There’s a wealth of evidence that suggests diverse, equal, and inclusive workplaces are more successful – but the pandemic and death of George Floyd forced leaders to truly reckon with this reality.
“Instead of focusing on how to manage diversity, we need to pivot to focus on how to leverage diversity,” Jessie Woolley-Wilson, CEO of educational-software firm DreamBox, said during Insider’s recent virtual event “What’s next: CEOs on How Talent Drives Transformation” presented by ProEdge from PwC, which took place June 29. “If you really believe that diversity is something to be leveraged and it doesn’t feel like just another project or another obligation, it feels like an opportunity.”
The conversation, titled “Diversity and innovation define the future of work,” was between Woolley-Wilson and Rebecca Knight, senior correspondent for careers and the workplace at Insider.
“Starting out as a woman of color in financial services, the expectations for excellence were either really high or really low,” Woolley-Wilson said. “We believe at DreamBox that diversity is required in order to build empathetic and relevant learning experiences.”
At the height of the pandemic, Woolley-Wilson said she took the unusual step of making the DreamBox digital platform free to help families, students, and teachers combat the equity gaps in education exacerbated by COVID-19.
Internally, she also oriented DreamBox to be guided by three simple principles: take care of each other, take care of our customers, and then by definition, we’ll be taking care of the company.
“We’re at an inflection point,” she said, referring to low unemployment and the changing job market. “The pendulum is swinging, and the leverage is swinging more in the employee camp.”
Woolley-Wilson said the last year highlighted that workplaces need to be more adaptive to the needs of women and racial minorities. Some women might need to work from home more, while others might not have a home environment that’s conducive to work and need to spend more time in the office.
“It’s about being intelligently adaptive, it’s about metabolizing new data, new stimuli from the environment, and meeting people where they are – just like we do with the platform and every individual learner,” she said.
DreamBox also hosts a monthly meeting – the most well-attended meeting company-wide, Woolley-Wilson said – to talk about diversity, equity, inclusion, and justice.
“We talked about hard topics like racial bias or white privilege, we talk about things that happen in the current news cycle,” she said. “All those are dealt with in a very open and authentic way.”
She added that MBA programs of the future are going to have to teach leaders how to create “positive gravity” so the best talent chooses them.
“We’re going to have to make sure that organizations are overt and explicit about what they value, because employees now – from the first day of the interview to the first day of onboarding to their first anniversary and beyond – are unapologetic and very courageous and very intentional about what they want and what they need in their professional environment,” she said.
As the US opens up, more and more employees are telling their bosses they want flexible and hybrid working arrangements.
“Three-quarters of our individuals around the world said flexibility is what they want,” Devika Bulchandani, North America CEO of Ogilvy, said.
Bulchandani said that Ogilvy, like many other firms, is also looking at a 3/2 working model and considering other positive changes it can introduce.
“We also shrunk our real-estate footprint because that allows us to reinvest into different areas of the business and reinvest into our people and what they need going forward,” she said.
She added that they’re instituting three compulsory days off per quarter for each employee to manage burnout.
“Just because we did it doesn’t mean we’re going to do it again,” she said. “Things like, do people need to travel to a meeting? Let’s ask ourselves why.”
Bulchandani said that she’s telling her staff to question whether there’s a perspective missing from the room in terms of gender, race, or disability, as well as capability.
“I have a different skillset, would this team do better? And then my question is, ‘Am I just thinking about New York, or should I be thinking about somebody from our Minneapolis office?'” she said.
In a similar vein, Heimann said that the “democratic” and inclusive nature of the virtual world is something her firm is trying to maintain as employees return to work.
Office space, she said, “will be a creative nexus, it will be a collaboration nexus, it will be a team nexus.” As for remote offices, Heimann said that they’re looking at a broad range of technologies that do more than simply combat “Zoom fatigue.”
“I think that the new age is going to be a little more immersive, more gaming-like, and those are the ones we’re testing,” she said. Weber Shandwick also hired a chief workforce innovation officer and a chief impact officer to push leadership toward “transformation that puts inclusion at the heart.”
