Evolving Sustainability and ESG Leadership – GEMI 2023 Fall Meeting
Mark Johnson, Gannett Fleming, GEMI Chair, welcomed the attendees, highlighted the ongoing Work Group activities of GEMI, and shared two issues he sees as priorities for environmental sustainability professionals including operating risk and company brand and reputation.
Steve Hellem, GEMI’s Executive Director welcomed the attendees and shared with the attendees that all meetings of GEMI and the Work Groups operate under GEMI’s Antitrust Guidelines, and that the meeting is also operated under Chatham House rules so that all attendees can feel comfortable in sharing comments during the meeting without attribution to the person making the comment or that person’s company.
The attendees then introduced themselves and shared key issues for themselves and their organizations that included:
- The expanding need and increasing demand for sustainability and ESG training and education
- Board-level
- Executive Team Interface
- Legal
- Procurement
- Finance
- The number of, and use of sometimes questionable sustainability rating scores by investors, financiers, and other stakeholders is frustrating
- Balancing between the business of sustainability and sustainable businesses
- The challenges about messaging and definitions when it comes to landfills and recycling, reuse, and sustainable materials
- Making sustainability an integral part of everyday operations
- Identifying and clarifying organizational commitments on collaboration across industries and with supply chain partners
- Evolving roles of sustainability professionals and the changes needed to support the business
- Community impacts, inputs, and involvement
- Sustainability embedded in operations
- Sustainability has grown from an assessment of the Supply Chain to an assessment of the Value Chain
- Shifting from guidelines, to requirements, to reputation management via reporting
- Increasingly turning commitments into action, with decarbonization and towards opportunities
Myra Hughes Foster, Vice President, Sustainability Innovation & Strategy, SEE, highlighted a number of key activities and commitments of her company within the category of “Evolving Sustainability Leadership” including:
- SEE set their initial key 10-year sustainability goals in 2014
- Key sustainability initiatives are addressing the entire value chain
- They recognize that messaging and communication drive competitive opportunities
- The important role of circularity in research and products
- The importance of ambitious “moon shots” that must be balance with pragmatic reality
- The lack of infrastructure to support evolving sustainability management opportunities
- The need for interactive conversations with key audiences not one-directional
- Addressing climate risk as a part of enterprise risk management (ERM)
- Continually looking for sustainability ambassadors
- “We are materially agnostic, we just want to meet the needs, objectives, and expectations of our customers.”
- The passing of legislation without the true consideration or responsibility for the unintended consequences
Raheem Cash, Vice President, Corporate Sustainability, Moody’s Corporation, focused on “Evolving Everything,” highlighting:
- The need to recognize the tension and opportunities between information and action providing value
- The importance of highlighting to CFO’s how sustainability decisions and action are financially material
- Do the real work of taking action, not just repeating the ESG words
- Keep your momentum on action, not just reporting
- Build new processes, change the dynamics of sustainability and ESG, and work hard to make sure you are not missing something
- Focus on change within facilities and supply/value chains
- Avoiding the lobbing of sustainability issues “over the fence” within a value chain
- The importance of talking about your “core business” when discussing sustainability
The participants then broke into three discussion groups with the “charge” of discussing: “How are Sustainability and ESG Challenges and Opportunities “evolving” for you and your company, what are the issues that are “requiring/demanding” you “evolve”, and how are you responding to those demands. During the report outs from the three break-out sessions the following comments, issues, challenges, and opportunities were highlighted, including:
- Carbon reductions are both a bottom-up and top-down responsibility and opportunity
- We have been doing “good” for a long time and sustainability is increasingly becoming normalized
- Concerns about materiality, and “double materiality” specifically from the EU and California
- The business of sustainability is getting in the way of a sustainable company, when the priority becomes the data, versus actionable changes in business processes that reduce carbon and improve the environment
- How do we get our companies to focus on sustainability?
