April 9, 2025 • 26 mins
In the current political climate, corporate executives must address environmental, social and governance challenges with real authenticity while never losing sight of the strategic needs of their organizations. On this week’s episode of ESG Currents, Bloomberg Intelligence Senior ESG Analyst Rob Du Boff speaks with Amy Brachio, Global Vice Chair of Sustainability at EY and co-chair of the S30, a community of chief sustainability officers from some of the world’s most influential companies. They discuss how enterprises can better integrate sustainability into their core business to gain a competitive advantage — from the C-suite down to new employees.
This episode was recorded on March 17.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social mega trends, mounting regulatory tension, and pressure from other stakeholders.
The rapidly evolving landscape has become inundated with acronyms, buzzwords
and lingo, and we aim to break these down with
industry experts. Welcome to ESG Currents, your guide to navigating
(00:33):
the evolving ESG space, one topic at a time. Brought
to you by Bloomberg Intelligence, part of Bloomberg's research department,
with five hundred analysts and strategists working across all major
world markets. Are coverage includes over two thousand equities and credits,
as well as outlooks on more than ninety industries and
one hundred market indices, currencies and commodities. I'm Rob Duboff,
(00:56):
Senior ESG analyst for Bloomberg Intelligence. It's no secret that
ESG is in the midst of some growing pains. On
the one hand, some stakeholders to cry ESG as woke capitalism,
seeking to push a social agenda on companies that should
just be sticking to growing profits, and on the other
critics accuse EESG as mere greenwashing, a distraction that makes
(01:19):
customers and investors happy without actually having a real purpose.
Conton between our corporate executives. The current tension has put
more pressure to come at environmental social governance challenges with
real authenticity while not losing sight of the strategic needs
of the organization. Today, we are joined by an expert
on this topic. Amy Bratio is Global Vice Chair of
(01:42):
Sustainability for Ernst and Young, where she supports the design
and delivery of services to help EY clients achieve their
sustainability agenda, provide EY professionals with opportunities to upskille and
engage on sustainability, and lead the organization's environmental strategy. She
also co chairs the ESA thirty, a community of chief
Sustainability officers from some of the world's most influential companies
(02:06):
with a goal of accelerating business action on environmental sustainability
and social impact through collaboration and collective accountability. Amy, thanks
for joining the podcast.
Speaker 2 (02:16):
Thanks so much for having me so I wanted.
Speaker 1 (02:18):
To dig in first on your career journey. You started
as a consultant focusing on risk. How did you ultimately
find your way into the sustainability world.
Speaker 2 (02:26):
Yeah. Absolutely so. For the first almost twenty years of
my career, I was focused on risk management and risk
management across a number of different topics, from consumer protection
and banking through enterprise risk management and resilience. And at
(02:47):
the time I wouldn't have known that it was going
to lead me to this role in sustainability. But what
it did is it provided me with a great background
on how to think about the challenges that an organization faces,
what they need to make sure they're doing to mitigate
those risks, and then what do you need to have
(03:09):
in place in order to take advantage of opportunities that
you have in front of you as well. It also
had a lot of non financial reporting, which we know
is a challenge related to sustainability, and a lot of
these topics where you had to think about what happens
within your own four walls and what are the pressures
coming at you from outside.
Speaker 1 (03:30):
So I think that's symbolic of the broader trend we're
seeing sustainabilities really moved from a nice to have, feel
good story to a strategic business imperative for managing risks.
So I think far too many companies in the past,
we're standing up sustainability in the marketing department. Can you
talk about why it may be more appropriate to have
it deeply ingrained in core operations.
Speaker 2 (03:52):
Yeah. When you did your opening to this episode, you
talked about the complexity that the world is based and
companies are facing, and then you also talked about the
need for authenticity, and I think both of those really
play in to why it's so important that sustainability be
embedded into the organization's strategy. So two things are definitely true.
(04:15):
Right now, we are seeing the impacts of climate change.
We see flooding, we see wildfires, we see extreme storms,
and all of that has not only a human impact,
but a business impact. Right it can disrupt supply chains,
it can put your employees at great risk. But at
the same time, we do see the challenges around geopolitics,
(04:38):
and we see in the US a big focus on deregulation,
and then we see in Europe a real look at
how are the regulations that they are that they've put
into place, how is that impact in competitiveness. So organizations
need to be able to address all of that at once,
And so would I talk to leaders and sustainabilit about
(05:00):
is thinking about it through three lenses. First, you have
to understand what are those risks that you face, whether
it's the physical risk from climate change, it's compliance risk,
it's greenwashing like, you raised really understand those and how
you're going to mitigate them. The next is understanding how
demand from your customers is changing. And if you are
(05:22):
a global organization with a big client base or customer
base in Europe, you're probably getting asked a lot of
questions that are weighing into buying decisions of your customers,
and you need to be prepared to respond to those.
And then lastly, there is opportunity for growth and differentiation
with a focus on sustainability, like what we see in
(05:44):
electrifying supply chains, things like that that you need to
make sure you're taking advantage of. So when you look
at sustainability through those three lenses, you are authentic to
what the needs of your business are.
