of this ESG stuff kind of social impact also, and ethics compliance and privacy is one of our key standalone pillars that’s part of social impact.

Matt: Gio, let me just pose a question to you since you’re talking to a lot of customers and players on the scene. So, how much in your observation is the volume getting turned up when they’re talking about ESG? Because I hear it all the time, but what are you hearing from, I don’t know, customer base or just chatting around with the compliance community

Giovanni: Yeah, I appreciate the question, Matt. Really, listen, as everything, it’s a range, right? And depending on the person within the organization and, you know, the organization at large, I think it kinda falls into a few different categories. Just for context, everyone, you know, ComplianceLine and our clients cover about seven million employees around the world so, you know, we’re not in every conversation around this, but we do try to be an advisor to our clients and try to help them where possible. Listen, the compliance and ethics that, you know, we’ve been in for the better part of three decades is a very relevant, you know, maybe an essential part of this ESG, so it comes up in conversations.

I think, you know, as a starting point, some people are asking questions, you know, they just want to learn about it. Well, what does this mean for me? What does this term mean and, you know, where do I play a role? And that’s part of the reason, honestly, that we put on this webinar today, because we’re seeing more and more interesting questions around it. But, I think there’s some other people who, you know, I don’t want this to sound too negative, but there’s a tone of concern about it. Like, did I miss the bus on this? Is someone else going to kind of become a new boss to me and focus more on these other things, because we haven’t really completely fixed the issue that we’re concerned about in the ethics sphere. So, is this going to take attention, budget, you know, control, power away? And I think that’s a relevant question and it’s not always, you know, in a fear of loss stance, but it’s just I’m trying to understand where this is. And we try to advise people to kind of step into this, you know, be part of the conversation and like we like to say, “Be the change you want to see in the world.”

And I think where we’re really excited to engage with people is when they start to see this as opportunity for ethics and compliance professionals, not just to, you know, get a bigger budget and a bigger team and be a bigger influence on the organization, but to, like Page and Mark were both talking about, partner with a broader swath of the organization. And I think a lot of that, it’s this ESG conversation, I really love it because it really is making a lot of things that I think we all, as humans, have wanted to make progress on for a long time, it’s making it a part of this integrated, you know, effectiveness conversation that we talk about in the compliance 2.0 world, and the opportunity is, I think, three-fold, right? So, the opportunity for ethics and compliance professionals is in kind of corporate structure, right? I want to be part of the team. I want to lend my vendors and my solutions and my platform to help do audits or policies or speak-up culture for ESG issues.

I think also, you know, Page was touching on this, there’s an opportunity to, as compliance leaders, help create this dynamic atmosphere where we get further and further away from that cost center that, you know, maybe we used to be in the ’90s, to helping to drive sales forward, right? Page was saying that, you know, customers want to hear about this and being, you know, especially being kind of the governance anchor in this ESG conversation into this, helps us integrate from customer questions into how the organization does it, and then push that into our suppliers and get that alignment that’s going to make this truly effective.

So, there’s an opportunity to push sales forward and win contracts that maybe we didn’t before when someone was just asking you know, what’s your anti-slavery policy” or something. And ultimately, you know, we say that compliance is culture, ethics touches the whole culture, ESG is focused on being integrated across the whole organization and this can help not just kinda win a contract right now, but being sharp on ESG, being, you know, a socially conscious company can help you innovate and move forward so that you’re not just affecting the P&L this year, but you’re helping grow the company to a continued righteous leader for years to come. And that’s really exciting and we try to help our client base, you know, understand the framework and figure out how they can kind of speak into this, help their company move forward on this using what they have.

Matt: Page, I’d like to maybe pick up a little bit more on talking with stakeholders and you had mentioned you talk a fair bit with customers. I was wondering if you could just tell us a little bit more about who are the maybe other stakeholders that you might or might not talk to as Dell, whether that’s employees or NGOs or I don’t know who else. But, I am trying to get a sense of what is it that stakeholders want to hear about with ESG. And so, I don’t know if you could give me some more colored air, and then Mark, I’d love to hear your thoughts on that too.

Page: Yeah, I think Mark will have some really good perspectives too. I would say that’s probably still evolving a bit, depending on the stakeholder. I think employees, you know, they’re not calling it ESG, but what they’re talking about is ESG, but what they’re wanting more and more is local information. We’ve spent so much time saying, “Here’s what we’re doing.” They’re like, “Well, what are you doing where I am?” So, you know, what’s happening in Southeast Asia in these spaces? What’s happening in, you know, my little neck of the woods? Because they want to be better connected to the outcomes and they want to be activated. So, a lot of our employee conversations is activation conversations, and then us scrambling to capture all that great information because it feeds capability. I would say customers, I already talked about they just want more and more specific data to their world, doing business with Dell, and that’s becoming…it’s exploding, right? And I’m sure all companies are seeing this.

