Alison Taylor of Ethical Systems and Jason Mudd discuss how to tackle ESG (Environment, Social, and Governance) in the corporate communications world.
Guest:
Alison Taylor is the Executive Director of Ethical Systems, a research collaboration based at NYU Stern School of Business. She is also a professor at Stern and is writing a book for Harvard Business Review Press on how companies can do the right thing in a turbulent world. It will be published in 2023.
Five things you’ll learn from this episode:
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Guest’s contact info and resources:
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Alison Taylor of Ethical Systems and Jason Mudd discuss how to tackle ESG (Environment, Social, and Governance) in the corporate communications world.
Guest:
Alison Taylor is the Executive Director of Ethical Systems, a research collaboration based at NYU Stern School of Business. She is also a professor at Stern and is writing a book for Harvard Business Review Press on how companies can do the right thing in a turbulent world. It will be published in 2023.
Five things you’ll learn from this episode:
Quotables
If you’re enjoying the show, please share it with others and leave us a review!
Guest’s contact info and resources:
Additional resources:
Sponsored by:
- [Narrator] Welcome to On Top of PR with Jason Mudd presented by ReviewMaxer.
- Hello and welcome to on top of PR. I'm your host Jason Mudd and it's my pleasure today to have Alison join us. Allison's the executive director of Ethical Systems, a research collaboration based at NYU Stern School of Business. She's also a professor at stern and is writing a book for Harvard Business Review Press on how companies can do the right thing in a turbulent world. Alison, thank you so much and welcome to the show. We're glad to have you.
- Thank you so much for having me. It's so delightful to be here.
- It is a pleasure. So Alison Taylor, tell us quickly, just a little bit about yourself and then a little bit about ethical systems, please.
- Sure. So I have worked on questions of the relationship between business and society for my whole career. Since the end of 2019 I've been at Stern's School of Business. I teach undergrads and MBAs about professional responsibility and ethics and ESG. And then I run a research collaboration that works to help companies build more ethical and effective cultures. And as I'm sure, I don't need to tell you the landscape for reputational risk and the kind of pressures companies are under have evolved pretty dramatically in the last five years and I think they're going to continue to evolve just as dramatically. So it's an interesting time to be doing this work.
- It absolutely is Alison and all the more reason why it's valuable to have you on our show today. So thank you for joining us. For our audience at home we're recording this on December 16th, 2021, and you're probably listening to it at some point in 2022 or beyond. Alison, just to make sure we're all on the same page, tell our audience what ESG stands for.
- It stands for environment, social and governance. Sometimes people characterize it as nonfinancial risk, but it is a framework developed really for investors to help them analyze the kind of environmental, social and governance risks and opportunities that companies have. And it is held that that aligns more closely with long-term value creation. So if you get these things right, it is a proxy for having a healthy culture and ought to over the term, build more trust from your employees, customers, et cetera, and ought to therefore mean that you have a more sustainable business over the term.
- Sure. Let's say one of our audience members is listening to this episode. Maybe they're at a smaller organization or maybe they're at a more, you know, larger established company and yet ESG is not something they're talking about. Where would be a good spot you would recommend that they get started in their organization?
- I think the best place to get started is by looking at the opportunities that you have to be more environmentally and socially responsible. The thinking is not that you just do what you were doing all along and then maybe donate to some charity or invest in the local community or do something feel good that's unrelated to the business. The idea is that you look at what your business does, how your business makes money. You look at the opportunities to reduce your negative impacts on the environment and the society, or perhaps do something positive. And then you look for the overlap between your business model and those opportunities and you focus as closely as possible on a few things. So I would certainly advise companies not to try and boil the ocean, not to try and tick the box on 40 or 50 issues, not necessarily to listen to everybody that's yelling at you, but be really, really focused about how you can make money by providing more value to society or having a better environmental impact.
- Excellent. Is there a company that's too small to consider ESG?