Speaker 1 (05:58):
Got if that makes sense, Amy, there are specific examples
of companies or industries that did a good job of
incorporating sustainability into that strategic value.
Speaker 2 (06:09):
So I think everyone is still navigating with all of
the complexity that we see around the world, but there
are two that really stand out to me. So one
is the shift to electric vehicles, and so we have
seen a real push forward. But one of the challenges
that we're seeing in this space. While we're seeing growth
(06:32):
in the move to electric vehicles, we're also seeing that
this is a real systemic change that needs to take place.
So you can't go there alone without the charging stations
and without the public policy to support that change. So
I expect that trend to continue up, but it's not
going to be linear. We're going to see some bumps
in the road as we go. The other one that
(06:54):
jumps out at me is mining and metals, And the
reason why I raise this is that both there is
a great opportunity for growth related to mining because a
lot of what is needed for electrification are these rare
earth metals.
Speaker 1 (07:12):
Right like the critical exactly.
Speaker 2 (07:15):
But at the same time, if those organizations don't have
a sound sustainability strategy, they don't have the license to
operate and they're not going to be able to drive
that growth for the future. So I happen to be
in London last week and ford Eskew is looking at
how they elect how they moved to sustainable shipping and
(07:39):
they've got a ship that they're now taking around the
world that can be powered through ammonia, but there's not
enough scale and availability, and so they're taking this you know,
proof of concept ship to different ports to be able
to tell the story but also drive the change that
will be needed for the future, so that that can
(08:00):
be the new mechanism for shipping as opposed to being
reliant on diesel. Yeah.
Speaker 1 (08:05):
No, that's an interesting one. I actually just saw today
a story on that the ship, the ammonia powership, So yeah,
you know, it's real kind of interesting investments to build
that whole ecosystem.
Speaker 2 (08:17):
Right.
Speaker 1 (08:18):
So then you touched on this a little bit with
non financial reporting, so sustainability reporting it it's moving closer
to the traditional financial reporting. Can you talk about how
the modern CSO and the CFO or kind of moving
closer together in alignment.
Speaker 2 (08:33):
Yeah, so we see in most organizations the chief sustainability
officer and the chief financial officer moving closer together for
a few different reasons. Reporting is one of the first
and so historically speaking, the chief sustainability officer had responsibility
for the sustainability reporting. We're now moving into a world
(08:56):
in which the expectations around reporting are even greater, and
there'll even be a requirement for attestation. So most organizations
are now looking for a very close partnership between sustainability
and finance to get that done. I think of it
as the sustainability folks know what to report and the
(09:17):
cfo's organization knows how to report, and so with that
type connection you can feel confident in what gets reported.
The other thing is, you know, we talked about the
need for sustainability to be embedded within the strategy. Well
with that comes investment and the need to be able
to articulate what the return on investment is for the
(09:40):
programs that an organization is doing, and that again requires
real type collaboration between the two to be sure that
the ROI is measured appropriately and can be communicated appropriately.
Speaker 1 (09:54):
Yeah, I mean, I think it's interesting. The whole sustainability
reporting really runs the gamut that you know, you have
some aspect that are very quantitative driven, like total reportable
instant rate, you know, air releases, et cetera. But then
you have others, particularly on the social side or the
human capital side, where they're extremely difficult to measure. Some
(10:15):
kind of interested in how that now that there's real
accountability in the space, you know how that evolves over time.
Speaker 2 (10:23):
Yeah, absolutely, And I think that's why that tight partnership
is so important, because the approaches that we're used historically
just by sustainability or just by finance have to be
tailored in order to be able to report with confidence
on these measures that don't necessarily align to what we're
used to. Yeah.
Speaker 1 (10:41):
Absolutely. And then you know, I think another kind of
executive in that is obviously the CEO. A lot of
the successful sustainability programs I see there's real buy in
from the top. But as you know I've written about
a little bit recently, there's been a lot of CEO
turnover in recent years. So now, how does that make
(11:01):
it harder for the CSO to gain traction if say,
their biggest champion is no longer there.
Speaker 2 (11:06):
Yeah. So I do think this is a topic where
the support and the tone at the top that'sai the
CEO is critical because there are going to be decisions
that are made that are not going to have return
over the same time period as some of the other
investments decisions made by the organization, and so you need
(11:28):
sponsorship in order to do that. But just like we've
been talking about, where we see the most successful programs
are those in which it's embedded within the strategy of
the organization, meaning that it goes beyond the CEO and
the whole C suite has to buy in. The Other
thing that we're seeing is that chief Sustainability officers really
(11:51):
have to be that bridge across the c suite. They
don't tend to own very much within the organization, and
so how they drive the program out is working closely
with the CFO, with the head of supply chain, with
the head of HR, with the business unit leaders, with
the head of technology, and so in developing those relationships
(12:11):
and driving change through others, it does help mitigate the
risk when a CEO change takes place.
Speaker 1 (12:19):
Do you think we're ever going to be in a
world where the CSO doesn't need to exist, where it's
basically so ingrained in the business units that you know,
having that separate group is kind of redundant.
