Speaker 1: In today's video, you'll learn how to develop a comprehensive ESG strategy and how to leverage your employees for your ESG programs with examples. Let's make a social impact. Hi everyone, I'm Karl. Welcome to the Social Impact Show, where CSR professionals get the latest strategies and tips to help them scale and grow their CSR and goodness programs. So this is part two of our three-part discussion on ESG. I'm joined by two special guests today. My first guest, her name is Jenna Irons, who is the Head of Communication Strategy with Think Parallax. And my second guest is Stuart Rassier, who is the Head of ESG Strategy with Think Parallax. So let's go right into ESG strategy. How would you go about developing an ESG strategy from within your organization? And maybe let's start it with your organization, you know, is just getting started. How would you go about developing that plan?

Speaker 2: One of the things that sort of is essentially establishing a baseline or an understanding of just what are you doing today, right? So what programs, what policies, what metrics do I have in place presently that meet some of the expectations for ESG? So that could be things around health and safety. It could be around environmental performance and energy use. It could be around diversity, equity, inclusion, training and development. The reality is we're probably doing some of it or a lot of it already. We're just calling it something different. So the first piece to that would be to just understand where you are and do a baseline. The second thing you probably want to do in that is understand what your peers are doing. And so some type of web research, talking to some colleagues in the space to understand what your colleagues and peers are doing would be kind of a second step for this. Kind of related to that is there's a lot of us that have done the work or you have other companies that have done the light work and we can learn from their failures and their successes. So participating in conferences, there's different webinars that you can get into that I think can be particularly helpful. And that's really going to provide you with a baseline for moving forward. As far as sort of implementation, things to consider and put together, I think one is often some of the first steps and it kind of helps ignite ESG strategy is to actually do an ESG or CSR social impact report. That is, it becomes a very tangible thing that you're trying to produce that then helps you push to answer questions around, right, why are we doing ESG? What policies do I have in place? What programs do we have? What metrics do I have? And then finally, how am I going to talk about and communicate that?

Speaker 1: I actually want to go a little bit back and how would you go about setting, I guess, your ESG goals? Is this something that you would maybe town hall with like a steering committee? Would you just set it with your leadership team? How would you go about setting, yeah, how would you go about setting those goals that I guess everyone would, I guess, buy into?

Speaker 2: I think there's a handful of strategies you're doing. A lot will depend on your organization. Some of them, there might be some already preconceived expectations for things that need to happen. Usually the need or the interest in creating an ESG strategy usually doesn't happen in a vacuum. Usually there's some type of catalyst for it. It could be like an investor call or it could have been a movement within employees to kind of expect to have that as something they want. So I think kind of what goals you prioritize or how you create them kind of varies a little bit on what is the genesis of the project. I know that's a little kind of a roundabout answer to it, but I think that's part of it. And then I think once you have a little bit more clarity on what's important or why it's important, I like to work, almost work backwards and try and figure out, so what kind of impact do we want to have? What does, what kind of change do you want to create, whether within the environmental, social, government space and then work backwards from there. So in three to five years, we want to be on a particular, we want to have a particular score on an ISS rankings and ratings type thing, or we want to be on the Dow Jones Sustainability Index, or we want to get recognized as the best places to work. And then that helps solidify some of the specific goals that we want to have and then work backwards from there on what would be the milestones and the steps to get there.

Speaker 3: Yeah, and I'll add that not all companies endeavor to be leaders, right? Some of them are fine to just be middle of the pack. So for them, it's doing a benchmark assessment of what their peers are doing and figuring out then where they need to sit in order to figure out where they want to be five years from now. So I think really it's a unique path for different clients, whether they want to, companies want to really put a stake in the ground on particular topics. So maybe they really want to have a bold goal around climate because that's really materials with their business and their stakeholders versus wanting to lead on everything. And so crafting their goals based on their level of ambition as well as their goals for their stakeholders as well as their business as a whole.

Speaker 2: And yeah, and I guess on that one, right? It's like sometimes the goal is to be middle of the pack. Sometimes quite honestly, Carl, like even to have your, you frame it as like first thing, a lot of companies that I've worked don't actually have goals in the beginning. It's more about just getting the, start getting the information out there and just understanding what it is and what our process is in place. And setting goals is often like a year two or year three project for the team. And the first year I'm just trying to figure out where all these squirrels running around my organization have my ESG data and how do I, that my only goal is really just to get all of the info and all the stakeholders, internal stakeholders together and to make sense of what we're doing and how we're doing it. And then once I have that, my goal is essentially to have the baseline. And then from there, then I can start thinking a little bit more strategically and setting goals.