- I mean, I think you need to think about it because consumer tastes are changing. Employees want to know that your company is doing more than just focusing on profit at all costs. So I wouldn't say that an organization is too small but I certainly recognize the pressures that small companies feel under. They don't have these big infrastructures, they maybe don't have these big investor relationships so, I think the mistake is seeing this as something that doesn't, you know, you're just doing for the sake of it. If you could focus on a few issues that are really, really relevant, then it shouldn't be too much of a burden. But yeah, there's a lot of noise and resistance I think from small companies who just feel that these issues don't apply to them.
- Hmm mm. In a typical organization who is the owner and respond responsible party for ESG within the enterprise?
- I think if you're a big organization at this point you will likely have a head of sustainability and ESG. So over 90% of the S&P500 now produce a sustainability report. So there's increasingly a tendency to have somebody, you know, specialists doing this work.
- Hmm mm.
- If you are too small for that, it really, really depends on the industry where the lead will sit. I've seen this being handled by lawyers, I've seen this being handled by the HR departments, certainly marketing, certainly risk and strategy, certainly the CEO's office, certainly investor relations. So, we're at an early stage of development and there's a lot of inconsistency and a lot of different companies trying different things at the moment.
- Gotcha. Excellent. Thank you for addressing that. I know that some of our audience has those questions and we appreciate you answering them. So tell me a little bit more about your book and what would some, and when is it gonna be available and what would someone learn from reading it?
- Sure, so it won't be out until 2023. but what I'm really exploring is, you know, back in the 20th century, when we had the Milton Friedman idea that all the business needed to do was to create shareholder value, we had this idea that as long as a business doesn't do anything illegal, as long as you don't break the law, you meet your compliance and regulatory obligations then anything else you do to maximize profit is ethically neutral and you can't criticize it. That is quite clearly no longer the case. If you open the news today you will see companies under pressure on an enormous range of issues that aren't to do with legal risk. We can think about diversity and inclusion. We can think about obviously climate change, human rights, fighting inequality, the social impact of technology. There's an almost endless list of issues. Companies are even being asked to help defend democracy at this point. So we're in a really, really new landscape I think for how companies need to manage their reputations but I wouldn't even see this as about reputational risks. This is about your relationship with society and how you manage those interactions and what you really do to build and sustain trust, particularly with your customers and your employees.
- Do you sense that corporate communications, public relations departments are a good place to have some ownership of this, or are you thinking it's belongs better in a different group?
- I think there's an absolutely critical role to be held by communications, held by marketing, held by PR. This is to a very, very great extent a communications challenge as I'm sure that no one listening has missed. There's a lot of pressure on companies for greenwashing. There was a lot of pressure, for example, after all the Black Lives Matter protests in 2020-
- Hmm mm.
- For companies to do more on systemic racism than just put a black square on Instagram to demonstrate what they're doing. So, you know, really, really important. I think that companies communicate about what they're doing honestly but I think there's a challenge because as I've mentioned already, companies feel under enormous pressure from activists on Twitter, from the general public, and they're being bombarded by questions. What are you doing on climate? What are you doing on animal rights? What are you doing on good jobs? What are you doing on all these questions?
- Right.
- And so I think the art for a communications professional is how you can tell your story without implying that you're addressing all these masses of social issues, which may be completely unrealistic.
- Hmm mm.
- So very, very easy to get this wrong and very, very critical to get it right.
- Alison, I completely agree. I think you're speaking spot on to a finger on the pulse of what I'm sensing is also happening in the marketplace. Speaking of the marketplace what brands seem to be doing this really well that other companies could be looking to for either examples or influence, or just kind of keeping track of what they're up to?
- I wouldn't say that any brand is perfect here. Nobody is doing everything perfectly.
- Hmm mm.
- The examples that people give over and over again, including in the classroom would be a brand like Patagonia, which very obviously has put social and environmental sustainability at the core of its business. It's a private company. It's much, much smaller than many other companies which makes it by some measures easier to manage these risks.
- Right.