Obviously, the investors, you know, they’re looking for better apples to apples comparison data. And so, they want more granularity. They want more apples to apples comparison. And then, they also are pushing us a little bit more in where they want to see us play, and what we like to call “raters and rankers” and all of that, which is a dicey game to get into, right, because there’s a million places where you can go for awards and ratings and rankings. And each company has to decide for themselves where you’re going to put your energy because you could spend all of your energy doing that stuff. And our goal is let’s do the work and let’s see what comes out of the work to fuel what that is, not let’s be everything to everyone. You know, we know what our strengths are and the gaps that we have to shore up. So I would say those.

Now, we also really deeply engage with NGOs proactively. We like talking to our NGO friends, especially the ones that are the most progressive and the most kind of loud, because they’ve got lots of really good information to say and we do not push them away. And then, analysts too. These analysts are getting really, really smart about this ESG stuff, and we want to hear what they have to say. So, we have kind of a 360 view of our stakeholders. Mark, what do you think?

Matt: Mark, what do you think about that? I think you’re on mute, Mark.

Mark: I really appreciate the flow of the conversation here, because building on what Giovanni said, you know, we’re coming into a period now where it’s always been there, but it’s becoming more and more explicit, like, through the business roundtable and Larry Finks letter. These are just examples of drawing in the question, the relationship between business and society. It’s just no longer good enough to focus your efforts only on shareholder value, right?

And so, you see the business roundtable, you see Larry Fink and you hear Page talk about the importance of stakeholders, right, and stakeholder engagement. And I would say just in terms of, just to summarize, you know, build on what Page was saying, we’re talking about environmental, right, ESG, environmental performance, the S in ESG, social performance, and governance, you know. So, people are going to want, stakeholders are going to want information about the impact that you have on climate change through greenhouse gas emissions. They’re gonna want to know about what you’re doing with waste management. They’re gonna want to know about energy efficiencies, natural resource, conservation, how you treat, you know, humane treatment of animals. That is with respect to environmental performance.

And then, social performance, again, Page talked about when she was in ethics and compliance, human rights, right? That’s always been something that we’ve focused on, human rights. Supply chain labor standards, right, child labor, workplace health and safety, human capital development, especially in relation to gender equality. And again, building on what Page said, relationships with local communities. The business roundtable is very focused on the impact that organizations have on local communities.

And then, governance, I think, is an area where people in ethics and compliance are very familiar with when it comes to ESG, because it’s talking about accuracy and transparency of accounting methods, tax disclosures, business ethics, anti-bribery and corruption, these are the focus of ethics and compliance. So, when it comes to ESG, folks in ethics and compliance are going to be most comfortable with and focused on the G in ESG.

Giovanni: Yeah, I really love that you brought that up, Mark, and obviously building on what Page said. You know, what I’m hearing is there’s a lot of complexity to this, right? Like, where are you going to focus? It’s three letters and each letter has a thousand things you could do for it. I love what Page brought up, that localization. I think it’s so important and, you know, I guess what I’m saying is that complexity to me speaks to opportunity. It’s an opportunity for leadership, for we, as ethics experts to speak into this, or whatever your role is, you know, whether your company calls it CSR or it’s part of ethics or you have a formal ESG panel or whatever it is, within this complexity, there needs to be leadership, and then also that buy-in, right? What are we gonna focus our strategy on? Mark, you very aptly talked about a range of different stakeholders and where are they located, right? What if you have investors in Europe and employees in the U.S., and most of your customers are in Asia, well, where are you focusing on here? Because that locale is going to change a lot of what you focus on here.

Just like a very rough anecdote, you know, the S, the social part of ESG, in the U.S., you know, I think the banter a lot right now, aptly so, is around racial issues and racial disparity and equity. You know, from what I understand in Europe, when people see that S, the first thing that comes to mind is gender equity and pay gap and things like that. Not that any of these are not on the radar of another continent, but when you have this range of stakeholders, this range of actions you can take and then different ways to implement them formally, it’s complex, right? And that’s why we need to have experts like Mark and Page and Matt on here, and we need to start spending some time getting educated so we can lead into it. But, the exciting thing is, to me, that sounds like a chance for leadership and a chance for smart people who care to be change makers and really make this world a better workplace.