Speaker 1: And actually, we talked about this in the last episode where getting buy-in. So where does the, where does getting buy-in from your leadership fit when you're developing a strategy?

Speaker 3: All throughout.

Speaker 1: Yeah, all throughout.

Speaker 2: I think you can't, in my experience, you can't, you can do ESG okay without a senior sponsor that's actively involved. But those that have buy-in commitment and if it's not being led by the senior leader, at least they have an ear to the senior leader. Those are where we see the most success, right? Then it's not necessarily the senior leader is doing the day-to-day work. But if the primary contact driving strategy or the primary person driving the report knows that her boss is there and can elevate when needed, that's key. So I think being very clear as to who has this senior ownership. And that is really defining it. If it's not a direct line to the CEO, at least it's like a one degree or one degree of separation from the CEO is key in all of this.

Speaker 3: And I think we've also really found it's effective at the start to include them in conversations, include leaders to share with us their ambition for their area of the business and really hear from them what they're already doing and where they want to go and be able to build that into the strategy and include them along the way where possible so that they have ownership over of it so that later on when the strategy is launched, it doesn't feel like something new that's being pressed upon them, but that they were part of creating. And the other, kind of the last thought

Speaker 2: on the senior leader and sponsors is understanding where they fit within the organization and what their day job is. Often it's not an ESG specific or there's only a handful of companies that have a chief sustainability officer. So if your senior leader is an HR, there's certain metrics, there's certain outcomes or expectations they have for ESG and framing it up more around attracting and retaining talent will be thinking more about human capital as a priority for my strategy. If I'm laddering up to legal, I'm gonna have a different, like the tone of the strategy, the tone of my communications might be different because they have more of a legal mindset I might be thinking a little bit more about the auditing process for my report. If I'm laddering up to the chief marketing officer, I'm thinking about making it splashy, I'm thinking about other external communications offerings. If I'm laddering up to investor relations, I'm thinking about some of these investor requests, I'm thinking about stakeholder or sorry, your shareholders and proxies that are coming in. So understanding who your senior sponsor is and what's important to her or him is gonna be key as well as I put my strategy together.

Speaker 1: Now, in addition to leaders and executives, obviously the second part of the buy-in is the employees too. So how would you go about leveraging the employees in your ESG programs?

Speaker 3: I'd say it really starts with being able to package what you're doing in a way that's easy to tell the story to, right? So you have these topics that you've figured out are the most important for your company to be focusing on, you're starting to set goals or figure out programs or policies around those. And then you have to figure out a way to turn all of that into something that you can share easily, right? So we call that an ESG communication platform, but it's really just a way to tell that story in a really short, comprehensive way. And so being able to start there and that's a really great tool to be able to share with employees at all levels. And then I think it's really about finding the what's in it for me, for employees, right? There's this kind of big, broad story of what the company is doing and that can help instill pride or purpose for someone working at the company. But you also wanna really connect it to like, how are they contributing to it or what does this mean for them and their jobs? You know, we've found that really helping employees really helping to understand, you know, through, you know, focus groups or surveys, helping to understand what things employees really care about. Maybe that's part of your materiality assessment ideally, but really understanding what employees care about and what topics really resonate with them and then building your story and your engagements around those.

Speaker 2: And Carl, when someone's thinking about engaging with their employees, thinking about how are, so essentially what you're trying to do is at the beginning, you're trying to build awareness around ESG and that's quite honestly, one of the biggest challenges and biggest gaps is people just don't know what a company is doing around ESG. The second piece is building knowledge around that and so what does it mean? Building sort of capabilities, understanding about the metrics, the significance of it to the business, sort of like the internal business case of why we're focusing on this. And then the third piece to this is some type of behavior change, right? We're asking them to, I mean, it could be something as simple as, you know, turning off the lights in the building, right? So something like, or turning off computers or not booking that flight to Orlando and instead of doing that as a Zoom call. Those types of behavior change things and you can't ask people to do behavior without building awareness and creating education. So being very thoughtful in how you're putting that communications and putting your programs and what you offer is super important and super key. And then the last thing, which is related but slightly different is we also have to reward our employees for being more involved in ESG. And you're seeing a big push now for connecting ESG performance in your job to compensation at the most senior level. But also that ladders down into, you know, do I have on my performance KPIs, do I have an ESG specific metric that I'm being measured to, being held accountable for? And if I hit it, am I seeing some type of reward for that, it could be a financial reward in performance. But also just there's non-financial things around recognition, employee recognition, particularly in ESG space is huge. So those are all like considerations as you're engaging with your employees.