- Another company that people mentioned a lot is Unilever, which has made huge investments in sustainable, you know, products, sustainable brands, you know, sustainable agriculture, that kind of thing. I also like companies like Salesforce and Snap, but there are many, many more companies that you could critique and I don't think anyone is doing this perfectly because I don't think such a thing is possible. So that's really where I think the communications comes in.
- So, you know, Facebook didn't make your list for some reason Alison. What would you advise them?
- I mean, I think Facebook's quite obviously in a really, really tough spot. One of the challenges of course is that Facebook is under a lot of pressure from regulators, from the general public, et cetera, but they're arguably making so much money that they don't care. So I think we're really getting to the point of regulators wanting to come in and kind of reign them in. We're also obviously seeing a lot of turmoil internally, a lot of employees are kind of raising objections there, and there seems to as far as we can tell, still seem to be a lot of resistance from the leadership team. So my advice honestly to Facebook would be to consider a new leadership team, but I don't think they're really gonna listen to that. So I would say that taking some of these criticisms a little bit on more on the nose and they have been.
- Hmm mm.
- Maybe listening to some of the recommendations from more credible civil society actors would be a good place to start.
- Well, that's some pretty good advice and sound advice. I hope they take it. You're listening to On Top of PR with Alison Taylor, from Ethical Systems. We're gonna take a quick break here and come back with more from Alison just after this message.
- [Narrator] You're listening to On Top of PR with your host Jason Mudd. Jason is a trusted advisor to some of America's most admired and fastest growing brands. He is the managing partner at Axia Public Relations, a PR agency that guides news, social and web strategies for national companies. And now back to the show.
- Hello and welcome back to on top of PR. We're joined here by Alison at the executive director of Ethical Systems and Alison is writing a book called "How Companies Can Do The Right Thing In A Turbulent" world for Harvard Business Review Press. Alison, welcome back to the show.
- Thank you.
- So, Alison, go ahead, let's talk a little bit about how companies can do the right thing in a turbulent world and maybe in a perfect world. What should companies be thinking about?
- So what I would say is we have, what we name efforts to do the right thing, what we name business ethics efforts has really for a very long time been about trying to create a defensive shield to protect the company from reputational or regulatory risk. And obviously PR professionals play a really, really key role here. So that's the criticism that PR is about spin, PR is about greenwashing, PR is about manipulating the general public. You can no longer, I think though maintain that defensive shield for a lot of reasons. Social media would be a really, really key one. It is quite clear that you can no longer manage the narrative about you in the public domain in the way that you used to be able to by cozy relationships with the media and advertising. You have to have a much more interactive relationship with the general public. They're probably not gonna take it from you, that they should buy your products. They're gonna look for other customer reviews. They're gonna go on Glassdoor to figure out where they wanna work. So there's a much more, much more ebb and flow with stakeholders and much less about kind of how we can control the message and protect the organization from scrutiny. The other thing that's happened I think is really a huge rise in employee activism. So, employees are much less likely today to call the whistleblowing line if they're worried about something and they're much more likely to take your internal emails or your damaging internal information and leak it onto Twitter. So that idea that you can defend your company from those kinds of things, it's really impossible. We're also seeing a lot of pressure on things like non-disclosure agreements, around harassment and discrimination.
- Hm mm.
- So we're really now in what I would call this hyper transparent environment where you can't rely on spin, you can't rely on the story, you have to assume that anything that happens internally could become public knowledge at any time. So that affects pretty much every department in the company. Certainly affects how you make money because intangible value and stakeholder trust is a much bigger part of how you make money. Certainly affects how you think about risk and it certainly affects communication and how you tell the story. I don't know if your listeners are aware there's a big new initiative called clean creatives at the moment, which is a bunch of PR professionals really objecting to the work that PR firms were doing with oil and gas clients and bringing that to light. So, I think that's just an example from this industry of how loud and vocal employees are becoming. They're also sharing salary data, they're calling out discrimination on sexual harassment. There's much more bottom up pressure on leaders today. So, I would say all of this requires a pretty dramatic rethink in terms of what's always been done.
