Keesa Schreane [00:00:00] Hello, everyone. Today are going to focus on overcoming ESG data disclosure gaps and getting the perspective of corporations when it comes to ESG reporting. We are talking to Suzanne Fallender, director of corporate responsibility at Intel Corporation, and Mike Wallace, partner at ERM, a leading global provider of environmental risk and social consulting services and sustainability-related services. Thank you for joining the podcast. One of the first questions that seems to be on everyone's mind would be the data issues question how do corporates manage data gaps?
Suzanne Fallender [00:00:47] I think it's really a journey in terms of companies doing data disclosure around ESG issues. And I think there's always gonna be some gaps because everyone's on a different journey. But I think the most important thing that we as a company is - Intel is a longtime reporter - have done is look at external standards, talk proactively with our investors about the types of data that they're looking for, and then continue to evolve our reporting to reflect those. I think identifying those gaps is important for how it then helps with your decision making in your company. So some of the times we've identified gaps is for us to know that we need better data so that we can be smarter about how we manage these issues internally.
Keesa Schreane [00:01:25] So, Mike, I know that when you speak to companies, you probably hear a lot of the concerns that they have around this. What's one of the top concerns you're hearing from corporate surround? Just managing these gaps and the gaps that exist?
Mika Wallace [00:01:36] I think one of the main things is that a lot of companies, the General Counsel, the Corporate Secretary, the Investor Relations Officer, don't realize how mature this field has actually become. They don't realize there are actual numbers out there from a lot of their competitors and peers that are being fed into the ESG space or the analyst space. So when you show them some examples of what their peers are saying publicly and disclosing into the ESG ecosystem, if you will, they're usually shocked by this because they've been the ones that are quiet ones, possibly, and they just haven't been comfortable with voluntary disclosure.
Keesa Schreane [00:02:06] So what are companies reporting against? What are some of the most important areas that are out there to report against now?
Mika Wallace [00:02:13] Well, I think the most widely used framework is the Global Reporting Initiative or GRI. It's been around for about 23 years now, to multistakeholder process that is been evolving for the last twenty-three years, and about 80 percent of the S&P 500 report and use the GRI's guidelines or their standard. The latest thing that comes up a lot is TCFD and SASB, which are two of the big ones. But a lot of companies, if you start to talk to them, they've been doing reporting against standards for many, many years. In our world, we bump into ISO a lot, the International Standards Organization, which writes very detailed quality-related standards. And so even in the ISO world, there are references to sustainability or ESG issues.
Keesa Schreane [00:02:54] So do you see companies that are working against ISO as well as SASB. I mean, is there crossover there? Do they usually pick GRI and stick with it or do you see any crossover at all?
Mika Wallace [00:03:05] Most of these things have evolved together. And the beauty of it is that these multistakeholder processes that have created these four frameworks and standards and guidelines, those people crossed into the other groups. And so there's that cross-pollination that's gone on. So really smart companies that are out there can weave this all together very easily because the 80-20 rule plays out here, where 80 percent of what's being asked of them is captured in these other frameworks.
Keesa Schreane [00:03:30] So, Suzanne, coming from a smart company like Intel, tell us what you're seeing.
Suzanne Fallender [00:03:34] Well, Intel is one of the first companies to start voluntary environmental reporting back in the 1990s;1994, I think, was our first voluntary report. And then over time, as these different standards evolved, really taking those and integrating that into how we report sort of using the GRI and most recently with SASB and the TCFF frameworks and using that information to make sure we're prioritizing the right data, the right topics, and making sure, across our disclosure. That it's integrated. So the other thing that we have done is we've worked really closely with our financial reporting team, our proxy team, so that we're not just doing a standalone corporate responsibility report using these frameworks, but we're also integrating ESG data into our 10K, into the end report, into the proxy statement as well.
Keesa Schreane [00:04:22] And how are investors responding to that? What kind of feedback are you hearing now?
Suzanne Fallender [00:04:24] Very positive. I guess when we talk with investors, they like the integrated approach showing the integrated thinking, the integrated outreach that we do. And also, I think it helps them to get the right information they're looking for at the time. So when we engage with the governance teams and the proxy teams, they're deep in looking at the proxy. The fact that they can get the basic information there where they're already looking for other information is helpful for them during proxy season. The fundamental analysts there are going through the 10K, having that information there, and the fact that it's consistent across the different documents is helpful.
Keesa Schreane [00:04:59] So, obviously, this is a mature process for Intel, you've been doing it for a while now. Where do you see the upside? Where do you see the most benefit in terms of this being a mature process?