Speaker 2 (12:31):
So we actually talk about that a lot amongst the
CSO community. I hope they answered to that question is yes,
that it just becomes so business as usual that you
don't need someone in the role at least, how it's
shaped today now. I think what is interesting about this
is that you've got so much where there is public policy,
(12:55):
regulation and also innovation, that you need to make sure
that someone staying on top of all of it. And
so I do think that we're probably at least five
years away from that.
Speaker 1 (13:07):
That being true, It's funny because you talk the way
you talk about it, there's a lot of parallels to
on the investing side, where you know, you hear discussions
on you know, do you need an ESG investing team
if you're also making the case that ESG should be
ingrained in all fundamental analysis. But at the same point,
you're right, like there's a lot of at this juncture,
there's so much upheaval that it probably helps to have
(13:27):
a few subject matter experts around exactly. So we've seen
instances where changing business conditions necessitate a shift in strategy
and then maybe sustainability is no longer as much of
a near term priority. For example, a lot of oil
companies have really started to roll back their transition plans
once the war in Ukraine kind of put great emphasis
(13:48):
on short term reliability and affordability for energy. So how
do sustainability teams adjust to kind of these short term
tactical shifts.
Speaker 2 (13:58):
Yeah, So I think that there are a few things
that sustainability teams are really focused on. First is getting
really sharp about the return on investment in what they're doing.
And I'm seeing more and more focus on efficiency as
part of the overall sustainability program. So what do I
(14:20):
mean by that? What I mean by that is looking
at opportunities for more efficient packaging. You do more efficient packaging,
you're going to reduce your logistics costs, and you're also
going to reduce your emissions energy efficiency and a faster
change to renewables, you're going to reduce your cost again.
And so if you've got a really crisp analysis of
(14:41):
the return on investment that is understood by the CFO,
you're now have a much easier time in pushing through
the change that's needed to make. The other thing where
we see organizations getting really crisp is the difference between
what is being done alongside their stress strategy to drive
the transformation that their business needs to mitigate risk to
(15:04):
be resilient for the long term, and what is corporate
social responsibility And the two are different, right, organizations do
things for their communities that are aligned to their overall strategy,
but it is a different return that would be expected
than the programs that are driving against the strategy. And
I think in the past many organizations have had the
(15:26):
luxury not to really distinguish between the purpose of the two,
whereas now I think you have to be really clear
on which is which.
Speaker 1 (15:34):
Yeah, I think that makes a lot of sense. That's
why certain programs like DEI, which I think has a
lot of tangible benefits but maybe not as easy to
measure on the quarter to quarter P and L. I
think those are having issues now versus maybe some other
energy efficiency or electrification trends. So moving above the C
(15:54):
suite is the board level by and how important is
it to have board over so of sustainability and how
do you make sure you're getting the right skill set
to deal with those issues. I mean, you hear horror
stories of companies that make these climate transition plans, but
there's actually no one on the board as any expertise
in climate science or understanding these strategies.
Speaker 2 (16:14):
Yeah, and the board is vital. And when you look
at the role that the board plays over time, they
really are there provide that governance and to look out
for the long term. And given that sustainability is such
a long term issue for the organization's resilience, it's critical
that the board is weighing in. So we see some
(16:35):
different techniques being used with respect to supporting the board
and their role with respect to governance. And some have
taken the step where they get someone who has deep
technical expertise on the board, and I think particularly in
sectors like chemicals and consumer products and manufacturing, having that
(16:59):
deep technical expertise is really important. The other thing we
see is turning to education programs for the board so
that the board is well versed on the topic. They
don't all need to be experts, but they need to
know what's important to be able to ask the right questions.
And then sometimes the board will turn to outside advisors
(17:20):
to advise them, especially at critical points like when a
transition plan is coming in front of them, or there
are big shifts in the organization that they need to
be able to respond to.
Speaker 1 (17:33):
Oh, that makes a lot of sense. And then speaking
of having the right skill set and some of those
technical skills, what about people earlier in their careers, maybe
aligned manager or even an entry level employee, how would
you recommend they get up to speed and understanding the
sustainability needs of a modern organization.
Speaker 2 (17:50):
This is actually a passion of mine and so I
love getting to talk about this. So what we find
in sustainability is that there are different and levels of
knowledge that are required. So you've got your people who
bring the hard science to the topic, right and oftentimes
that is formal education and formal experience. But as you
(18:12):
look forward, everyone across the organization has a role to
play in sustainability. So you need this general upskilling to
understand sustainability and the topics in general that apply to
your organization, and so that can be handled through training
for all to get people up to speed on what matters.
(18:33):
Then you need learning that's specific to the individual's role.
So if you are in the supply chain and function
and you drive procurement, you're going to have to start
asking your vendors better questions about their programs, and so
you need to know how sustainability plays into your specific
job description. And so we see it cutting across the
(18:57):
board and more and more on topics like this, individuals
are looking to their employer for the education because they
can't rely on necessarily what they learned in school, because
things are moving so so quickly. The other reason that
I find this to be a really important topic is
(19:17):
that oftentimes when you see that we get stuck in
transitions like this as society, it's because people are being
left behind. And so I think organizations need to think about,
as we're making this transition, how do we help those
that are reliant on the fossil fuel industry, for example,
to be able to make the bridge so you know
(19:39):
another example. So I got to visit that ship, the
FORDESCU ship, and get a tour of it, and one
of the things that they were talking about was that
a lot of the skills where the engineers had previously
applied their skills to you know, engines based on diesel,
we're taking their skills and now applying them to this
(20:00):
engine based on ammonia. And so we need to see
how we can do more of that shifting from one
to the next to drive the transition forward.