Page: Well, and I’ll just add one thing. It also means that traditional ethics and compliance folks who understand G need to shift their mindset just a smidge on ESG and here’s why. Because you know who all those stakeholders are, in the ESG space, you need to do an ESG materiality, right, because you cannot conquer everything. Doesn’t mean everything is off the table, but you got to have a place you’re going when it comes to ESG world. And doing a materiality assessment is slightly different than a risk assessment, right? We’re used to working in a risk assessment, let’s have an X and Y axis and a heat map and the attorneys will come in and, you know, privilege it all and it’s a completely different…not completely, but it’s a slightly pivoted way to address ESG when you look at materiality. Because you are literally taking the stakeholder input often outside of the company as being just as important as what you’re seeing from a regularity standpoint, etc.

So, that’s a really interesting angle because it gets to, Gio, what you were saying, which is when you think about the S, we’re at the places of S where we have the most need, and it doesn’t mean risk management needs sometimes. Sometimes, it’s people don’t even know we’re doing all this good work and we need to better amplify it or we need to better talk about it or we need to be more transparent about it. So, it’s a slight shift that I think ethics and compliance, it’s just a little bit of a different way of looking at things, but once they got that piece of it, I think ethics and compliance is primed to add so much value to advising various parts of the business on the now where do we go to tackle or amplify or engage on these topics.

Giovanni: Yeah, I love it. And, you know, I love that you brought that up, Page, just briefly. You know, we always want to educate on these webinars, but also allow people to take action. And that formalizing that commitment that you brought up, Page, is one place that you can really start to get some traction here, you know. Again, a random example. You may not have a written down formal anti-slavery policy, but increasingly that’s gonna come up in a vendor review or a customer review of you as a vendor, and just codifying that, like, you may not be, you know, supporting slavery by any means and that’s the last thing you’d want to do, but codifying some of those great things that you’re already doing can help amplify it, clarify it and, you know, I think you can also get some of that feedback from your stakeholders of, like, “Oh, I really like that thing. That’s why you won.”

Matt: Let me weave in a question from the audience here, somebody who actually submitted two related questions talking about the standards that a company might use and are they formal and mature enough that we could compare one company’s ESG disclosures to another. And do we have those standards and how do we do it? I mean, my personal take is do we have those standards? It’s not even that we have a set of those standards, I think we have multiple sets of standards that are somewhat in conflict at the moment, or they are leaving companies a bit overwhelmed about which standard do we pick.

Mark, I was gonna maybe nominate you as our standards guru to just give me your observations on are the standards that we have for ESG disclosures, are they mature enough for comparability like that? And what about that idea that we’ve got Sustainability Accounting Standards Board, we’ve got the Global Reporting Initiative, we got various other standards out there. Do we have, like, a standards overload?

Mark: Well, I mean, you know, the gold standard is GRI, right. I mean, that’s been around since, you know, 2000, you know. So, for somebody who is just starting out in this space, you know, Dell is a signatory of the UN Global Compact, right? So, I would start with the UN Global Compact 10 principles, right? And then, the 10 principles that are focused on four categories, human rights, labor standards, environmental standards, anti-corruption, anti-bribery, gets extended in the GRI because the GRI originated in the UN Global Compact. So now, the GRI has produced standards around each of those categories, each of those principles, right? And so, you can go to…I mean, really all you have to do is to go Dell’s website. They have the GRI Index, right, which all…you know, when you talk about best practices, a company needs to produce a GRI Index. So, you take those standards ultimately derived from the UN Global Compact principles, and then you look at the metrics that line up against those standards. Again, best practices, Dell, you know, go to Dell.

Now, for those who really are trying to do what is in the best interest of all of us, right, GRI Index, absolutely essential. But now, the sustainable development goals, right, the UN, the 2030 agenda recently produced in 2015 by the UN elaborated on 17 sustainable development goals. Again, best practice is Dell has married the GRI Index with the STG, so Dell now is reporting out not only on the GRI standards, but the relationship that obtains between those standards, those metrics, and its impact on the sustainable development goal.

So, here’s the maturation level, right? Begin with the principles of the global compact, move to a consideration of the GRI and the production of GRI Index, and then for the most mature, you use the sustainable development goals as a means by which to report out to your stakeholders exactly what it is that you’re doing in alignment with those goals.

Page: And I did not pay Mark to say any of that.

Matt: I was about to ask.

Giovanni: It’s pro bono, right?

Mark: Now, I use it for my students, you know. I mean, I teach this and Dell is again, a member of those who employ the best practices, so I want my students to know the best.

Giovanni: That’s wonderful.

Matt: Page, maybe tell us a little bit about how the standards work and you are benchmarking against what, because I do think soon enough, the Securities and Exchange Commission seems like it is going to require these, and I suspect a lot of companies are going to say, “Oh, crap, now I have to find standards, now it’s real.” How did you build, like, the formal approach for Dell that we’re gonna use this framework and this is how it looks. How does that operate?

