What is ESG and why it's important: Lessons learned with Dave Stangis
In today's video, you'll learn what is Environmental, Social, Governance (ESG), why it's important, successful examples, strategies and keys to success. We chat with ESG expert Dave Stangis, Chief Sustainability Officer with Apollo, and explore his career journey, lessons learned from his ESG programs. We also discuss where the focus on ESG this past year and how to leverage your employees in your ESG programs and projects.
This is part 1 of our two part discussion on ESG. Watch or listen to part 2:
How to get started with ESG reporting, metrics and measurement
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What we discussed:
Karl Yeh:
So, today I've got two special guests. My first guest you've probably seen her on the episodes before. Her name is Erica Graham Jordan. She's my co-host today and she's the regional vice president here at Benevity. And our special guest today is Dave Stangis, who is the Chief Sustainability Officer at Apollo. [00:01:00] Thank you very much, Dave, for joining us today.
Dave Stangis: Thanks, Karl. Looking forward to the conversation.
Erica Graham Jordan:
Excellent. Dave, it's amazing to have you join us today.
With your career, I almost don't even know where to start. From advisor to many companies and organizations, to chief sustainability officer roles, to Impact to Campbells to Intel.
On the thought leadership academic side, Babson and BCCC. You're just a true thought leader in this space.
So, I know you're too humble to say that. I will say it for you. We're really, really [00:01:30] just grateful to have you. But I think folks always want to know about career journey. So, can you share a bit more with us about your career journey?
And then also, maybe with a lens of, did you always have a passion for ESG? Did you always think you were going to work in the space and how did that come to life?
Dave Stangis ESG Career Journey
Dave Stangis:
Yeah. Thanks, Erica. It's a good question.
I'll try not to take up the whole hour with this one, but my background was science and technology. That's what I enjoyed going to school. That's what I studied.
My undergraduate's in biochemistry and have a master's [00:02:00] in occupational environmental health. And that's what I was doing at the time.
I was doing environmental health and safety. Started my career at Ford Motor Company as intern, did some consulting work. Worked at Electric Utility out in Arizona. I kept going to school though. I enjoyed continuing to go to school while I was working full-time.
And even after my MBA at Michigan, I applied and was accepted into law school in Wayne State back in Detroit, and finally got out of Michigan. I had been trying to get out of Michigan [00:02:30] for the weather.
And so I had to put my law degree plans on hold, which was fine.
I wouldn't say I had a orientation to ESG, but even in the early jobs at Ford or at Arizona Public Service Company Utility, there always seemed to be just opportunity to do things better, to combine some of these efforts, to leverage disciplines.
I was hired [00:03:00] from the Electric Utility to go over to Intel and I was literally a corporate safety engineer working in the corporate environmental health and safety group. Good culture, great company.
And they asked me early on to take a different role, to move to a more external facing role focused on reporting and more public policy around environmental health and safety.
And I found myself in pretty challenging stakeholder negotiations, investor share owner resolutions, development [00:03:30] conversations with people and neighborhoods where we had factories and concerns about health and safety.
And it was really clear that this was a role that the company really didn't have anybody to fill it. It was growing, it was a reputation management role.
We were doing environmental reporting at the time, but this was the year the GRI was born, 1997. A long time ago. And it was really clear that this was a role a company like Intel needed. They were already in the crosshairs [00:04:00] from a reputation standpoint. They were trying to be a leader doing really good things, but not listening as well as they could.
And it took me a couple years to convince them to create this role, literally, because who's this safety engineer that comes from a power plant and now he's going to tell us to build this new role.
But I had great boss and good leaders and good partnership with Public Affairs and Communications, but it took two years to create this corporate responsibility role.
That's what we called it at the time.
[00:04:30] SRI was a thing then. We were doing some of that work, but we can talk more about that. But I would say that grew into the Intel job and role in the expansion, and it continues today. The people there continue to do great work.
Many of them are still there. Suzanne Fallender has been doing that role for many years. Some have come and gone, but it's been great.
And then we can talk about what happened after that, but that was the start of it. And we created many [00:05:00] of the tools and systems that I really didn't even know we were creating to leverage later with other things, but you continue to build on it.