- When it comes to reporting, at some point should we “just say no” because the reporting alone does not make change happen
- Addressing the limits to moving waste between systems – the infrastructure and logistics challenge, particularly within the fragmented US infrastructure
- Every business has its own unique ecosystem and that can be a challenge when trying to develop a corporate sustainability and ESG value and action system
- How do we move toward “Operational sustainability” as a discipline
- Having an assessment process to vet new topics
- Having organizational change management capabilities to manage the introduction of new topics
- Considering operations as a key stakeholder of sustainability: Understanding what operations needs
- Ensuring the CSO-Board interface
- Leveraging key sustainability partnerships
- Infrastructure for recycling
- Combined industry voices for legislation
- Recruiters for sustainability capabilities
The participants were then joined virtually by Professor Alison Taylor, New York University Stern Business School of Business, who with Co-author Robert C. Eccles developed a Harvard Business Review article entitled “The Evolving Role of Chief Sustainability Officers.” Professor Taylor outlined an extensive foundation for the HBR article that included a recognition that:
- Materiality is a critical lens for viewing where to put sustainability efforts and resources
- Mimetic isomorphism is everywhere and expanding in the context of corporate sustainability and ESG leadership
- There are uncomfortable truths
- CSO’s need direct links with CEO’s and CFO’s
- Social media, which has increased transparency and reduced the ability of business to control the narrative
- Rising political polarization, fragmentation, and dysfunction, which is pulling in companies
- Younger professionals, have new sensibilities, values, expectations, and different ways of communicating
Each of the GEMI Work Groups then provided a report and results from their activities during 2023 that included:
- Evolving Sustainability Leadership – led by Scott Nadler, GEMI Fellow and Linda Brewer:
- Multiple participants at difference levels of their companies
- A series of ESL workshops
- Reporting, what can we do to ensure reporting that leads to action, versus reporting for the sake of reporting. This approach includes Raheem Cash’s urging to address the “increasing tension between information and action” and Tanis Marquette’s “the business of sustainability is hindering the sustainability of business” a
- Does the HR ecosystem meet your needs
- Next Year
- Reporting for the sake of reporting or making operational changes happen within our companies, focusing on operational sustainability
- The Sustainability Organization, Roles, and Responsibilities
- Scope 3 – Release of Scope 3 Quick Guide – Natalie Pryde, Work Group Director
- Scope 3 disclosure requirements continue to move closer to reality with CA Senate Bill 253, CSRD, and maybe SEC.
- Scope 3 platforms that support data collection, monitoring, and reporting are plentiful, however many companies are still using spreadsheets with ample opportunity for enhanced efficiency and accuracy.
- There is a need for education around Scope 3 at all levels of the organization.
- Resourcing, both human capital and monetary remain major challenges for Scope 3 teams. Leveraging the power of many has arisen as an effective solution for some.
- Contaminated Plastics – John Meyer, Smithfield
- Collaborative effort of Smithfield, Tyson Foods, SEE, and WM to find technologies that can address protein contaminated plastics so they will not be sent directly to landfills
- Reviewed and discussed Site visit to 3 Rivers a potential technology provider, as well as other providers
- Discussion of additional companies and/or technologies that can be utilized to prevent landfilling of protein contaminated plastics
- There is recognition of the importance of constructively addressing key water issues in the processing and post processing of the contaminated plastics
- There are also important logistics issues is moving protein contaminated plastics to and from technology providers, that can prevent landfilling of the plastics
- Will be prioritizing meetings with Federal Government Agencies – USDA, FDA, EPA, DOE to increase R&D technologies and ultimate scaling up of the technologies for Work Group members
- Trade Association Sustainability Forum – Bryan Kuppe, American Chemistry Council
- Developing a Trade Association Policy Statement with ACC, FMI, RILA, HCPA, NRF and PIA that includes:
- Developing a Framework/Guidance that describes how a trade association will can address a process for identifying risks/opportunities in sustainability, and then building an organizational strategy to work toward the goals both actual and aspirational
- Identifying and communicating the opportunities and challenges of executing the Framework/Guidance to ensure that learnings are both recognized and shared with appropriate audiences
- Engaging with external stakeholders, when appropriate, with such the finance community and other key sustainability and business external stakeholders to strengthen collaborative relationships with those targeted audiences
