Should Training Be a Part of Your ESG Strategy?
Consumer and regulatory demands have elevated environmental, social, and corporate governance (ESG) initiatives to a necessary component of every organization’s DNA. And while many ESG initiatives are voluntary right now, government regulations in the United States and Europe are evolving rapidly. That’s why a focused approach to ESG is fast-becoming a corporate necessity.
So, how does creating value through ESG initiatives go hand-in-hand with understanding, managing, and mitigating risk as part of an effective compliance training program? I recently had the opportunity to sit down with Gwen Lee Hassan, Chief Compliance Officer at Cordant Health and Pooja Knight, AVP of Enterprise Risk Management and Climate Change Initiatives at Gallagher to discuss the synergies between ESG, compliance, and training in more detail.
Most of Us Are Learning About ESG As We Go
To kick off the conversation, we asked attendees where they are in their ESG program. The majority of respondents reported being in the “toddler” stage – still working on developing a formalized ESG program and learning as they go.
This wasn’t a surprise to Pooja, who became responsible for her organization’s ESG program over two years ago while she was managing its global enterprise risk program. She said, “I expressed interest in sustainability to my leadership team… they had been looking at corporate social responsibility (CSR) initiatives for a number of years and wanted to formalize our efforts and measurement.”
After raising her hand to work on ESG initiatives, Pooja was able to get her feet wet and do a lot of research to kick off the program. But this begs the question: Who is responsible for an organization’s ESG efforts?
Participants in our live webinar said that ESG was likely a compliance (29%) function. But 23% admit that they are still figuring it out – just like Pooja had to do.
Her first step? She performed an informal materiality assessment and was able to gauge her organization’s priorities – in this case, the environmental aspect of ESG – and then began piecing together a more comprehensive program that put the “E” at the forefront.
Her advice to anyone in her position? Partner with others in your organization.
Pooja met with many people in her organization before she learned who could provide her with the emissions data she needed. Many of the people she spoke with had no idea what ESG meant, so she was responsible for a certain level of internal education, as well.
She has compiled her organization’s carbon footprint since 2019 and is currently working on issuing her organization’s 2021 carbon footprint.
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Companies Should Focus On The “Why” and Not The “Who”
Gwen mentioned anecdotally that many people in compliance have been “volun-told” to handle ESG. Since they are already familiar with issues related to policy, risk, and control mechanisms, employers believe that ESG is a natural extension of their role.
However, compliance is not the same as ESG. While there are many overlapping skill sets required, a compliance professional would need to assess, based on their company’s ESG priorities, whether they would need to substantively learn a new skill in order to stand up an entire ESG program. Sometimes the answer is yes, and sometimes the answer is no.
So, who is responsible for ESG? Where are companies in their ESG journeys?
Different organizations will answer these questions in different ways. The responses don’t matter as much as your company’s why. Why are you pursuing ESG efforts in the first place, and how do these efforts inform the way we conduct business?
“When you look at it that way,” said Pooja, “we’re all ESG managers. We’re all risk managers. No one owns ESG, but we all have a part in it. Our role is to do better, to address risks where they sit, and how to put controls into place to help mitigate risks.”
Gwen agreed: “Education and training never stops because issues related to ESG continuously change. We need to educate ourselves and our peers. And when they clearly understand their role in our ESG strategy, they become managers as well.”
Training Must Play A Role in Your ESG Program
For organizations looking to operationalize their ESG efforts moving forward, training should be a key part of your strategy. This is important because many people are just figuring out what ESG will mean to their organization now … it is not a concept that has been on our radar for a long time, so education is required.
Not only do we have to educate ourselves on the components of an ESG program, including ever-evolving regulations, but we need to educate our teams as well. “ESG is a risk to every single company, whether they like it or not,” said Pooja. “It’s time to start thinking about it.”
So, how do you create learning culture where people are working toward a goal – like ESG – and also learning something?
“Before you delve into ESG issues like emissions and governance,” said Gwen, “there has to be a curriculum in place – materials, courses, newsletters, articles.” She outlined her idea of effective ESG training:
- Train your team to be safe and compliant
- Train your team based on role and responsibility
- Audit your process
Gwen believes that the people on the front lines of your business are the ones creating the risk in your organization, so they need to learn how to be compliant with your organization’s culture and be empowered to learn what they need to know to be successful. At a basic level, they need to understand their role in how to identify, escalate, and manage risk. They need to know they are being held accountable.
Next, your team needs training based on their role and responsibility. How can they better do their jobs? What are they specifically responsible for? What do they need to know? This is where ESG-specific training may fit in.
Finally, you need to audit your processes. What’s working? What’s not working? How can you iterate and improve to enable your team to do the right thing?
Gwen mentioned that a strong ESG program is one that invites various corporate functions to participate. Between ESG, compliance, cybersecurity, operations, and other departments, your organizations must identify top risks across departments, see where they overlap, and create synergies so you can best address your “why.”
Traditional Learning Plus More Is Good For ESG Learning
Webcast participants agreed that the best way to train organizations in ESG is via “non-training training materials.” Finding effective ways to educate the team should go beyond traditional web-based training where participants watch a video, take a test, and report on their learnings. Instead, organizations should look for ways to take learning offline in order to meet learners where they are.
Further, we should look to educate employees in the ways they best retain information. And then we need to find effective and actionable ways to report on this.
“We need to push the envelope when it comes to ESG sustainability reporting, said Gwen. “I’ve seen a lot of data on who completed compliance training… honestly, it doesn’t tell me much. I want to see things like – after we did this training, what percentage increase did we see in calls associated with the helpline on this issue? How did employee understanding increase when we followed up with them?”
Pooja agreed, talking about the importance of understanding your why. She said: “When we understand our drivers for training, we can pinpoint the metrics we need to share with leadership. We know what is important to the organization.”
The topic of ESG is a complex one, so at the end of the conversation I asked Pooja and Gwen what information they wanted to leave viewers with. Here’s what they said:
Pooja: “Be engaged! Ensure you know your organization’s direction and strategic mission with respect to ESG. What’s really important? This will change, but it is a good first step and it will drive your initial efforts. You can revisit this purpose as you made progress.”
Gwen: “Communicate! There is nothing more important than transparently sharing your efforts – between functions, teams, and other organizations you work with. The more people you can get to align with your ESG efforts and purpose, the better off you will be. Collaborate.”
My takeaway for viewers? Get feedback. Did people learn anything from your ESG training efforts? Were they valuable? If they weren’t, reassess!