And ESG is another acronym that describes some of the evolution of this work.
Karl Yeh:
So Dave, important topic as we go through this conversation.
Because you're talking about you were in Michigan, how did you feel about the Michigan win over Ohio State and on to the college football playoffs?
Dave Stangis:
Well, what's it been? 11 years or 14 years, something like that? It's about time. I mean, yeah, I was in Michigan when Brady was a quarterback and when Harbaugh was a quarterback. These guys deserve to win at some point.
I was sad to see all the seniors come and go and come and go and not beat Ohio State. But yeah, that was the top of the mountain for most of us from Michigan and then everything else has been gravy.
Winning [00:06:00] the Big 10 and now going on to the championship. So, we'll see. But I don't think anybody in Michigan's going to be disappointed no matter what happens now. We've got the Ohio State thing finally.
Karl Yeh:
Yeah. And being a 49ers fan, it was really crushing when they let go of Jim Harbaugh. So I've been really rooting for him ever since he moved to Michigan.
So it was pretty exciting to see him win and him getting really excited down that sideline.
Dave Stangis:
Yeah. They've got a lot of passion, both those guys. Some people love them, some [00:06:30] people don't.
Erica Graham Jordan:
I think that's the first time we've talked about American football on the Social Impact Show and I'm loving it.
Dave Stangis: We covered the Ravens. Yeah, we covered the 49ers.
Erica Graham Jordan:
We covered all the critical, important parts of American football.
Excellent. So now that we're taking care of really important questions to ESG.
We have a lot of folks who are listeners who might be newer to it. There might be some folks who feel well-versed and have advanced approach to it.
But knowing [00:07:00] that you live in this space every day, per your earlier answer, you actually talked a lot about how you were in the early phases of it.
But for those folks who might not have as much background, can we dive into a little bit more of what ESG is? What are some examples of ESG issues?
And then we can just maybe have some follow on questions as a result, just to help those folks listening who are kind of like deer in the headlights with this early info for them.
What is ESG? Examples of ESG issues?
Dave Stangis:
Right. I mean, the message I would tell them, and the one I tell everybody, is to keep your mind open when [00:07:30] it comes to these acronyms.
I think that it's a challenge for companies. It's a challenge for leaders. It's a challenge for business schools, I know, as they try to bring up the talent in this space.
But ESG today, we know the acronym stands for environmental, social, and governance.
It's for the people that have been doing this for many, many years.
It's evolved. It's kind of an evolved term from terms like corporate social responsibility, or corporate citizenship, or even socially responsible investment, SRI.
But [00:08:00] it's not really the case at every company and it's different in every sector.
So I do think that, today, most companies are using ESG to signal the fact that they've matured.
They're on the maturity curve where they're making new investments and that they're using ESG as an acronym to communicate the fact that they're trying to be more or strategic.
It's just broader than environmental sustainability. Perhaps they're looking deeper into human capital or human rights.
And they're thinking about [00:08:30] governance processes both around how they operate this team and also how governance is structured inside the company.
But to be fair, so are the people that were calling it CSR and corporate responsibility and SRI.
So it's really important to actually break down these terms both in your head if you're a professional and you're trying to build this in your company, but also when you're communicating both inside and outside the company, you have to think about the audience.
And I just presented [00:09:00] my new version, I mean, literally, a two month strategy document, to the management committee at Apollo.
And the first question I got from my report to two presidents... And they're just different kind of people, they run different parts of the business.
One of the first questions I had was, "So, how do you define..." In this case, it was sustainability because they were using ESG before. So different sectors think about this in a different way. Finances often looked at ESG as a compliance function.
Are they [00:09:30] complying with minimal expectations or at least best practices around environmental, social, governance?
Where CPG companies, brands, mission driven companies, have been looking at ESG as kind of the next evolution.
So it's really important to make sure that you recognize these terms, get them out on the table, and actually talk about what we're talking about.
- Are we talking about reducing our carbon footprint?
- Are we talking about building better accountability and management systems?
- Are we talking about recognition and incentives?
- Are we talking about volunteerism?
- Are we talking about employee engagement, productivity?
These are all things that we have to actually describe.