Speaker 1: And how often do you need to report, I guess, back to the organization on the progress of your ESG program? Is it something that, you know, is it a quarterly thing, a weekly thing, an annual thing, part of, like I know you mentioned there is a, you know, an impact report or a CSR report or ESG report at the end, but I'm sure the business or the executives or even the employees want to know like, hey, is everything that I'm doing actually working or achieving what we're trying to do?

Speaker 2: Yeah, I know, Carl, it's a great question. I think, I mean, we'd love more of it and there's not enough of it. That kind of the joke in the space is we put out these, you know, an impact report or these different performance reports and we spend four to six months writing them. We put it, when we put it out and they're literally out of date the minute we publish it, right? Because it's reporting on information that happened six months ago. So moving towards real-time data, more updates is going to help just better performance in the space. We're not there yet. Organizations are creating dashboards that can provide sort of the ladder up to the senior leaders that can provide sort of like here's some key metrics for that. But I think one of the things that we're talking to more and more people about is like the impact report or the ESG report, that's just one of many channels for communication around ESG. And if you want to attract and retain talent, if you want to improve your reputation, if you want to demonstrate that you're a company that has purpose, then you need to identify what those audiences want to hear and then figuring out ways to Janice point earlier about to package it in a way that they're hearing it and seeing it in a regular, on some type of regular cadence because it's not their day job in ESG and they've got significant number of competing messages at them at any one point. And I'll always say to an ESG person, it's like it's not until you talk about your topic or you talk about the performance of like your volunteer program or your foundation or your carbon disclosure, it's about the time when you've gotten red in the face and you're ready to give up. That's usually the time when your peers and colleagues are actually paying attention. So yeah, really like the communications piece to this is so key because that's really how you get the business value around reputation and the business value around attracting and retaining talent. And that's how increasingly now, those were kind of their two main drivers for ESG and business value. But now we're also seeing customers want to hear more about it. And investors, Carl, to your point earlier, are wanting to hear more about this too. So we need to be communicating more about these topics in more venues and more places and more channels and significantly more often.

Speaker 1: Now, do you have any examples of, I guess, organizations or businesses that have developed a successful ESG plan?

Speaker 3: Yeah, and I guess to Stuart's point earlier, really having to meet employees where they are and really go from awareness to knowledge then to behavior change. We were working with, just for one example, a company with manufacturing facilities in the South and they had a really bold climate goal and they needed the people working in those facilities to be involved, to be able to reach that goal. And so through focus groups, understanding that people just didn't understand emissions or carbon or what it all meant and why it mattered. And so really having to go through the process of helping them understand the issue, be aware of what the company is doing, really build knowledge and understanding around the topic itself before we could then drive behavior. And so not just coming in and asking people to change, but really get them to understand why and to own it. And so that was just one example of a really successful way that we've really helped to build around one specific topic, employee engagement, and really drive action and performance. And we know that this sort of work not only helps to engage employees and feel like they are part of something, that they're going to be loyal and have pride for where they were, but that we also can use it to help drive performance on specific topics and actually achieve our goals by engaging employees.

Speaker 1: Now, do you have anything else to add in terms of developing an ESG strategy?

Speaker 2: No, I think for me, I mean, when I'm thinking about strategies, it's about choice and they have to make them. So you definitely have to be making choices about, and we spoke to this a little bit about making commitments. So whether it's commitments to the program and qualitative and quantitative goals, but that's often hard to do in year one. But that's definitely something that you're thinking about. I talk about clarity and being very clear about what is included and what isn't. And your strategy has to be actionable so that if I'm sitting in HR, if I'm sitting in operations, I know what to do. A very clear example of that was a handful of years ago, Starbucks focused specifically on the ethical sourcing of the coffee bean as their primary strategy and focus. And it became very easy for decisions to be made within the organization from an ESG perspective, because they were primarily focused on that as a priority. And that's a great example of like, there was some very clear strategic thinking and direction that was put to the organization. And then the last thing on strategy, which is hard to do, but the really good strategies tie back to specific capabilities or talents or unique products, skills, services that the organization has. So, and a really good example of that is looking at like an organization like Lyft who use the cars and the technologies of getting a shared car service. And when they were thinking about their types of social impact programs they could do, they use their technologies and work with nonprofits to get individuals that didn't have access to vehicles or in low income to their doctor's appointments, right? So they use the technology that they had. That's something that not everyone, every company has, but like, hey, we have this unique capability. Let's apply it to our social impact program. And that laddered into a larger sort of strategic implementation plan, which was unique and special and something that we could talk about.

Speaker 1: Check out part three of our three-part series on ESG by watching this video here. Thanks for watching. And we'll catch our next video.