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Amanda Kramer: Welcome to the Leeds Business Insights podcast, featuring expert analysis to help you stand out from the herd. My name is Amanda Kramer. We are thrilled to be discussing corporate social responsibility and environmental social governance with Jennifer Forman, social impact and corporate social responsibility consultant, as well as instructor at the Leeds School of Business.

Welcome to Leeds Business Insights, Jennifer, and thank you so much for being here with us today.

Jennifer Forman: Thanks, Amanda. I'm thrilled to be here talking about my favorite subject.

Kramer: Yes. Well, let's start there. Can you tell us more about what corporate social responsibility, or CSR, and environmental social governance, or ESG, are?

Forman: Yeah. We often say, "Welcome to the world of acronyms." As you get involved in CSR and ESG, there's so much to absorb and to take in. And every company uses those phrases just slightly differently, but I will tell you from my point of view that CSR, or corporate social responsibility, is an umbrella term that really encompasses everything a company does to become a good corporate citizen. It's both within their operations, things that they need to do from a regulatory standpoint, and also voluntarily.

ESG, on the other hand, has its roots, for the most part, in investing. And so, it's traditionally been used by investors to determine the financial risks that are associated with these topics. And ESG is less concerned with whether your employees volunteer or some of the charitable giving that you do, but they look more at, if your operations are beside a river that is likely to flood, then you have an environmental risk that may impact you financially. Or, if your company manufactures overseas and there's a chance of bribery or corruption in your supply chain, then there's a social risk to the business that may impact it financially.

So, just to recap, it's that umbrella, is CSR, all of the things the company does, and then ESG, environmental social governance, often more tied to financial risks and is related to metrics around these issues.

Kramer: Great. Thank you so much for that information to ground us in our conversation. So, Jennifer, you've coined this term called "big sustainability," and it's founded on this notion that social impact or social justice and environmental sustainability are not two separate pillars to be worked on separately. Tell us more about your thoughts on this.

Forman: Yes, I've coined it and I have no idea if it's actually going to catch on, but it makes a lot of sense to me. And so, I do try to use that term in my classroom to have people think a little more holistically about the term, “sustainability.” So, big sustainability means everything that your company has to consider to be able to grow and survive. Environmental sustainability is really limited to the things we have to consider to keep our planet healthy. But there's more to business than just keeping the planet healthy. I mean, obviously that's critically important.

But when we think about big sustainability, we're looking at diversity, equity, and inclusion. Who's at the table? Whose voices are you hearing? Have we got representation from the markets that we serve? That's really important in terms of growth and being able to be sure that you're speaking to your consumers and to the employees that you're going to need for long-term sustainable growth. We need all of those voices at the table. It refers to social justice, especially in other parts of the world where we have to look at how our business impacts those other areas, and are there workers making our goods on the other side of the planet that are potentially being overworked or violating safety conditions? If things happen in our supply chain, we are limiting the ability of our business to be able to grow and survive long term. So, that big sustainability really looks at, not only all of these different areas and initiatives that fall under CSR, but how they intersect and affect one another.

Kramer: And that's a great segue into businesses and what businesses need to think about. Can you tell us, Jennifer, more about how the CSR and ESG landscapes are shifting, or where they're at right now, and what is most relevant for businesses to think about and focus on within this space?

Forman: As you know, and I think as, probably, a lot of your listeners know, that this movement has really seen explosive growth in recent years. And that's, in part, really due to investor concerns around negative impacts of climate change. But it's also because younger generations are showing a really high preference toward working at or buying from purpose-driven companies. And we're seeing, like no generations before them, as Gen Y and Gen Z, are giving companies a license to operate, really, based on a broader notion than just plain revenue alone. I mean, you have to have revenue to have a successful business. But CSR and ESG concerns can be woven in and operationalized so that the way companies are making revenue looks at the least amount of negative impacts to all of their stakeholders and really using their unique area of expertise to leverage that for social good. So, not only how can they make money, but how can this be done in a way that potentially benefits people everywhere that their business touches, from concep, to creation, to sales, and eventually down the line.

Kramer: Great. And are you able to give a couple of examples of the ways that corporations are, you know, executing on CSR, ESG in a way that supports revenue and profit?

Forman: So, we're seeing companies now really start to innovate around energy use. And as there's more and more attention paid to emissions, especially in manufacturing, but even in your supply chain, as those emissions are being measured and monitored, businesses are calling upon employees throughout their company to look for ways that they can save energy.

And so, this is a great one. There are many different opportunities for companies to start using, not only just solar panels on their building, but to actually look at the way they design and produce so that they're reducing the energy that they have to purchase.

We're also seeing circular design. So, the more companies are adopting this circular design format, where they're thinking about products before they go out into the marketplace and they're thinking about how they're going to pull that product back into their supply chain. So, I would say, you know, IKEA is doing a really good job with this right now, where they're designing furniture that can come back into their stores, be pulled apart, recycled, and be put into new furniture. So, you can start to see how all the dots connect that not only reduces the need to create new raw materials. So, it demonstrates good stewardship of our forests and our water. It reduces energy usage. And it ends up reducing price because they're pulling in materials from the consumers instead of having to go get them. But they're probably charging a very similar amount for that refurbished or new furniture being made with recycled parts.