We can say the word ESG and then we have to then explain it, and it has to be in the context of the audience. So not only just the audience that is in the room, but the group you're speaking to and where a written piece of communication or a recorded piece of communication's going to go.
But also in terms of the context of your culture, your leadership, who you're [00:10:30] trying to motivate, who you're trying to engage inside your company.
So it's kind of a messy answer, unfortunately, but there are a lot of great companies that still call this corporate responsibility.
A lot of them call it corporate social responsibility.
There's still a wide range of investors that call it SRI.
I'm actually going to be using some of these terms in a presentation I'm doing to a broader leadership team in January at Apollo and try to help walk them through it a little bit so they don't put it in some little corner, which is not what we want.
Karl Yeh:
[00:11:00] So Dave, just a quick follow up on that.
Would you say that there are strategies that you'd have to develop internally and externally when you're developing, I guess, your main ESG strategy?
You were mentioning that you have different audiences.
So does that mean there are different strategies related to it or is it all just one strategy, but the communication is different?
Do you need an internal and external ESG strategies?
Dave Stangis:
I like to think of it as one strategy, but it literally touches every part of the company. I have my own framework, but other people have... There's books [00:11:30] written all the time that include different frameworks.
I literally touched on a lot of them already, but one is focused and direction, which is internally, but you would also communicate that externally.
Metrics, governance, and accountability, capacity or competency building, metrics, what are you actually going to measure, if you're going to take targets, and then communication and reporting.
And it's communication by audience. It's communication to different...
- What is the story to senior leaders?
- What's the message to internal employees?
- What's the message to investors?
- What's the message to public policy makers?
- What's the message to media?
- What do I want amplifiers to have and to learn and to recommunicate?
And when you think about communications, often it's not just audience but it's, what do I want the audience to hear? What do I want them to comprehend and what do I want them to do with that information?
So, I'd look at it as one strategy with [00:12:30] six or seven big pillars.
I don't think I was taught it this way, but when we created it and build it, and then I had to replicate it at other companies, I realized that I had this framework.
So, I didn't know I had the framework at Intel. I learned that I was using this framework when I went to Campbell. And then I've been able to replicate that in teaching or writing or at Apollo.
Erica Graham Jordan:
I love so much of what you said, the hands on and practical approach, even as we embarked on our first question around [00:13:00] how did you get to this space, and then realizing it, understanding the themes, and bucketing them appropriately.
Some of that jumped out to me too, in terms of how you describe ESG is when you use the acronym, it's lofty and it can be confusing.
So how do we drill down to the layers below? And when you describe those, volunteer or understanding the impact of your supply chain, carbon footprint, all these aspects help you actually dive into what ESSU stands for.
We saw so much [00:13:30] on the S, right? When we talked at Benevity, there has been so much conversation the year the S, right?
Employee engagement, attrition, diversity, equity, inclusion. How do you focus on your employees? What does the future of work look like?
Just really a big conversation there.
Curious if you saw the same or if you saw something different in the past, call it year or two, knowing that we've really had quite a shift in terms of what work looks like over the past couple years here.
Where has the focus on ESG been this past year?
Dave Stangis:
Yeah. No, I think I saw much of the same.
I spent some time [00:14:00] with the Human Capital Coalition and some of the metrics and strategies around building again.
More rigor, more structure, more robustness in how companies talk about human capital.
And many of us have been talking about these things in the past, but clearly the pandemic, social activism, the election, all of these things put up a magnifying glass.
And I think the pandemic, literally, it was like the tide going out and everything that was just under the surface [00:14:30] was then visible, and companies had to manage it.
Health and safety, wellness, trust, these are all things that turned into currency.
They literally were there always, but you couldn't get people to come back to work unless they felt safe, unless they trusted leadership.
You couldn't get them in your building, if you were a store operator or somebody in a city, restaurants.
So these things were always there, but I think that the last two years, [00:15:00] clearly, health, wellness, wellbeing, social awareness, right?
Diversity, equity, and inclusion, but also access in equality.
People don't stand for inequality anymore.
They kind of tolerated it before. It's very important for companies to think about it.
It's a treacherous space because of everything else that has happened, so [00:15:30] there is more thought among public position, internal position.
