- Marisa Drew framed the discussion as exploring the concept of the intersection between environmental, social & governance (ESG) and the Sustainable Development Goals and, in particular, taking the enthusiasm and demand for companies to be able to communicate a sustainability strategy and using that energy to think about solving some of the world’s biggest challenges.
“Those companies that can really seize the moment in sustainability by incorporating sustainability deeply into their strategy and their operations, and make it a part of their DNA […] there is really value-creation opportunity here—it’s not a box-ticking exercise,” Marisa Drew
- Many leaders in the private sector tend to see ESG as being at the periphery of their companies. By doing so, explained George Serafeim, and by failing to deeply incorporate ESG into their strategy and operations, companies miss out on a key value creation opportunity.
- According to Serafeim, successfully integrating ESG into company strategy necessitates both top-down and bottom-up commitment. At the top, the Board of Directors and C-suite leadership need to thoroughly understand and commit to ESG. Equally critical is company culture, which needs to reflect the ethos of ESG, with employees at all levels viewing ESG as part and parcel of their role.
- Harvard Business School’s Impact-Weighted Accounts Initiative, of which Serafeim is part, is working to rigorously, systematically, and quantitatively measure the impact companies have on society. The initiative focuses on three areas: environmental impact, employment impact, and product impact. Serafeim and his team have examined scores of individual products, and have found that products with a positive societal impact exhibited better financial performance.
- Kathleen McLaughlin spoke to the purpose of business in society, which she defined as creating wealth—providing products and services that are important to people on a day-to-day basis and doing that in a way that creates value for everyone participating in that enterprise, including employees, suppliers, and communities. Walmart believes in the notion that the most successful companies in the long run are the ones that are addressing societal issues through business in a way that also strengthens the company, rather than focusing solely on corporate social responsibility or philanthropic initiatives. While the retail giant does consider ESG from a risk mitigation and value creation standpoint, it also sees ESG as a way to strengthen societal systems, whether that’s workforce development or sustainable supply chains.
“We [Walmart] very much believe in this notion called shared value: the idea that the most successful companies in the long run are the ones that are providing a service through business,” Kathleen McLaughlin
- When measuring a company’s impact on society and the environment, McLaughlin highlighted the importance of engaging with stakeholders, including customers, associates, suppliers, investors, community leaders, to understand what they view as the most material ESG issues relevant for Walmart. Walmart then develops strategies to drive outcomes—for example, if the issue is climate change, then the outcome will relate to the company’s emissions profile; if the issue is the economic prosperity of the company’s associates, the outcome will be new skills advancement and ensuring people can thrive due to their position at Walmart. McLaughlin emphasized the importance of purpose in accelerating progress on ESG performance, citing the fact that in a recent company-wide engagement survey, 80% of Walmart’s associates in the U.S. said that they either agreed or strongly agreed that their work makes a difference.