So, that's one small example of an innovation, but there are so many out there now, where companies have been able to find things, especially in manufacturing, that they can do along the supply chain to cut steps, to design things differently, that use less virgin materials, that use less energy to create, that definitely use less water as they go through the process. And this is all a savings, a cost savings, to the bottom line for the company.

Kramer: Are there other examples of companies that are living the values of CSR and doing it well?

Forman: I think there's some great examples out there of companies that we can be so proud of. I mean, the most obvious example is Patagonia. And they were created with a very obvious mission: to support the planet. They had to make revenue. In order to do that, they had to be a successful company in not a nonprofit. But what they've done is actually turned themselves into a 501(c)(4) so that any incoming revenue can be used to support their original mission. It's really such a stellar example, and we hope that more companies follow in their lead.

I mean, locally, what New Belgium has done over the years has been really interesting to watch. They became, as their founders retired, they became an employee-owned company. And that meant that the employees were able to benefit from the profits that the company made, really changed some lives when the company was sold to Kirin. And they continue to live out their values as a B Corp every day. And I would encourage your listeners, too, to look into the whole B Corp movement.

I also love Warby Parker. They've made purpose a real part of their business. They sell glasses. Of course, they make a profit doing that, but they make sure that they are increasing opportunities for access to clear vision for others around the world. It really makes me hopeful that, as people innovate the different ways to make profit, we are going to all benefit from what it is that they're trying to do.

Kramer: Those were some great examples, Jennifer. And shifting focus, too, we've talked about how it's important for companies to do good in order to attract employees. Let's take the employee perspective for a moment. For some of our listeners who may be interested in going into work within this space but don't have decades or years of experience within CSR/ESG, what is your advice or recommendation for those listeners?

Forman: So, I think CSR practitioners get this question a lot. There is heavy interest in becoming a CSR person or an ESG person at companies right now. And that's great. I think it's because people are passionate about seeing how we can't make business a force for good in this world and try to, not only make a company successful, but make sure that it is doing its part, in terms of social impact and environmental responsibility.

So, how do you break into this as a career? I have to say there's no textbook and the industry is changing so rapidly that, I think, using your company that you work with now is a good idea, trying to figure out, where are their pain points? Where are their sticky points? What's happening in terms of equity? What's happening in terms of energy usage and environmental sustainability?

And then, also take a look at this growing government regulation and start reading everything you can. There is a lot of information out there that's easily accessible. But you can read company impact reports. You can scour their websites for sustainability and social impact programming listings.

And then, start to really become familiar with this language. We talked about the acronyms. It's got a language of its own. And so, learning how those terms are used and what they mean, I think, can be very impressive to a potential employer.

And then, I would say that those who have CSR titles at companies do get invited on a lot of coffee dates, and they might not have time to go to coffee with everyone that calls them. But it is a really generous field. And we all try to help each other, especially if you're at a company and you're starting out but this isn't in your title and you want to make a change, reaching out to people in a like industry and asking them very specific questions, I think you'll be pleasantly surprised with how many people have done it before and are willing to share you their best advice.

There are also different certifications that you can look at throughout the country. And the Center for Ethics and Social Responsibility at the Leeds School of Business produces a certificate program for anyone at any stage in their career. It's a 16-week program that covers a really wide variety of topics underneath that CSR umbrella and gets people up-to-speed on the language and what's happening in the industry. They learn about resources. And they also hear from guest speakers who are in the industry now, talking about how things are changing and how they're adjusting what they do on a day-to-day basis.

Kramer: That was great, Jennifer. And you actually tackled my next question, which was, we had talked about how everybody can be a sustainability professional, so I'm really glad that you touched on that piece. We talked a little bit about how CSR professionals often think that they have to accomplish 95% of their goals in order to do good work, but there's some reframing that we can do on that. Can you tell us more about that?

Forman: Yeah, I think that is really a key takeaway, as a lot of companies don't want to speak internally, especially not externally, but they don't even want to speak internally about where they might be making progress because they feel like, "Oh, this doesn't count. We're only 10% of our way to our goal," or, "When I look at this kind of energy reduction, it doesn't seem very impressive." But I would really counsel companies to share. Really share your progress. Share your hopes, your dreams, your goals. And get people on board. You do not have to be very far along in your process, in your procedure, or even close to your goal. What's important is that you've set it. You've set the goal. You're beginning to measure. You're committed to it. That's what people want to hear. Consumers are looking for this. Employees are looking for this. And it's better to state exactly where you are on the journey and not be embarrassed, not hide it away. That level of transparency is what is really, really important.

Kramer: Would you have tips for employees who are interested in sustainability for advocating for these practices and companies that are not currently focused at all in thinking about the CSR space?