Speaker 1 (20:08):
Yeah. I think, I mean you hit it on an
important point that it's not just I mean, we have
people over this organization that are very passion about sustainability,
but I think you know where you can really add
value as finding out how that intersects with your role.
You know, obviously everyone knows what climate change is, but
knowing all right, what is what I do? How can
that have an impact? Or you know, what skills do
I need to prepare for how the world may look
(20:31):
in the next five, ten, fifteen years.
Speaker 2 (20:33):
Well, and I think it's important to help bring your
employee base along. So for example, I mean, we're a
professional services company and our people are not all going
to get to work on sustainability each and every day
in what they do, but there are many who want
to be able to get involved. And sometimes that's through
corporate social responsibility, right, some of our volunteer programs. Sometimes
(20:56):
that's through education, and sometimes that's through upskilling them selves
so that when that audit slash sustainability project comes up,
they've got the skills that they need to be able
to do it as opposed to waiting for something to
come along. Yeah. Very cool.
Speaker 1 (21:13):
So your co chair of a group called the S thirty,
can you tell us a little bit about that organization?
Speaker 2 (21:18):
Yeah, So the S thirty was originally launched alongside the
Sustainable Markets Initiative back in Glasgow and it was set out.
The Sustainable Markets Initiative was set out at that time
by Prince Charles now King Charles to really mobilize the
(21:38):
private sector, and that's a CEO led organization and the
members are CEOs. But there was a recognition that there
needed to be something alongside for the chief sustainability officer
community as well, because they're the ones driving a lot
of the change, and so it grew out of that.
I know it's called the s thirty. We probably have
closer to forty members chief Sustainability officers from around the
(22:03):
world who are very committed to driving action. And so
what this allows is for networking across sector to be
able to understand the challenges that you know, different organizations
and sectors are facing and work through how to drive action,
especially in this complex world.
Speaker 1 (22:23):
So I would say, you know, we've noticed this real
anti ESG movement over the last few years, and one
of the strategies they've employed is going after organizations that
collaborate on sustainability citing anti trust concerns. I mean this
basically brought down a few of the Glasgow net zero
initiatives in the financial sector. So I guess when you
(22:45):
talk about an organization like the S thirty. Is there
a path forward for organizations to still work together on
this but without running a file of the backlash?
Speaker 2 (22:53):
Yeah, I think so, and maybe a couple things. One,
any of that collaboration you do has to be in
line with the laws and regulations of the jurisdictions that dictate.
And then also any of the dialogues need to be
really pre competitive. And part of what we've done from
(23:16):
an S thirty standpoint is that we look to drive
convening and discussions on key topics that are of interest
to the members. But it's really a forum for education
and then taking that and seeing if they're you know,
what action can be taken back at their own organization.
(23:36):
And sometimes you'll find that there are cross sector opportunities
where through this education it comes up and it's you know,
a few organizations across a value chain to say, hey,
if we work on this together, we can drive change.
But you've always got to keep your eye on that.
It has to be pre competitive.
Speaker 1 (23:54):
Can you talk about that a little bit more. What
do you mean by pre competitive?
Speaker 2 (23:56):
Yeah, so you've got to focus on topics in which
the it's not core to the business and the growth
strategy of the individual organization, right. And so if you're
thinking about topics like how do we better engage in
the cop process as business, how do we get our
(24:18):
messages across if you look at things like gaining an
understanding of the regulatory environment, right, And what we try
to do is we bring in experts from different sphears
of experience to be able to speak to the group.
But then it's not the individual problem solving for the
(24:38):
organization that would happen in that it would be taking
away the knowledge to drive what you need to for
your own individual business. Got it?
Speaker 1 (24:47):
That makes sense? So last question here, what would you
say to the modern chief sustainability officer. I assume that
they're all listening to this podcast, but any advice for
them in the current kind of climate we're in.
Speaker 2 (25:00):
So I think two things. The first is be really
clear with respect to how the sustainability program is deeply
embedded within the strategy of the organization and be able
to speak to the business imperative and the return on
everything that the sustainability function is doing. And the second
(25:23):
is keep going. I mentioned early on that we are
seeing the effects of climate change loss of biodiversity et cetera.
And we need to just keep going and so I
know that sometimes that's hard, but this is a group
that is incredibly perseverance, so I know they can do it.
Speaker 1 (25:44):
Fantastic. Thank you so much for your time today, Amy.
Speaker 2 (25:47):
Thank you so much for having me. I really enjoyed this.