[00:05:09] I think the most benefit comes from that integrated discussions inside the company and consistency in the quality of the data. Because we're all integrated and working together on that information. I think we've been able to get good results with our investor discussions and communications. So when we go out and we meet with investors, we specifically ask for feedback across all of our disclosure and they're saying it's meeting their needs. And obviously, that's one of our objectives to make sure our investors are getting the data that they need.
[00:05:40] And on the subject of investors and really what they're looking for, we all know that the E in ESG, the environmental piece is huge. People are talking a lot about climate change. So are we seeing a shift? Do we see more focus on the E more so than social and governance? Do we see that as resurging in some way? And if so, with what industries? Mike, what are you seeing in that space?
Mika Wallace [00:06:02] The E. Yes, been around for a while. It's much more quantifiable. How much waste to remove to landfill, how much hazardous waste you produce. Those kinds of things are very quantifiable. So that has a lot of uptake. I think the EP that's probably the most provocative right now is around TCFD thinking about your risks and doing through a scenario analysis of what the world might come to as the sea levels rise and where your factories are, where your operations are laid out in the world energy. In the type of work that I've been doing lately is human capital. How do you treat your people? Are you giving them a road up in their career you're at your workplace, or are you treating women and men equally? Are you paying people, people equitably? And so human capital is the kind of the next area of work that's really starting to take off.
Keesa Schreane [00:06:47] So what's the answer to that? And you can feel free to chime in as well, Suzanne, when you're asking are we paying people equitably? Are we, you know, as parity an issue when it comes to gender relations or even race relations, what are people saying in corporate governance? You know, who's on the board? What are their answers are lots of work to do. Do they feel that they're reslly meeting the goal?
Mika Wallace [00:07:06] The goal is really fairly fresh. And in fact, in a 60 Minutes interview with Marc Benioff of Salesforce. He talked about sustainability ESG, but he never used those phrases in the way he talked about it was they are treating their people in a very equitable way. They're looking through HR records and with the HR team to figure out pay structures and make management teams more equitably paid. Looking at management levels and the diversity of men and women in different management levels. But he also talked about volunteering time of the employees to go out and do good for society and their communities. So you suddenly go from human capital into social capital. And so that interview with Benioff was all about human and social capital, but he never used those phrases. But it's really about what a company can do with its people to not only elevate their own performance, they as the individual, but they as a company, but also have a better impact on society.
Suzanne Fallender [00:07:57] Yeah, I think we've seen a real uptick in questions from investors on human capital the last two years, and we've expanded our disclosure around human capital and we've had a lot of disclosure in our corporate responsibility report for years. We've also added that into our 10K in our proxy. The key issues for us, of course, we are the technology innovation company that needs to have the top talent and 90 percent of our employees are in technical roles. So and looking at our industry, we know inclusion and diversity is a key component for us that we have to focus on. So pay equity, we achieve global gender, pay equity last year. We've been very, very transparent around our data and our disclosure and the importance to drive those conversations through that data and said that's really helped. I think in those discussions with investors of, you know, how do we get better at this data? It's not always as easy to quantify as some of the climate and an environmental issue, but it's just as important to start to build that that data and that transparency and talking about transparency.
Keesa Schreane [00:08:58] What can we do to encourage other companies to really report on their ESG performance? And, Mike. I know that you consult with several companies. What are you seeing that really pushes them to want to do that?
Mika Wallace [00:09:11] I think probably the most interesting and beautiful thing that we're seeing is a competition in this space of doing good. So you see a lot of positive competition in that way. The stick side of it is that more and more of their investors are asking these questions. And so you're suddenly caught off guard and an investor relations meeting are, you know, what ESG means. And so that's the stick in the sense that the company is somewhat embarrassed. And here is a, you know, a well-known, very large asset management firm asking some very, very detailed questions.
[00:09:40] Are we really finding that or are people still saying they don't know what he or she means if you're at that over the past year or so?
Suzanne Fallender [00:09:47] I think there are still a lot of people. And Think of so large companies like Intel who've been working on these issues for many years. But there are a lot of companies out there where this is still relatively new to people. It's an acronym. So I think it's also about language and understanding how to kind of frame it for people in the language that they understand. One thing I think that's really important is making it easier for companies to start in the journey of reporting. So we've been doing a lot of engagement over the years with our suppliers, which some of them are smaller companies, and helping them to figure out how do you get started reporting? What are the top indicators that we know their investors or their US and their other customers will ask for and help to drive that transparency and how it will help their business by doing that. And we've gotten that feedback over time is that it has helped them. Because once you start to report and collect that data, it gives you good opportunities to see what performance improvements can be driven and also how to build those relationships with your stakeholders.
Keesa Schreane [00:10:43] Suzanne Fallender from Intel, Mike Wallace for Ekrem. Thank you so much for joining us. Thank you.
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