Forman: Yes, and we do get this a lot. People are asking, what can I take? What kind of language can I use? What studies can I take to my employers to see if I can't get them on board? And this is such an interesting phenomenon because it is often the more junior employees who are pulling the C-suite along. And the data is there. The data is really finally there now. And I'll read you, if you don't mind, a few data points that I think can be very helpful. And they are all really easily accessible now online.

So, the Russell 1000 companies saw, on average, 218% increase in share price over the last four years when businesses named at least one charitable recipient had a diversity and opportunity policy, expressed board and gender diversity, and utilized a local sourcing policy. And that came out of Accelerus. Another one, according to BCG Brighthouse, brands with a high sense of purpose experienced a valuation increase of 175% over the past 12 years compared to median growth rate of 86%.

So, you see how these stats are adding up to show that businesses invested in this are doing really well. And then, one of the biggies, Deloitte, reports that purpose-driven companies witness higher market share gains and grow three times faster, on average, than their competitors, all while achieving higher workforce and customer satisfaction.

So, if you could start to bring these statistics into meetings with your C-suite, you might get a little attention on this. We've grown a lot further than the days when we had a green team and it was about recycling. But we've come a really long way now. And this has entered boardrooms and investor conversations. And it really does need to be taken seriously. It's proving out to help businesses maintain market share and even get a competitive edge over talent attraction and over customer retention.

Kramer: So, can you share with us some emerging trends that are coming down the line in CSR or ESG?

Forman: Yeah. There are some big things coming down the line, actually. I think it's time for companies to begin gearing up for the Securities and Exchange Commission regulations around scope one, two, and three emissions. That sounds like a mouthful, but what it means is that the SEC is starting to level the playing field for every company that states its environmental sustainability goals. They are asking companies to use a standard language and be consistent about the way they report their emissions. And this is a really big deal because the way companies have come forward before and talked about things like net zero and carbon neutral, the consumer and the investor into these companies is comparing apples to oranges and they're really looking at marketing language, more than they are actual figures, about how many emissions this company creates as it produces a service or it produces a goods for sale.

So, this is something that we need to be ready for. And by 2023, 2024, we're going to start to see common data coming out of companies. So, you could actually compare and contrast one company to another and make an informed decision. So, very exciting in the field.

It also means that, if you're a small business and you haven't worried much about your emissions in the past, it's time to start thinking about it, because even if you're not public and you don't need to report to the SEC, it means that you'll likely be asked to share your data or, at least, your commitments from your larger partners or vendors because they need to report on what they're purchasing as well and services that they're using. So, this is going to take a while for everyone to be on board and everyone to be able to use the tools to measure greenhouse gas emissions. But the conversations should be starting now and, at least, the planning to measure that and think about it over time.

And then, I also wanted to mention double materiality. In the past, material issues, really, were pinned to things that might affect the company financially. But now, double materiality, and I think consumers and potential employees will be excited about this, we're looking at measuring the impact — very often, the negative impact — that the company has on the community or the environment or other stakeholders. It's also a way to measure positive impact.

And so, we're starting to tie together CSR and ESG with these types of financial measures. We're starting to speak the language that people in your financial and accounting departments understand. It's a really nice bridge from where we came from, maybe, just a heavy emphasis on corporate philanthropy, and it was siloed in one area of the business, to thinking about how all of these social and environmental impacts could affect the bottom line of the company, and not just the bottom line financially, but how it can impact all of the other measures around the community, employee welfare, customer welfare, people in your supply chain, etc.

Kramer: So, every episode, we have an LBIdea or a key takeaway. And the key takeaway here is that CSR is here to stay and you don't have to have CSR attached to your title as an employee in order to make actionable change and impact. There are ways that you can proceed today in order to influence the company that you work for to make progress in CSR, for consumers' benefit, for employees' benefit, and for the corporation's benefit.

Forman: Absolutely. I couldn't agree more. If you are in just about any position at a company right now, you can look at your sphere of influence and start thinking about equity. If you're in procurement, you can think about, "Wow, do I have a lot of diversity in my supply chain? Is there anything I can do to make an impact there?" If you are in a product design role, you can start thinking about, "How will this be produced? And what will happen at the end of its life?" And you can start building things into that process right away. But it's all the pieces that you personally influence in your job. If you are in finance, wow, we love you, please try to think about setting aside a little funding for measurement and then maybe putting into place goals for energy reduction around your company. There are so many different ideas that really come from the people that are on the ground doing the work every day. They have endless creativity in ways that we can make our companies more equitable and more environmentally sound.

Kramer: Thanks, Jennifer, so much for being here with us today.

Forman: Thanks, Amanda, for the terrific conversation. I hope that your listeners enjoy learning more about CSR and ESG.

Kramer: Thank you again for listening to Leeds Business Insights. Don't miss a single episode, subscribe to Leeds Business Insights wherever you get your podcasts. You can also find more information about our podcast series at leeds.ly/LBIpodcast. We'll see you next time.