What position do my employees demand I take as a company or as a leader? People will leave companies because of the positions.
It's happened. It happens a lot.
And I think that the coming back to work was another wake up call, right?
So all of the pain everybody felt at the front end was one [00:16:00] thing, then all of a sudden everybody's been out of their office for 18 months or two years and they have to go back, or they want to go back, or they're not sure if they want to go back.
They're having conversations with themselves about, "Is this really the company that I want to go back to?
Did I really like the culture compared to now that I've been working at home?"
And this has driven a lot of the Exodus that we're seeing as well, and just people reassessing their values.
So, yeah. I think it's really the S piece has gone from always being important to being [00:16:30] a topic of board conversations, a competitive advantage or disadvantage now, which it wasn't before, and new talents still figuring out what they're supposed to do on the human capital or the S side.
Karl Yeh:
So Dave, your tenure at Campbell's presents a really great foundation for how people think and leaders think about ESG.
You've got being recognized as a Dow Jones Sustainability Index for 10 years, Global 100 most sustainable corporation for [00:17:00] four years.
We've got a top 50 best managed company, number one in social responsibility in the Wall Street Journal.
So, when you're achieving these lofty goals, what are some of the key things that help you achieve them?
Is it C-suite alignment, focus on certain KPIs, employee focus, having the right strategy? What were some of your keys to success?
What are the keys to success in ESG?
Dave Stangis:
I'll be fair. We achieved these things at Intel through... I know we're talking about Campbell, [00:17:30] but literally everything you read, we did at Intel first in a different sector, in a way that... Because we were building from scratch, we were...
One of my jobs then, at Campbell now, is monitoring signals and listening to people that are a little bit further along.
I often tell people in our profession, and people I work with, that our job is to predict the future and be right. We can't tell you the exact day but we can tell you exactly what's going to happen. Literally, [00:18:00] that's our job.
And if we can't, then we need to do more listening and more searching.
But in the days that we were building this at Intel and Campbell, we're looking at these external signals.
We're looking at how investors are judging companies. We're looking at every place we show up as a...
One of the things we talked about, again, way back, is depending on who we were talking to, this is a build the brand, protect the brand exercise. [00:18:30] Intel, even though it's not a consumer product company, it's a consumer brand.
Everybody knew the brand and knows it now. Campbell, obviously, and all the food products that they made all around the world.
So we were showing up in places. We were being ranked on certain things. Both these companies are publicly traded.
There's tools, there's methodologies.
These lists, whether I'm on them or not, are out there. All of these things that you mentioned, Karl.
And if I'm on them, my company's proud, [00:19:00] or maybe they don't think I'm high enough.
Or if I'm not on them and a competitor is, they... We say we don't care about these things, but as soon as we're not on them and one of our competitors is on them, all of a sudden the board sends a note to the CEO, because they read about it somewhere, and says, "Well, why aren't we on the list?"
So there's methodologies behind all of these.
Some of them are really good. I've always been impressed with the Dow Jones sustainability index.
I used it as a systematic improvement tool at Intel for years, and I did the same thing at Campbell. It took us, [00:19:30] literally, only a year to get on the list at Campbell.
I mean, at Intel, we were doing these things on day one. We literally filled out the first carbon disclosure project when it was seven questions.
It took me 15 minutes. First Dow Jones sustainability index, first time any of these came out, we were engaged.
So you learn about them, you learn the style, you learn the methods, and you get to know your analysts. You build relationships with the people that are ranking and rating you. So, it's a strategy.
You can start where you were. Do I focus on [00:20:00] C-level engagement? Do I focus on employees?
But oftentimes, it's best to focus on, in my mind, the things you're being judged to and those things that are value added, things that are useful to me.
I'm not going to go try to map my company to some program that it's not helping my company.
So I'm looking for some of these lists and I'm looking for indicators in the rankings that help me drive better performance, help me drive better product engagement and innovation and employee engagement, then I'm building on those.
So I [00:20:30] view these, often, the ones mentioned, as... I could give you stories on every single one over time, which we won't do because it would take too long, but they're really good parts of each of these that help build a better company, make a company more resilient or more agile or faster or more creative, just a better company, reduce cost, and these are all things that we can build in.