Speaker 1 (25:49):
I really enjoyed the discussion. And for our listeners, you
can find more information on sustainability issues on Big Go
on the Bloomberg terminal. If you have an ESG quandary
you would like us to ask bi's expert analysts or
learn more about our research, send us an email at
ESG Currents at bloomberg dot net. And if you like
this episode, please subscribe on Apple, Spotify, or your favorite
(26:12):
podcast platform. Thank you again,
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social mega trends, mounting regulatory tension, and pressure from other stakeholders.
The rapidly evolving landscape has become inundated with acronyms, buzzwords
and lingo, and we aim to break these down with
industry experts. Welcome to ESG Currents, your guide to navigating
(00:33):
the evolving ESG space, one topic at a time. Brought
to you by Bloomberg Intelligence, part of Bloomberg's research department,
with five hundred analysts and strategists working across all major
world markets. Are coverage includes over two thousand equities and credits,
as well as outlooks on more than ninety industries and
one hundred market indices, currencies and commodities. I'm Rob Duboff,
(00:56):
Senior ESG analyst for Bloomberg Intelligence. It's no secret that
ESG is in the midst of some growing pains. On
the one hand, some stakeholders to cry ESG as woke capitalism,
seeking to push a social agenda on companies that should
just be sticking to growing profits, and on the other
critics accuse EESG as mere greenwashing, a distraction that makes
(01:19):
customers and investors happy without actually having a real purpose.
Conton between our corporate executives. The current tension has put
more pressure to come at environmental social governance challenges with
real authenticity while not losing sight of the strategic needs
of the organization. Today, we are joined by an expert
on this topic. Amy Bratio is Global Vice Chair of
(01:42):
Sustainability for Ernst and Young, where she supports the design
and delivery of services to help EY clients achieve their
sustainability agenda, provide EY professionals with opportunities to upskille and
engage on sustainability, and lead the organization's environmental strategy. She
also co chairs the ESA thirty, a community of chief
Sustainability officers from some of the world's most influential companies
(02:06):
with a goal of accelerating business action on environmental sustainability
and social impact through collaboration and collective accountability. Amy, thanks
for joining the podcast.
Speaker 2 (02:16):
Thanks so much for having me so I wanted.
Speaker 1 (02:18):
To dig in first on your career journey. You started
as a consultant focusing on risk. How did you ultimately
find your way into the sustainability world.
Speaker 2 (02:26):
Yeah. Absolutely so. For the first almost twenty years of
my career, I was focused on risk management and risk
management across a number of different topics, from consumer protection
and banking through enterprise risk management and resilience. And at
(02:47):
the time I wouldn't have known that it was going
to lead me to this role in sustainability. But what
it did is it provided me with a great background
on how to think about the challenges that an organization faces,
what they need to make sure they're doing to mitigate
those risks, and then what do you need to have
(03:09):
in place in order to take advantage of opportunities that
you have in front of you as well. It also
had a lot of non financial reporting, which we know
is a challenge related to sustainability, and a lot of
these topics where you had to think about what happens
within your own four walls and what are the pressures
coming at you from outside.
Speaker 1 (03:30):
So I think that's symbolic of the broader trend we're
seeing sustainabilities really moved from a nice to have, feel
good story to a strategic business imperative for managing risks.
So I think far too many companies in the past,
we're standing up sustainability in the marketing department. Can you
talk about why it may be more appropriate to have
it deeply ingrained in core operations.
Speaker 2 (03:52):
Yeah. When you did your opening to this episode, you
talked about the complexity that the world is based and
companies are facing, and then you also talked about the
need for authenticity, and I think both of those really
play in to why it's so important that sustainability be
embedded into the organization's strategy. So two things are definitely true.
(04:15):
Right now, we are seeing the impacts of climate change.
We see flooding, we see wildfires, we see extreme storms,
and all of that has not only a human impact,
but a business impact. Right it can disrupt supply chains,
it can put your employees at great risk. But at
the same time, we do see the challenges around geopolitics,
(04:38):
and we see in the US a big focus on deregulation,
and then we see in Europe a real look at
how are the regulations that they are that they've put
into place, how is that impact in competitiveness. So organizations
need to be able to address all of that at once,
And so would I talk to leaders and sustainabilit about
(05:00):
is thinking about it through three lenses. First, you have
to understand what are those risks that you face, whether
it's the physical risk from climate change, it's compliance risk,
it's greenwashing like, you raised really understand those and how
you're going to mitigate them. The next is understanding how
demand from your customers is changing. And if you are
(05:22):
a global organization with a big client base or customer
base in Europe, you're probably getting asked a lot of
questions that are weighing into buying decisions of your customers,
and you need to be prepared to respond to those.
And then lastly, there is opportunity for growth and differentiation
with a focus on sustainability, like what we see in
(05:44):
electrifying supply chains, things like that that you need to
make sure you're taking advantage of. So when you look
at sustainability through those three lenses, you are authentic to
what the needs of your business are.
Speaker 1 (05:58):
Got if that makes sense, Amy, there are specific examples
of companies or industries that did a good job of
incorporating sustainability into that strategic value.