Page: So, some of it, to Mark’s point, has been just evolutionary, looking to what are the kind of north star gold standard approaches like UNGC reverse engineering that and saying, “We gotta do this.” But, I would say over the past year, we spent a lot of time as a company saying, “If we had to start to rally around besides just STG, other…you know, GRI clearly, we did that, STG, clearly we did that, but we’ve also taken a really deep look at SASB and TCFD, right, for climate. And that’s not all. We’re talking with people like the Roll Economic Forum and WBCSD about their kind of broader thinking on international standards, but that’s still evolutionary, right?

But, I think for us, what we wanna be able to do is we wanna be able to take a motion every year that allows us to hit all of these things in a crisp, transparent way, because producing this information is very time-consuming, right So, we wanna be able to have motions that feed a lot of different data sets. And right now, we’re starting to align a bit more in the kind of SASB, TCFD as the next steps, right? We did our first TCFD climate assessment last year. So that’s where we’re going.

What I would say though is on the broader ESG…and that’s in the sustainability space obviously, heavily, obviously SASB hits other things too. But, we created a governance structure in the company about a year ago to really more formally govern these decisions at Dell for ESG. So, we created an executive steering committee for ESG. I sit on it. Mike McLaughlin, chief ethics and compliance officer sits on it, right? You know, our head of investor relations sits on it. Our head of diversity and inclusion sits on it. You get the point. All the right players that either lead or touch these significant ESG concepts. And then, the people who then have to help us with getting the information out. Right, those folks all make up the decision-making body. We’re supported by an interlock group that are kind of people doing obviously more of the work and can recommend how hard is it gonna be, what direction do we need to go, what tools are we gonna need. Because we see this engine continuing to go in this direction. So, we make some calculated calls and that’s often through talking to people like Mark, benchmarking, having frank conversations with, you know, government entities and regularity bodies and NGOs and all the like. So, that’s kind of how we make these decisions and how we organize ourselves to focus on the right things.

I would also say that we just learned a lot through when we will get feedback from various groups to say just what Gio said earlier, “Well, I know that Dell must care about this. We just couldn’t find it anywhere.” And what we say is, “Oh, well, it’s buried six layers deep on a website and I guess all we need to do is put it first layer, check.” Right? We don’t need to go do something new. We’re just not positioning the information in a way, and that’s unfortunate but it’s the reality we live in, which is not just the information you share, but making it easy to access that information too. I hope I answered your question, Matt. Please let me know if I didn’t.

Matt: Well, you know…

Mark: If I could just add to that, just very briefly. Folks, millennials have smartphones and they’re very familiar with sustainability reporting. They know where to go to find the information. And if you don’t have the information, you’re not doing what it is that they think that you should be doing, you’re gonna suffer reputational damage. So, I think that’s why it’s really, really important. You know, there are people that say, “Oh, where do you find it?” You know, well, these millennials, they’ve gone through courses where they know exactly where to go in the GRI Index or in a report that uses the STG compass or whatever it might be. So, it behooves you to report out as much as you can and then make it as easy as you can. But not to worry, the millennials are gonna access that information no matter where it is.

Page: They’re gonna find it.

Giovanni: Yeah, they know where it should be, so we should be there speaking to it when they’re looking.

Mark: Exactly.

Matt: Let me pull on that a bit and Mark, maybe ask you a little bit more, because I do think that part of the challenges for a lot of businesses, probably less mature ones, who haven’t been thinking about ESG all that much, is going to be more, like, we know our data is out there somewhere. We just have to build the right process to pull it out so that I can put it into an ESG report. Or we know we have to think more about governing our supply chain, so I need to revisit all the contract terms to make sure that my suppliers will tell me what I want to know. And I’m just curious about the challenges around the mechanics of getting the information from wherever, because you’re right, it’s out there somewhere and, you know, how can you pull all of that closer to an ESG function that can then say, “Okay, here’s how it matches up to our goals. Here’s what we need to do. Here’s what we’re gonna put in our report.” Mark, what do you think about that kind of challenge, and then Page, I’d love your thoughts too.

Mark: Well, I think you see Page, you know, she has moved from ethics and compliance. The bedrock is ethics and compliance. The folks in ethics and compliance, in risk management, that’s what they do, you know? They identify information that’s relevant to regulatory agencies. And here, we’re talking about ESG. So, if it is a small company and you’re having, you know, difficulties in evolving, you can build on your ethics and compliance function as a means by which to generate this kind of information. It’s like Page said, all you have to do is just make a little turn in what it is that you’re looking for and you bring to bear your skillset, your knowledge base in order to be able to help the company make explicit what it’s doing in ESG realm, you know.