Karl Yeh:
I don't know if there's a trend, [00:21:00] but how much do you, I guess, leverage your employees to help build or craft some of these programs or projects that eventually have led to some of these achievements?
How to leverage employees in your ESG programs and projects
Dave Stangis:
Literally, as much as I can.
I would say the cultures are different at all of these three big companies I've been in, and then all of the other ones that I worked with for smaller amounts of time. So you have to figure out who's in the building.
This goes of the competency and capacity building piece that I mentioned in [00:21:30] the six big buckets, but it also goes to the culture and the business systems.
But literally, the goal we took at Campbell in 2010, and it was one of our 10 year targets, was a hundred percent employee engagement in the strategy.
People would like, "What do you mean? What's a hundred percent? How do you measure that?" And we did. Literally, that was our goal. And then we built systems to do it.
DESG, at the time, it was corporate responsibility and sustainability and new employer orientation.
It found [00:22:00] its way into our culture. It found its way into the way we hire and search and retain talent. We paid for it, incentive compensation.
We built recognition systems around it.
And at the beginning, we literally put it hardwired in every single employee's objective setting for the year so that when they had to fill out their individual performance objectives, there was a question there that they had to answer.
So what am I or my team or myself and my manager doing to advance Campbell sustainability strategies? [00:22:30] Once you start doing that, it's a flywheel, literally. They have to figure it out on their own. They have to talk to their manager.
What am I going to do? What are we going to do? What's our team going to do? Is it location based? Is it function based? I'm in the plant, I'm in the factory, I'm in the supply chain, I'm in procurement, I'm in marketing.
I think it's really an under-leveraged piece of strategy. I also think that the employee communications piece is one of the hardest aspects [00:23:00] of every company.
There's people that are connected.
If people aren't connected, how do I get them engaged? How do I not overwhelm them? I can't send them a survey every week. It's a tough role.
And figuring out how to optimize that to help drive ESG or sustainability is really important thing to focus on.
Karl Yeh:
So, Dave, do you have anything else to add? As we wrap up part one of this conversation, do you have anything else to add in terms of if anybody's just getting started with their ESG program?
Dave Stangis:
Yeah. I mean, we really just skimmed the surface. So, we could have [00:23:30] talked for a few hours on this, but I think there are places to connect.
There are membership organizations. There are some great... Without naming them all here, in addition to Benevity, that are resources.
For people at different maturity models in their company curve, different places from their own personal profession, definitely go in mind, those.
Find the people, engage in the conversations.
This is a profession [00:24:00] that continues to evolve. It's a stretch for anybody, for even people like me that have been doing this most of my life.
Every day the job is different.
So be open to learning and be open to engaging, skim the questions, skim the topics that you're comfortable with, but also push yourself a little bit.
When I teach, I tell people to always be focused on learning. Learn their company, if they're in company.
You never thought you had to learn the company.
Literally learn how the company makes money, how it loses [00:24:30] money. Learn every function of the company the best you can.
Listen to the earnings calls. Just seep in...
The best ESG, sustainability corporate citizenship professionals know their company better than almost anybody except the CEO. So there's just a lot to cover.
And the more you know, the more comfortable you are and the more you can engage. And just the last thing I'll say on this point, Carl, is to listen.
Go around the firm.
This is not about convincing your company to do [00:25:00] things. It's about listening to the leaders, to the employees, about how you can build something that helps them with the tools that you know in the ESG space.
And then it turns into a win-win and you get a lot more partnership.
Karl Yeh:
So Dave, if anyone wants to connect with you, what's the best place to reach you?
Dave Stangis:
I think the best place these days is on LinkedIn. I'm also on Twitter.
The names are the name so it's not like I'm hiding behind anything.
If they look for Dave Stangis, they'll find me on either platform. I try to share a lot about the profession [00:25:30] on LinkedIn and a little bit more about signals on Twitter.
So it's a different type of communication, just like we talked about a little earlier about the audience and what the audience is looking for.
And there are a lot of great people on LinkedIn. LinkedIn has really, I think, turned into... Especially once you figure out who you're following and searching the key terms, there's a great community and a lot of people willing to share best practices.