Speaker 2 (06:09):
So I think everyone is still navigating with all of
the complexity that we see around the world, but there
are two that really stand out to me. So one
is the shift to electric vehicles, and so we have
seen a real push forward. But one of the challenges
that we're seeing in this space. While we're seeing growth
(06:32):
in the move to electric vehicles, we're also seeing that
this is a real systemic change that needs to take place.
So you can't go there alone without the charging stations
and without the public policy to support that change. So
I expect that trend to continue up, but it's not
going to be linear. We're going to see some bumps
in the road as we go. The other one that
(06:54):
jumps out at me is mining and metals, And the
reason why I raise this is that both there is
a great opportunity for growth related to mining because a
lot of what is needed for electrification are these rare
earth metals.
Speaker 1 (07:12):
Right like the critical exactly.
Speaker 2 (07:15):
But at the same time, if those organizations don't have
a sound sustainability strategy, they don't have the license to
operate and they're not going to be able to drive
that growth for the future. So I happen to be
in London last week and ford Eskew is looking at
how they elect how they moved to sustainable shipping and
(07:39):
they've got a ship that they're now taking around the
world that can be powered through ammonia, but there's not
enough scale and availability, and so they're taking this you know,
proof of concept ship to different ports to be able
to tell the story but also drive the change that
will be needed for the future, so that that can
(08:00):
be the new mechanism for shipping as opposed to being
reliant on diesel. Yeah.
Speaker 1 (08:05):
No, that's an interesting one. I actually just saw today
a story on that the ship, the ammonia powership, So yeah,
you know, it's real kind of interesting investments to build
that whole ecosystem.
Speaker 2 (08:17):
Right.
Speaker 1 (08:18):
So then you touched on this a little bit with
non financial reporting, so sustainability reporting it it's moving closer
to the traditional financial reporting. Can you talk about how
the modern CSO and the CFO or kind of moving
closer together in alignment.
Speaker 2 (08:33):
Yeah, so we see in most organizations the chief sustainability
officer and the chief financial officer moving closer together for
a few different reasons. Reporting is one of the first
and so historically speaking, the chief sustainability officer had responsibility
for the sustainability reporting. We're now moving into a world
(08:56):
in which the expectations around reporting are even greater, and
there'll even be a requirement for attestation. So most organizations
are now looking for a very close partnership between sustainability
and finance to get that done. I think of it
as the sustainability folks know what to report and the
(09:17):
cfo's organization knows how to report, and so with that
type connection you can feel confident in what gets reported.
The other thing is, you know, we talked about the
need for sustainability to be embedded within the strategy. Well
with that comes investment and the need to be able
to articulate what the return on investment is for the
(09:40):
programs that an organization is doing, and that again requires
real type collaboration between the two to be sure that
the ROI is measured appropriately and can be communicated appropriately.
Speaker 1 (09:54):
Yeah, I mean, I think it's interesting. The whole sustainability
reporting really runs the gamut that you know, you have
some aspect that are very quantitative driven, like total reportable
instant rate, you know, air releases, et cetera. But then
you have others, particularly on the social side or the
human capital side, where they're extremely difficult to measure. Some
(10:15):
kind of interested in how that now that there's real
accountability in the space, you know how that evolves over time.
Speaker 2 (10:23):
Yeah, absolutely, And I think that's why that tight partnership
is so important, because the approaches that we're used historically
just by sustainability or just by finance have to be
tailored in order to be able to report with confidence
on these measures that don't necessarily align to what we're
used to. Yeah.
Speaker 1 (10:41):
Absolutely. And then you know, I think another kind of
executive in that is obviously the CEO. A lot of
the successful sustainability programs I see there's real buy in
from the top. But as you know I've written about
a little bit recently, there's been a lot of CEO
turnover in recent years. So now, how does that make
(11:01):
it harder for the CSO to gain traction if say,
their biggest champion is no longer there.
Speaker 2 (11:06):
Yeah. So I do think this is a topic where
the support and the tone at the top that'sai the
CEO is critical because there are going to be decisions
that are made that are not going to have return
over the same time period as some of the other
investments decisions made by the organization, and so you need
(11:28):
sponsorship in order to do that. But just like we've
been talking about, where we see the most successful programs
are those in which it's embedded within the strategy of
the organization, meaning that it goes beyond the CEO and
the whole C suite has to buy in. The Other
thing that we're seeing is that chief Sustainability officers really
(11:51):
have to be that bridge across the c suite. They
don't tend to own very much within the organization, and
so how they drive the program out is working closely
with the CFO, with the head of supply chain, with
the head of HR, with the business unit leaders, with
the head of technology, and so in developing those relationships
(12:11):
and driving change through others, it does help mitigate the
risk when a CEO change takes place.
Speaker 1 (12:19):
Do you think we're ever going to be in a
world where the CSO doesn't need to exist, where it's
basically so ingrained in the business units that you know,
having that separate group is kind of redundant.
Speaker 2 (12:31):
So we actually talk about that a lot amongst the
CSO community. I hope they answered to that question is yes,
that it just becomes so business as usual that you
don't need someone in the role at least, how it's
shaped today now. I think what is interesting about this
is that you've got so much where there is public policy,
(12:55):
regulation and also innovation, that you need to make sure
that someone staying on top of all of it. And
so I do think that we're probably at least five
years away from that.