Page: Yeah, and I would say not just for our ethics and compliance friends, but our really good friends in audit, right?

Mark: Right.

Page: These guys, I will tell you, we have locked arms with our audit team because this data, this information is not nice to have, right? People are making buying decisions on it, investment decisions on it. So, that data better be auditable, right? You better feel good that that data is accurate because people are looking at it and they’re making financial decisions off of it. So, one of the things that we’ve done really closely is say, you know, “Let’s pull in ethics and and compliance and legal in a really tight way. Let’s pull in audit and kind of that traditional ERM risk management group tightly. Let’s make sure that we have really robust data management processes, and if that means we need to invest in tools, we need to invest in tools.” We have the right approvals process to look at that data, review and approve that data every year, so it’s iron clad.

And then, the other piece is making sure that we’ve got our risk structures updated so that, and I’ll give a great example, in the climate space. In the past, we might have looked at supply chain resiliency, I’m not saying this is an issue, supply chain resiliency and said, “Well, here are the key risks to supply chain resiliency.” And one of them might have been extreme weather events, but did we attach climate as the root cause of that? Probably not. Maybe not. Do we need to now because ESG climate is one of the big Es in the ESG? Absolutely we need to. So, locking arms with that audit team and saying, “Let’s look at our risk inventory. Let’s make sure it’s categorized also in the context of ESG and not just traditional ERM,” has been life-saving. And that educates that broader organization too into thinking about it, not in a traditional risk structure as well.

Matt: I would even say, I wholly agree with the idea that if you need to get more tools to find this, then yes, you should go out and get the tools. I’m not necessarily sure how many organizations will actually need a lot of new tools though, because so much of what we are saying, I could strike out ESG and put [inaudible 00:40:16] corruption in the place, and the sentence is still going to read perfectly true. To a certain extent, this is not anything companies haven’t done before.

Page: Data we already captured. We just call it something different.

Matt: Exactly.

Giovanni: Yeah, and the tools you have, we’re not farming new land, right? Like, you need policies, you need to monitor vendors, you need to hear from employees, you need to do assessments and audits of your organization.

Mark: … analysis.

Giovanni: You maybe need some different pipes into your integrated risk management system or wherever you keep it. You maybe need to get some new data, and to Page’s point about vendor resiliency, you maybe need to recategorize and redefine some things. But I think, you know, this is a lot of the big opportunity here is we’re already here. We’ve already hoed a bunch of roads and we already have planted a bunch of stuff in the ethics and compliance space. As ENT professionals, let’s set up some new plots for E and F and, you know, kind of formalize it with the G.

Matt: So, we have a stream of questions coming in, so I’m going to start…

Giovanni: I love the questions, everyone. Thank you so much for throwing them in.

Matt: Somebody had asked just sort of a general opinion, do we believe that there will be more regulatory attention to the transparency and accuracy of ESG disclosures and whether these things might be audited. I don’t know if anybody wants to touch…that’s a bit of a live wire. I’ll touch it. I absolutely think the SCC is going to mandate this and I don’t know if they will mandate that ESG reports be audited, although I know the external audit firms out there are delighted at this prospect. They are chomping at the bit to say, “Sure, we’ll be happy to audit anything.” I don’t know if anybody has any thoughts on what regulators might do to put a lot of shoulder behind this, but any thoughts there?

Mark: No, I agree. I mean, the recent letters have come out of the SCC, you know, pointing to the fact that the SCC already regulates gender and racial diversity, right. So, it’s not a big leap for them to include other, and the fact of the matter is, if you’re going to do the kind of analysis and do the kind of disclosure, you should be held accountable. It’s just as Page said. You just can’t greenwash. You’ve got to back up your data in ways that provides evidence. And that’s where I think the regulations are gonna come in and that’s where even without the regulations, you have, you know, whether it’s EY, KPMG, Deloitte, they have whole divisions now that are focused on “non-financial reporting.” And we could get into the integrated because the two of them, the financial and the non-financial, the best practices involves an integration of the two. But, you can get a lot of free information out of folks who would like your business, on how to structure your reporting mechanisms from a Deloitte or from an EY. So, yeah, I do feel it. There’s no question. It’s just a matter of time before the SCC regulates this kind of disclosure.

Page: I concur. All over the world, not just the United States. I mean…

Matt: True.

