Provokeglobal: ESG Efforts Must Emphasize Material Impact

(MENAFN- PRovoke) WASHINGTON, DC-Companies should not abandon sustainability initiatives but they do need to do a better job of explaining to consumers and others how those initiatives have a material impact on the business and its long-term success, attendees at the PRovokeGlobal Summit in Washington, DC, heard this week.

During a session on“The New Corporate Activism Era,” sponsored by SEC Newgate and moderated by Global Strategy Group partner Jim Papa, representatives from both Bayer and the Las Vegas Raiders explained why programs that fall under the much-maligned ESG benner are critical to their organization's success.

Introducing the discussion, Papa cited Global Strategy Group research showing that 61% of Americans still want companies to speak out on social issues that matter to employees and communities. But he pointed to the conservative backlash against the concept of ESG to ask how companies can balance risk and reward in a polarized environment.

Daniela Foster, senior vice president and global head of public affairs, market access, and sustainability for Bayer's consumer health division, works to ensure that sustainability is woven into Bayer's entire business model. The company is working to expand access to health for 100 million people in underserved communities by 2030, and has committed to investing $130 million into sustainable solutions.

She provided a quick overview of the way the issue has evolved in recent years:“I remember, probably a year ago, reading a Wall Street Journal article that said, forget the term ESG, but don't ignore the power of the concept. That's a lot of what we're talking about here.

“I've been in this space for nearly two decades, and I remember in the midst of the pandemic, being incredibly encouraged that investors were really starting to pay attention to ESG. And then, quite quickly, we saw how polarizing ESG could be when it's politicized.”

Nevertheless, Bayer has maintained its commitment to sustainability, because the company viewed such efforts as critical to its long-term success.

“If you really look at and what ESG has been used for, it's really a reporting mechanism. Environmental, social, governance. It's reporting some of the good fundamentals that as a company you should have, some of the fundamentals of what you need to do as a business to run your business in a long term. And then it sort of got extrapolated into a number of different things.

“But what does not change, and what I think accelerates in the future, is that sustainability is the future of business, period. If you want to be a company that's gonna be around for the next 20, 40, 60 years, you have to be thinking about how to use the resources that are most material to your business, to your industry in a more sustainable way.”

It is important, she explained, for sustainability initiatives to be tied to the core business.

“We're in healthcare, we're in consumer health, and we're in agriculture. On the agricultural side, 25% of all greenhouse gas emissions are tied to agriculture. This is material and existential for our business. So one of the ways that we think about our research and development and our future products, farmers, is figure out how we solve for that. So we're looking at everything from investing in clean products that have a lower carbon footprint to improving the livelihoods of 100 million smallholder farmers in low and middle income countries. That's under the umbrella of sustainability, and it's material to our business.

“Another example, and this just launched today. We've just, after a very long journey, announced our first ever-the first that we've seen in the consumer health industry-sustainable, recyclable blister pack for our relief wraps. The blister packs are made of multi layers, they're not recyclable. No one's been able to solve it at scale. But we made an investment, we worked with external partners, and we're now looking to scale this to all of our brands."

Piper Overstreet White, senior vice president of government and community relations for the NFL's Las Vegas Raiders, works at the nexus of policy, sports, and community, focusing on both the business interests and the community impact of the Raiders. Over the past year, the Raiders have donated half a million dollars to eliminate school lunch debt and provided more than 400,000 meals across the state of Nevada.

Papa pointed out that“the sports world is also where a lot of society's social questions are debated and
discussed, matters of identity, race, gender, sexual orientation, everything from gun violence and domestic violence to mental health.”

She started by discussing the organization's heritage:“Can you just say as an organization, are we going to socially aware? And if you're socially aware, how are you going to show up?

“We have a unique history in that Al Davis, who was the former owner, head coach, GM, and NFL commissioner, and who's also the father of the current owner, he was a proponent of civil rights. He refused to play in cities where his Black players were forced to stay in segregated hotels. He hired the first black head coach. And I feel very lucky to work for an organization that has that kind of history, that championed diversity before diversity was the term that it is now.

“So being socially aware and deciding how we're going to show up is sort of in the DNA of our organization. And so I took it upon myself when I came into this role, to say we've got to move forward. We've got to tell our story. In a state like Nevada, people want to know your story. We have a community benefits agreement and we have to report out on that to a benefits oversight committee.”

The organization focuses on five pillars: military and veterans, youth development, health and wellness, community relations (including corporate giving) and football development (including youth sports initiatives).

“Folks want to hear about football, they want to hear about the team, and they aren't necessarily on our main channels open to hearing about sustainability initiatives or community impact. So we created and curated social impact channels. . Last year, we issued our first comprehensive ESG report called the Impact Playbook. And I think that really helps bridge the gap between a team that was at one point viewed as a transfer from California to really be part of the fabric of the community.”

Papa asked about the way in which the business impact of ESG efforts are measured, prompting quite different answers from the two panelist

“I do think that the old quote, what gets measured gets managed, is still very true here,” said Foster.“In 2019, when we were looking at this and having the conversations with the board around how we wanted to think about our community and organization over the next 10, 20, 30, 40, 50, 60 years, that discussion included the materiality assessment. These are the topics and the areas that are most material to our business in terms of the industries we're in, and also where we're uniquely positioned to have an impact.”

The company needed to back that up with data, she said.“One of the things that was pretty pivotal for our organization is when we came out in 2019 with our sustainability strategy, we were the first large industrial conglomerate to say we were going to tie this to compensation. So 20% of the board's compensation is tied to whether or not we reach our sustainability goals. And I can tell you from an incentive perspective, there is nothing quite like being enumerated on something to make sure you measure with extensive metrics behind this.

“We spent a lot of time saying, how will we know when we've done it? How will we know when we have given a woman access to modern day healthcare? How will we know when we've approved access to everyday health? So we have a set of methodologies behind that. It is published, it is publicly available, and it's audited with the same rigor that our financials are audited.”

As a result, Foster said,“I can sit through today and tell you, for example, that our sustainability goals around consumer health also contribute 12% of our annual revenue.”

But Overstreet White's challenges were different than those described by Foster, focused on the immediate issues raised when the franchise relocated to Nevada.

“Facts, numbers, metrics, data, all extremely important. And again, we report on that in our Impact Playbook. But I will tell you, in the world that I live in, narrative is a measure. And what I mean by that is, we were moving to a new market when I first took this role on. I heard some questions, what are we doing? The narrative that was a concern, because if you're not informing people, it will take on a life of its own, and then you'll be pushing back against a false narrative.

“So I think that narrative is our measure. And I can tell you, it's changed. It's changed to the positive.”

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