Speaker 1 (13:07):
That being true, It's funny because you talk the way
you talk about it, there's a lot of parallels to
on the investing side, where you know, you hear discussions
on you know, do you need an ESG investing team
if you're also making the case that ESG should be
ingrained in all fundamental analysis. But at the same point,
you're right, like there's a lot of at this juncture,
there's so much upheaval that it probably helps to have
(13:27):
a few subject matter experts around exactly. So we've seen
instances where changing business conditions necessitate a shift in strategy
and then maybe sustainability is no longer as much of
a near term priority. For example, a lot of oil
companies have really started to roll back their transition plans
once the war in Ukraine kind of put great emphasis
(13:48):
on short term reliability and affordability for energy. So how
do sustainability teams adjust to kind of these short term
tactical shifts.
Speaker 2 (13:58):
Yeah, So I think that there are a few things
that sustainability teams are really focused on. First is getting
really sharp about the return on investment in what they're doing.
And I'm seeing more and more focus on efficiency as
part of the overall sustainability program. So what do I
(14:20):
mean by that? What I mean by that is looking
at opportunities for more efficient packaging. You do more efficient packaging,
you're going to reduce your logistics costs, and you're also
going to reduce your emissions energy efficiency and a faster
change to renewables, you're going to reduce your cost again.
And so if you've got a really crisp analysis of
(14:41):
the return on investment that is understood by the CFO,
you're now have a much easier time in pushing through
the change that's needed to make. The other thing where
we see organizations getting really crisp is the difference between
what is being done alongside their stress strategy to drive
the transformation that their business needs to mitigate risk to
(15:04):
be resilient for the long term, and what is corporate
social responsibility And the two are different, right, organizations do
things for their communities that are aligned to their overall strategy,
but it is a different return that would be expected
than the programs that are driving against the strategy. And
I think in the past many organizations have had the
(15:26):
luxury not to really distinguish between the purpose of the two,
whereas now I think you have to be really clear
on which is which.
Speaker 1 (15:34):
Yeah, I think that makes a lot of sense. That's
why certain programs like DEI, which I think has a
lot of tangible benefits but maybe not as easy to
measure on the quarter to quarter P and L. I
think those are having issues now versus maybe some other
energy efficiency or electrification trends. So moving above the C
(15:54):
suite is the board level by and how important is
it to have board over so of sustainability and how
do you make sure you're getting the right skill set
to deal with those issues. I mean, you hear horror
stories of companies that make these climate transition plans, but
there's actually no one on the board as any expertise
in climate science or understanding these strategies.
Speaker 2 (16:14):
Yeah, and the board is vital. And when you look
at the role that the board plays over time, they
really are there provide that governance and to look out
for the long term. And given that sustainability is such
a long term issue for the organization's resilience, it's critical
that the board is weighing in. So we see some
(16:35):
different techniques being used with respect to supporting the board
and their role with respect to governance. And some have
taken the step where they get someone who has deep
technical expertise on the board, and I think particularly in
sectors like chemicals and consumer products and manufacturing, having that
(16:59):
deep technical expertise is really important. The other thing we
see is turning to education programs for the board so
that the board is well versed on the topic. They
don't all need to be experts, but they need to
know what's important to be able to ask the right questions.
And then sometimes the board will turn to outside advisors
(17:20):
to advise them, especially at critical points like when a
transition plan is coming in front of them, or there
are big shifts in the organization that they need to
be able to respond to.
Speaker 1 (17:33):
Oh, that makes a lot of sense. And then speaking
of having the right skill set and some of those
technical skills, what about people earlier in their careers, maybe
aligned manager or even an entry level employee, how would
you recommend they get up to speed and understanding the
sustainability needs of a modern organization.
Speaker 2 (17:50):
This is actually a passion of mine and so I
love getting to talk about this. So what we find
in sustainability is that there are different and levels of
knowledge that are required. So you've got your people who
bring the hard science to the topic, right and oftentimes
that is formal education and formal experience. But as you
(18:12):
look forward, everyone across the organization has a role to
play in sustainability. So you need this general upskilling to
understand sustainability and the topics in general that apply to
your organization, and so that can be handled through training
for all to get people up to speed on what matters.
(18:33):
Then you need learning that's specific to the individual's role.
So if you are in the supply chain and function
and you drive procurement, you're going to have to start
asking your vendors better questions about their programs, and so
you need to know how sustainability plays into your specific
job description. And so we see it cutting across the
(18:57):
board and more and more on topics like this, individuals
are looking to their employer for the education because they
can't rely on necessarily what they learned in school, because
things are moving so so quickly. The other reason that
I find this to be a really important topic is
(19:17):
that oftentimes when you see that we get stuck in
transitions like this as society, it's because people are being
left behind. And so I think organizations need to think about,
as we're making this transition, how do we help those
that are reliant on the fossil fuel industry, for example,
to be able to make the bridge so you know
(19:39):
another example. So I got to visit that ship, the
FORDESCU ship, and get a tour of it, and one
of the things that they were talking about was that
a lot of the skills where the engineers had previously
applied their skills to you know, engines based on diesel,
we're taking their skills and now applying them to this
(20:00):
engine based on ammonia. And so we need to see
how we can do more of that shifting from one
to the next to drive the transition forward.