Page: …regulatory groups and government entities are…

Giovanni: Yeah, I think it’s everywhere and I think that’s part of the draw and the importance of this ESG conversation is just as we talk about all the stakeholders around a company and a corporation, there is, you know, pressure, demand, excitement from all of those, right? Customers are asking about it, vendors care about it, regulators are also in that mix. I know we had a question come up about the German supply chain regulator as an example and, you know, not that this is really profound, but I think just for all these different regulators, it’s more of a question of when and how than it is whether, right? It may follow this, “Hey, here’s some guidance. Here’s a request. Start reporting it. We’re gonna start enforcing it,” and, you know, that may happen in a few quarters or a few years, but, you know, everyone cares about it.

Listen, at the heart, people want a piece of this because it’s important to humanity. Workplaces are at the top of the list or near the top of the list of the entities that have trust among our population. People see more and more ties to their workplace and we, you know, gone are the days when we can only care about one stakeholder. Everyone cares about it and, you know, I think that, again, is the opportunity for us to get ahead of it because there’s a window of opportunity here. Call it, you know, 2 to 10 years depending on your industry and stuff like that, where you can be the best in your industry. You can be the Dell of your location in your industry and be ahead of the curve on this, rather than doing that kind of compliance 1.0, I’ll do it once I’m forced to by a regulator. Then, you’re…

Page: Uh-oh. Did we lose him?

Giovanni: Sorry. I was just saying, then you’re playing catch-up. If you’re behind the curve and just waiting for that forced stage of you’re forced to do it, you know, then you’re putting your organization in a tough spot of now we have to do 5 and 10 years of development on ESG in a year.

Matt: So, here is a comment from a listener saying, “ENC cannot wait for this mantle to be passed. We must go and take it,” in big capital letters, “within our corporate landscape.” And Mark, here’s a question more for you. This is an interesting one. Looking to the pipeline of talent, how are schools positioning students into various channels? Basically, they are wondering how much are corporations maybe participating in this conversation, because they’re going to need these employees. What’s being taught, things like that. What can you tell us from the halls of academia?

Mark: Great, great question, right. So, it is the case, and many of you obviously know this, that ENC is a part of curriculum development, especially within a business school, right? But, building on that now, it’s becoming more and more important that students prepare themselves for the job marketplace by familiarizing themselves with what does it mean, what would it look like to work for a company that’s a global compact signatory, right? So, you have to familiarize yourselves with the principles of the global compact, but then you have to go beyond that and look at the sustainable development goals.

And so, we have project management classes, right, we happen to be a member of what’s called the United Nations of Principles for Responsible Management Education. And it’s a sister agency of the UN Global Compact. So, we partner with companies, I’ll give an example, with Nike, right? So, we partnered with Nike, partnered with a couple dozen companies, but we partnered with Nike where we send out a project management team, and they converse with, interact with senior executives who are involved in sustainability and reporting out on sustainability. And here it happened to been the case that Nike had not yet begun to understand the relationship between its operations and sustainability reports and the STGs. So, our students were glad, pro bono, to help the Nike executives by combing the documents of the sustainability reports and supporting the materials, etc., and coming to an analysis of the fact that Nike’s operations align with five or six sustainable development goals, and under those goals, you know, 12 targets or so. And so, that’s the extent to which students now are learning about. Not just ethics and compliance, but all the way up through the global compact into GRI reporting, understanding the distinction between financial and non-financial reporting, integrative reporting, all the way up to the STG. So, there’s a continuum of education that students are being prepared for the workplace. So, great question. I really appreciate that. It’s kinda my bailiwick.

Giovanni: You nailed it, Mark.

Matt: You know, since you mentioned Nike, that jarred my memory, if you wanna pivot back to some of the mechanics of what companies you’re doing here. I know for example, that Nike, they have prime risk around sweatshop labor overseas. So, I know that they do things such as their suppliers cannot subcontract, their suppliers must adhere to certain specific designs for their factories. And they get really demanding on the precise contract language of what a contractor for Nike is or isn’t allowed to do, and does Nike go forth and audit it? Yes, they do. They have a whole little corporate audit function. It’s not even that little. But, they really do pay attention to that level of supply chain oversight, and that’s to sort of, example I’ve always thought, you know, that’s how ESG is going to really permeate the whole organization. And so much of it is gonna be around the supply chain.

Matt: Yeah. Mark, what were you going to say too?

Mark: I was just gonna say, you know, just to kind of as a caveat/warning to our participants, a hot topic, obviously for the millennial. So, this project management team scoured the documents involved in this sustainability report to look for the extent of gender equality, right. And so, pointed out, hopefully there’s no one in Nike here, but pointed out to Nike, it’s all well and good to break down in terms of some total of your labor force, the difference between men and women, right, which Nike looks pretty good and it’s about, you know, 50/50, right? But, what the millennials wanna see is upper management. What the millennials wanna see is the statistics involving the board. And if you don’t have those ready to hand in your GRI Index, then that’s where you’re gonna get dinged by consumers who are millennial. They want to see the breakout at the level of senior management between men and women, as well as race and ethnicity, but then in addition to it, they want to see at the board level, what is the company doing to break the glass ceiling regarding the number of women on the board?