- Hmm mm. You said earlier hyper transparent, we're in an age of hyper transparency. I don't wanna misquote you, but you said something to that effect.
- Yeah.
- But is it reasonable to expect that the transparency expectations and therefore compliance with such is likely to increase over the next five to 10 years versus decrease?
- I definitely think the pressure is going to increase. You're seeing already many more regulations around disclosure of things like climate change, modern slavery, the gender pay gap, diversity and inclusion statistics. So, definitely this is not going away, but being transparent is pretty difficult because companies aren't really used to saying this is hard and we haven't got it right. Companies are used to saying, we've got it under control and we're doing our best and here are all the great things we're doing. So, I think at the moment we're in this really problematic situation where transparency is increasing, reputational pressure is increasing, but we don't necessarily have realistic ideas of what a business should and shouldn't be doing and so it's really a kind of art form to tell that story well without exaggerating, without lying, without greenwashing, but also not implying that it is a company's job to solve every single social, environmental problem out there.
- Yeah, that's well said. I think those will be some good quotables we'll use in our media to promote this episode. So those comments I think were on fire. So very accurate Alison. And so, you know, I like what you said that it's not a corporation's job to solve all the social problems but they can certainly put their dollars into those they feel most passionate about, maybe those that they're influencing. So for example, like Amazon, right? I mean their carbon footprint is ridiculous and yet they've made some pretty bold statements and plans to improve upon that. And so I kinda like how, you know, when a company thinks about what space are they in right, and then how can they use that position of influence in their industry or what they do for a living to something that's very, you know, very close to what they do. So for example, you know, I've worked with a national worldwide staffing company and one of the things they got involved in is bring your son and daughter to work day, right? That's perfect for their space. And so is providing, you know, suits and interview clothing to people who may not have those capabilities. So I just love it when I see an organization be very smart about where they put their philanthropic efforts and their corporate social responsibility efforts.
- Yeah, I mean, I think that's a perfect example because I would rather see a company like that doing that kind of work on making or recruitment more inclusive, really trying to tackle some of the kind of issues that come from referrals and a narrow pipeline and bias in recruiting and that kind of thing is much more important that they work on that than that they work on climate change. But for an oil and gas firm-
- Right.
- It's important to work on climate change.
- Yes.
- If you're a pharmaceutical company it's important to work on access and affordability of drugs. If you're Facebook, it's important to work on the social impact of your product. So, you know, you've got to focus on the areas where you can provide most value and where you have most risk and tackle those things, not trying and distract people with irrelevant charitable efforts.
- That's good. Yes, I like that a lot. So Alison let's say, for example you or I, or somebody in our audience is moving into a new role at the beginning of the quarter. They're gonna be the chief communications officer, the chief marketing officer. What kind of questions should they be asking of their new employer either during the interviewing process or on their first days on the job so they can better get a understanding of where the company is as far as ESG?
- So I would ask what their strategy is for ESG and sustainability. I would ask if they are reporting, I would ask to see that report. I would ask who is leading those efforts at the company? I think the other thing I would be really interested to find out is what is this company doing to understand its stakeholder landscape? Probably they're monitoring social media, but maybe not. It would depend on the industry, but are they in touch with key activists and key NGOs? What do they do to understand their customer base? What do they do on investor relations? What do they do to understand employee engagement and what employees are saying? Because you, if you have information about all those perceptions and risks, you'll have a much, much stronger communication strategy. And if the answer to any of these questions is eh, nothing, then I would be pushing to do that exercise very early on in the job. So you could only really communicate well, if you really understand today where all these stakeholder groups are coming from and where they might be going next. It's really, really important not to be reactive given how risky the external environment has got. So you need to be on the front foot, you can't be reacting every time someone's yelling at you on Twitter. You really, really need, I think, to kind of be anticipating where things might go next.
- That's good advice, Alison, thank you. So, thinking of that same persona, that same individual, what resources would you point them to to get educated quickly and get familiar on this topic and maybe even identify some best practices?