Speaker 1 (20:08):
Yeah. I think, I mean you hit it on an
important point that it's not just I mean, we have
people over this organization that are very passion about sustainability,
but I think you know where you can really add
value as finding out how that intersects with your role.
You know, obviously everyone knows what climate change is, but
knowing all right, what is what I do? How can
that have an impact? Or you know, what skills do
I need to prepare for how the world may look
(20:31):
in the next five, ten, fifteen years.
Speaker 2 (20:33):
Well, and I think it's important to help bring your
employee base along. So for example, I mean, we're a
professional services company and our people are not all going
to get to work on sustainability each and every day
in what they do, but there are many who want
to be able to get involved. And sometimes that's through
corporate social responsibility, right, some of our volunteer programs. Sometimes
(20:56):
that's through education, and sometimes that's through upskilling them selves
so that when that audit slash sustainability project comes up,
they've got the skills that they need to be able
to do it as opposed to waiting for something to
come along. Yeah. Very cool.
Speaker 1 (21:13):
So your co chair of a group called the S thirty,
can you tell us a little bit about that organization?
Speaker 2 (21:18):
Yeah, So the S thirty was originally launched alongside the
Sustainable Markets Initiative back in Glasgow and it was set out.
The Sustainable Markets Initiative was set out at that time
by Prince Charles now King Charles to really mobilize the
(21:38):
private sector, and that's a CEO led organization and the
members are CEOs. But there was a recognition that there
needed to be something alongside for the chief sustainability officer
community as well, because they're the ones driving a lot
of the change, and so it grew out of that.
I know it's called the s thirty. We probably have
closer to forty members chief Sustainability officers from around the
(22:03):
world who are very committed to driving action. And so
what this allows is for networking across sector to be
able to understand the challenges that you know, different organizations
and sectors are facing and work through how to drive action,
especially in this complex world.
Speaker 1 (22:23):
So I would say, you know, we've noticed this real
anti ESG movement over the last few years, and one
of the strategies they've employed is going after organizations that
collaborate on sustainability citing anti trust concerns. I mean this
basically brought down a few of the Glasgow net zero
initiatives in the financial sector. So I guess when you
(22:45):
talk about an organization like the S thirty. Is there
a path forward for organizations to still work together on
this but without running a file of the backlash?
Speaker 2 (22:53):
Yeah, I think so, and maybe a couple things. One,
any of that collaboration you do has to be in
line with the laws and regulations of the jurisdictions that dictate.
And then also any of the dialogues need to be
really pre competitive. And part of what we've done from
(23:16):
an S thirty standpoint is that we look to drive
convening and discussions on key topics that are of interest
to the members. But it's really a forum for education
and then taking that and seeing if they're you know,
what action can be taken back at their own organization.
(23:36):
And sometimes you'll find that there are cross sector opportunities
where through this education it comes up and it's you know,
a few organizations across a value chain to say, hey,
if we work on this together, we can drive change.
But you've always got to keep your eye on that.
It has to be pre competitive.
Speaker 1 (23:54):
Can you talk about that a little bit more. What
do you mean by pre competitive?
Speaker 2 (23:56):
Yeah, so you've got to focus on topics in which
the it's not core to the business and the growth
strategy of the individual organization, right. And so if you're
thinking about topics like how do we better engage in
the cop process as business, how do we get our
(24:18):
messages across if you look at things like gaining an
understanding of the regulatory environment, right, And what we try
to do is we bring in experts from different sphears
of experience to be able to speak to the group.
But then it's not the individual problem solving for the
(24:38):
organization that would happen in that it would be taking
away the knowledge to drive what you need to for
your own individual business. Got it?
Speaker 1 (24:47):
That makes sense? So last question here, what would you
say to the modern chief sustainability officer. I assume that
they're all listening to this podcast, but any advice for
them in the current kind of climate we're in.
Speaker 2 (25:00):
So I think two things. The first is be really
clear with respect to how the sustainability program is deeply
embedded within the strategy of the organization and be able
to speak to the business imperative and the return on
everything that the sustainability function is doing. And the second
(25:23):
is keep going. I mentioned early on that we are
seeing the effects of climate change loss of biodiversity et cetera.
And we need to just keep going and so I
know that sometimes that's hard, but this is a group
that is incredibly perseverance, so I know they can do it.
Speaker 1 (25:44):
Fantastic. Thank you so much for your time today, Amy.
Speaker 2 (25:47):
Thank you so much for having me. I really enjoyed this.
Speaker 1 (25:49):
I really enjoyed the discussion. And for our listeners, you
can find more information on sustainability issues on Big Go
on the Bloomberg terminal. If you have an ESG quandary
you would like us to ask bi's expert analysts or
learn more about our research, send us an email at
ESG Currents at bloomberg dot net. And if you like
this episode, please subscribe on Apple, Spotify, or your favorite
(26:12):
podcast platform. Thank you again,
Host
Eric Kane
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