Giovanni: I’m so glad you brought that up, Mark. It’s really, you know, this is what is going to separate the [inaudible 00:50:48] from the leaders over the next decade, is the people who get past a, you know, a press release that came out in the middle of 2020 about supporting racial equity, get past the, you know, poster on the wall with, you know, diverse faces on it, get past the greenwashing and do what actually matters. Listen, you know, the breakup, you know, there are a bunch of dimensions, right? The breakup around counting those as across the workforce, it’s relevant but it’s not everything.

And the people who lead that, and listen, to lead it, you have to understand what the game is. You have to understand that this game is not just one stat, it’s a wholesome, effective integration of these principles and these values into every facet of your organization, from your supply chain, you know, even including your investors and what they invest in to your employees and everything else. And, you know, I can’t emphasize enough how much progress needs to be made, right, if you’re just kind of getting up to speed on this, that point that you made, Mark, you might be five years into bragging about the mix by headcount of your workforce before you realize, “Oh, wow, look at, you know, the top five tiers of our org chart. There’s, you know, there’s no diversity on it,” regardless of what that is. And it’s something that we’re really proud of here at ComplianceLine. It’s on our website. We talk about not just, you know, that our count of women but where they are in management, how it’s in pay, where they are in leadership and things like that, just because it’s so essential to actually live it out and not just check the box, right. This is not, you know, the 1970s, you can just say, “Yeah, you know, we have some admins, so it’s not all men.” You have to actually live it out and I’m so glad you brought that up, Mark.

Page: I will also, and I agree with you. I will also give a counterargument.

Giovanni: Okay, love it.

Page: …compliance person out there that’s thinking about this numbers game. I’m a firm believer that ESG is not just about numbers. So, I get that we have to put numbers out. That is important. They needed to be transparent and audible and a huge web, to Gio’s point, a web of information, not a single data point. However, context is king here. I’ll give you a perfect example. Dell just came out with a net zero goal in April. It is all in. It’s one, two and three, upstream and downstream. But, because our goal says 2050, we were worried, luckily we didn’t get backlash, but we were worried, “Oh, that’s too late, Dell.” Until we started educating people that the largest portion of our footprint, I’m talking the PacMan virgin of the pie chart, the part that eats the other parts is the use of our products by our customers.

So, it isn’t what we control, our facilities. It isn’t even our supply chain. It’s big, but not nearly as big. It is you purchasing our products and using it. So, what can we do? Energy intensity reduction, decarbonizing of the materials, all that good stuff. But also, there’s a flipside of that coin. The environment in which it’s being used. Is it on green energy or is it not? Is it plugging into a wall that’s fueled by not just 100% fossil fuels, love my fossil fuel friends too, don’t think I’m disparaging, but my point is, that is a factor, right? But, we thought if we came out with an earlier goal out of the gate, we would not be legitimate. Somebody would eventually go, “Are you kidding me? You’re gonna guarantee that the entire world’s gonna be on green energy by 2040? You’re insane.”

So, I said and the team said, “We’re gonna put out a defensible goal. We’re going to be transparent about what we’re doing because it’s context. We’re gonna talk about programs and initiatives, not just data.” Data’s important. We need all of it. And I stand by that. And I think that’s also where this ESG game has got to go, and ethics and compliance people understand it better than anyone, right? Data can only tell you something, and that’s never more true than hotline numbers. We always have to defend, why do we have higher hotline numbers for some reason? It’s good that people are speaking up. You don’t want zero hotline numbers. Zero hotline means people are scared to pick up the phone and complain and talk about their experience. Data does not indicate the answer by itself. It’s context. So, ethics and compliance peeps, you are right in the middle of that nexus of data and context, so you can inform other people in the ESG space that don’t understand that sometimes.

Giovanni: Yeah, and that needs that interpretation, Page, and I’m so glad you bring that up. And I just want to honor you and your team for doing the high integrity thing. It would be easy for you to say, “All right, 2023, we’ll be carbon neutral or something.” Like, it’s not gonna happen or it’s kind of a fake goal. You’re like, what is it? Well, we’re just gonna make sure everyone has a recycling bin. That’s what we’re calling it, right? You have all three tiers. And listen, we were talking about this at a recent conference. Integrity is not just doing the right thing when nobody’s looking. Integrity is doing the right thing when everyone’s looking and it’s the hard thing to do. And to put out that 2050 goal and say, “We’re actually gonna work toward it and it’s gonna be an integrated real thing and we thought through it enough to realize that, you know, this is not something we can do in three years,” I think it takes boldness, right? You have to do that education, Page. But, I really want to honor you and your team for making that commitment and doing it in a way that models integrity rather than kind of the easy, kind of greenwash type of thing. That’s beautiful.