- I mean, the company that I used to work for is a nonprofit called BSR, Business For Social Responsibility, bsr.org. They have a ton of very, very useful resources. I would also, if you're unfamiliar with this whole space and maybe if the company isn't doing much yet, I would start off by looking at maybe some of the bigger competitors, some of the companies in your industry that have a really good reputation on these issues, look at what they're saying, look at what they're doing and then think about what you might be able to do to differentiate yourself, or, you know, think about those same issues.
- Right? Don't just copy what they're doing, but look at what they're doing and figure out if their space that they're not currently occupying that you could occupy and make a material impact and be relevant to the stakeholders that are important for you and your organization.
- Absolutely. And then focus. I kinda can't say this too many times, but I think both communication and sustainability professionals can end up feeling like Chicken Little, that they're running around the company saying-
- Right.
- You got to do this, you've got to do that, the sky is falling in and the reality is you need to pick one to three issues where you're gonna try and make a difference.
- Hmm mm.
- Is it good jobs, is it climate change, just pick a few-
- Yeah.
- And focus and then resist any pressure on anything else to the degree possible.
- Perfect. I can relate to that a 100%, that's very good, Alison. So your book doesn't come out for a while. If somebody wants to follow you on social media or connect with you and they have questions about this episode, how would they best get ahold of you?
- You can go to my website, which is ethicalsystems.org. I'm very easy to find on LinkedIn and Twitter. You can in fact, follow me on either of those places and you will, I think, learn something about ethical culture in ESG and responsible business. I'm a very frequently share my opinions there. And then always happy to have a dialogue with communications professionals that are thinking about these topics. So feel free to get in touch.
- Perfect. And how would somebody stay informed as to the, your book and its release?
- Oh, we have a monthly newsletter Ethical Systems. I mean, we write an enormous number of great articles. Did a podcast recently, for example, on combating bullshit in the workplace.
- Okay.
- We're doing, we did something at the moment on how if you look at the business case for these things rather than your core values then that focus on money at the expense of your mission and purpose can really undermine what you're doing. So we have a lot of different perspectives, but we'll certainly be keeping everybody updated on the progress on my book by that medium as well.
- Alison as we're wrapping up I wanna just ask you one more question which would be at the end of the day, could you just remind and encourage our audience, why this is important.
- Because the world is changing very, very rapidly. I mean the biggest single reason I would say is you're not gonna be able to attract or retain anyone under 30 for much longer if you don't pay attention to these problems.
- And ultimately at the end of the day it's the right thing to do and it's for the betterment of society, culture environment, and more correct?
- Yeah, exactly. I mean, you know, if you have young children or you're sitting at the dinner table with your teenage children, I'd be super surprised if you're not hearing about these things already, but the good news is they align with what we wanna do as responsible citizens. So this can be a win-win, this can be good for the company, good for the people in it and good for your own career satisfaction. So, a learning journey it's worth getting on. Also, I would say, you know, it's an aside, but an important one, a fantastic long-term career opportunity for a PR professional that wants to really get deep into this space.
- Yeah, for sure absolutely. Hey, Alison Taylor, you've been fantastic. Thank you very much for joining us today and helping our audience stay on top of PR. With that, I'm your host Jason Mudd and please I encourage you to reach out to Alison should you have any questions. Check out our episode notes. We'll be sure to link to the blog post and resources that she shared earlier as well as her website and LinkedIn. And in addition, when the time comes we'll do our best to update the episode notes with a link to her book where you can buy it for yourself. And again, if you have any questions, please reach out to Alison or reach out to us. We would love to hear from you and if you have any suggestions for content, we wanna hear that as well. Lastly, if you have a peer or colleague that you think would from this conversation, please share this episode with them. We'd love to help them out. And with that, thank you for staying on top of PR. This is Jason Mudd from Axia Public Relations signing off.
- [Narrator] This has been On Top of PR with Jason Mudd. Many thanks to our solo cast sponsor Burrelles for making this episode possible. Burrelles has a special offer just for On Top of PR fans. Check it out at burrelles.com/OnTopOfPR.