- Reporting on the activities undertaken to the leadership of Trade Associations and making recommendations on the needed next steps in our sustainability journey
- Measuring current performance and quantitative goals to meet the sustainability goals and objectives developed for associations
GEMI Strategy and Activities for 2024
Following the report outs from the Work Groups there was general discussion of the issues, challenges, and opportunities discussed during the day that included:
- Present Work Group structure and activities are providing value and should be able to attract additional companies and organizations in 2024
- How does GEMI continue to address Scope 3 emissions and ways to reduce carbon emissions in supply chains/value chains
- Can GEMI help identify what “moves the needle” with the investor community
- Can GEMI help address a wide range of issues relating to “sustainability human capital”
- When can a company say “no,” or provide alternatives to “mandated” reporting from customers
- How do we create new disclosure strategies that focus on real change, versus, reporting that may or may not actually reduce carbon within our companies
- How do we manage/limit poor quality AIBOT-related “reporting” on our companies and organizations
- How do we get a better understanding of the potential ways to address the “double materiality” challenges
Two potential projects discussed that could be created in 2024 the GEMI Annual Meeting include:
- Developing and Implementing Disclosure Strategies (formerly Reporting). Key components might include:
– Setting priorities: helping companies determine which reporting channels and venues are best suited for their needs. This could include some GEMI investor outreach and discussions to better understand (and perhaps inform) their priorities and expectations.
– Implementing priorities: helping companies focus on those priorities and shift attention and expectation (including from BOD and C-Suite) away from lower-priority channels. This could include the “when and how to say ‘no’” discussion.
– Improving disclosure efficiency: Sharing lessons learned/best practices about data management, platforms – and applying the Scope 3 lessons about engagement with other internal functions and stakeholders.
– Improving disclosure effectiveness: Sharing lessons learned/best practices about the kinds of things on; how to improve “bot recognition and uptake” of data on your web site; and how to structure and deliver investor meetings.
– Reducing overlapping and conflicting expectations: This was in the presentation yesterday and did not get much uptake but should probably remain on the table. Much like the SP discussion, this would engage key players in a sector to drive some standardization/ harmonization of requirements imposed on suppliers.
- Creating the Optimal Sustainability Organization, Roles, and Responsibilities (Formerly HR Ecosystem). Key components might include:
– The Sustainability Leadership Role(s): What does the role require, what are the pros and cons of different organizational reporting structures (such as direct to the CEO, to the CLO, the CFO, and others), and defining the leadership skills (communications, organizational changement, etc.) to be developed.
– Sharing Sustainability Organizational Structures: There may be strong interest in better understanding the different models that companies are using including what is included in the scope of the Sustainability organization, where it sits/reports in the company, and how it is staffed.
– Defining and meeting Sustainability capacity needs: Including the Sustainability Roles and Responsibilities that have previously been addressed within the ESL Work Group, and those roles and responsibilities as related to the rest of the organization and to the supply chain.
– Building the Sustainability network or ecosystem: This includes networking roles such as sustainability diplomat and sustainability ambassador but would also include who do you need to work with across the company, what do you need from them, and external contributors to your organization’s sustainability information, such as supply chain contributors.
– Identifying facilitating Sustainability technologies: this includes technology merging sustainability/financial/management systems, communications technologies, inter-organizational databases, and tracking and measurement technologies.
– Defining the potential value that Sustainability brings to the business: This includes use of sustainability as a lens for innovation, external partnerships, and relationship-building, as a catalytic role, as a forum for values alignment within an industry or partnership, as a contributor to operational efficiency, and so on.
Action Items:
- Meeting notes will be distributed, along with presentations presented
- Recommendations will be solicited from GEMI Members and Work Group participants regarding new activities/Work Groups that should be organized to address issues, challenges and opportunities outlined during the meeting, that can provide additional value to GEMI members, as well as attract additional companies and organizations to GEMI.
Mark Johnson thanked the attendees for their attendance and engagement in the meeting.
The meeting was adjourned at 3:00PM (EDT).