Matt: Page, I wanted to sneak in one more question before we get to wrapping up. This question seems rather well suited to a large global corporation. How would you get global agreement on priorities when approaches will vary so much regionally? And I think you had touched on that earlier in the hour, but any other advice or thoughts for that question or?

Page: Yeah, so the materiality piece was really important to us. So, it isn’t that everything isn’t important, it’s all important. But, we’ve decided there’s some things and in our June 29th next public facing report, we’re going to really be explicit about what are those top things and how are we characterizing those. But, what we’re looking to do is apply similar type of maturity model that you apply to other aspects of ethics and compliance and risk, which is you can have a global perspective and depending on where the need is, you can have regional or local aspects of maturing those spaces too. We just need to make sure we’re very crisp on what on those, get all the right staples together. I think you can do it, right?

We’re not trying to reinvent the risk and compliance wheel. We’re trying to partner with those groups and stay, “Okay, out of the most material items, where are the spaces where it isn’t that we need to mature in management of those programs, we just need to make the information more readily available, versus the ones where we really do need to mature in some spaces and what are the top three to five things we have to go do? And we have to have rigorous management about it.” So, that’s part of that governance group we’re also building out, how do you more rigorously manage those pieces that sometimes have multiple owners. Human rights isn’t owned by a single group. Lots of different people have their hands in that. And so, how do we get a coalition where we’re driving all. Not a great answer yet, I think it’s going to be evolving, but I think you have to have both a global and a regional view.

Matt: Mark, do you have any thoughts, and then Gio, I’ll pass it back to you for closing and wrap-up.

Mark: Well, this is why corporate collective action is so important, right? Associations like the Global Compact, associations that were born out of conflict minerals. These are folks who work together to try to assist one another to meet the kinds of standards that everyone has adopted, right? So, that doesn’t mean, you know, just regional, but global. The UN Global Compact is exactly that, global. It’s the largest corporate collective action in the history of commerce. There’s a consequence of that, you have a firm foundation of being able to reach out to folks who are signatories in order to be able to coordinate your activities in doing what is best for the planet as well as for society.

Matt: All right. And Gio, I think we covered plenty of ground here. If you just want to wrap it up and take this home for us.

Giovanni: Yeah, are you guys fine staying on for an extra five or six hours so we can cover everything? Listen, this has been a wonderful discussion. I wanna thank everyone for joining us today. Listen, you guys in the audience, you did what we asked and you threw a bunch of questions into the chat. We weren’t able to get through all of them and I don’t think we actually have another five or six hours. So, we’re gonna wrap up right around on time, but please keep an eye on your email. Compliance side is gonna follow up. We will send you a recording of this webinar so you can, you know, watch it, fall asleep to it, you know, stream it with your family, share it with your friends. And then, we’re also going to work on following up some of these questions and providing some directional insight, either informed by this group or informed by our own research. There were a lot of really thoughtful questions, so probably, you know, within the next few weeks, we’ll get a follow up kind of an FAQ type chat written document that is gonna address some of those questions. We really appreciate that interactiveness, that suggestion of things that matter to you, and we want to honor that by getting you some answers to those things.

Also, keep an eye out on ComplianceLine’s LinkedIn. We’re gonna do some compliance lives as a series to follow up on this, to stay on this issue of ESG. Obviously, we can’t actually cover everything today, but we got into so much today. Mark and Page and Matt, you all have honored us with your intelligence and your experience and your insight. You’ve given us the breadth of all the things that can be in an ESG and the depth of how to get started on a program, be nuanced about it, implement it, so many things that are important to us. So, you know, my parting thought is just I wanna encourage everyone in ENC, this is part of our world, whether you are, you know, a frontline worker, a manager, director, a chief compliance officer, on an official ESG panel or not, this is part of what the future of, you know, that collective corporate action that ethics is a part of is going to be, so please continue to learn about it. Please continue to invest your time and your energy in getting smart about it, because if we, within our company, within our spheres of influence can lead forward on these ESG principles, then not only will be continue to be a strategic lever as ethics experts for our organization, but we’re all gonna make the world a better workplace. This has been an awesome discussion. I’m indebted to Mark and Page and Matt for joining us today. Thank you all so much.

Matt: Thank you.

Mark: Thank you.

Page: Thank you so much.