“We talked to client after client about the need to solve at the intersections and therefore put together agile, cross-functional teams to bring that ability to clients again,” she said.
The business case for actively coaching, mentoring, and upskilling all people across an organization is clear.
“The cost of inaction around upskilling and often reskilling is going up,” Annette Richardson, founder and managing partner of consulting firm Richardson Partners LLC, said during Insider’s recent virtual event “CEOs on How Talent Drives Transformation” presented by ProEdge, which took place June 29. “We saw with COVID-19 that we could potentially lose a decade of human gain.”
“This concept of leaving no one behind is really important,” she added.
The panel, titled “Mentorship and upskilling – the two keys to a high-performing workforce,” was moderated by Chris Weller, senior editor of strategy at Insider, and featured Richardson and Suneet Dua, chief product officer at PwC.
In the consulting firm’s recent “Hopes and Fears 2021”survey, 77% of PwC employees said they want new skills, while 60% are worried about digital automation.
CEOs are really concerned about “the key skills of their individuals – but one out of five CEOs in our survey showed that they haven’t done anything about it,” Dua said. “We’re trying to help companies work through the how,” he added.
Dua said that in the context of a hybrid workforce and remote work being here to stay, employees have to be performing at the highest level.
“Your employees have to become what we call lifelong learners,” he said. Once there, he added, “they will graduate to be a digital citizen. That’s where we then transact with automations and bots on a day-to-day basis.”
Dua said PwC has over 270,000 people currently being upskilled and there are about eight to 10 digital disruptive technologies in the world that are going to create these new skills.
“Let’s dispel the myth – it’s not hard to start,” he said. “You don’t have to start with everybody. You should start now.”
Miranda Blaiklock knows HR teams didn’t have a playbook for handling the people and business challenges during the pandemic.
Chief among those challenges is the responsibility to holistically support employees, said Blaiklock who is the director of benefits, compensation, and HR information systems (HRIS) at The Kraft Group.
“The blur between working nine-to-five has really changed in this new model,” Blaiklock said, speaking at an Insider event on Tuesday.
This goal of holistically supporting workers taught HR teams to invest in technology that can help make employee’s lives easier. For example, Blaiklock said the company recently added a tool that allows employees to clock in for work or log PTO from their phones. It works just like consumer technology, she added.
Holly Faurot, chief sales officer at Paycom, noted this trend as well. Over the course of the pandemic, she said “employees had an increased amount of interaction with consumer technology. We were utilizing apps more than ever last year.”
This increased use of technology in their personal life may be changing expectations for the tech they use at work.
“Employees are coming back into the workplace now with that same type of expectation,” Faurot said. “They want to have the same type of experience that they’ve had with Amazon or maybe their local pizza place. That’s something that companies need to realize. There’s a very, very low tolerance of complexity for employees.”
Using data and feedback to make decisions
Another way The Kraft Group monitors employee satisfaction with technology is through a digital experience score provided through Paycom. The experience score is a measure of how their HRIS are performing, she explained.
“It is a little bit like a game, so just after each month we just take it just like the Patriots just won a game,” she said, referring to the NFL team whose operations are run by the Kraft Group. “We go and look at our game film and the DDX score and see how we could do it better next month, so it’s been a great tool for us and from a process improvement standpoint. It’s really been a game changer.”
Blaiklock also uses HRIS data to make the business case for different employee decisions, such as changing schedules or offering more flexibility. Data helps Blaiklock make the case to finance when they insitute a new workplace policy.
“I think that most HR teams really have to straddle that line of being both the employee, advocate, but also wearing the business hat and I think the challenge with that is being able to speak the same language,” she said.
From Faurot’s perspective, employee data provides plenty of feedback for business leaders to act on. She recommends employers take the time to look closely at how employees are using the technology and even run focus groups.
“Make it easy, lower the complexity and you’re going to see a huge return on that investment,” Faurot said.
As financial institutions grapple with the steep risks posed by the imminent global climate crisis, ESG (environmental, social, and governance) investing has emerged as a potential solution. While these sustainable investment strategies have gained popularity with investors, data and reporting surrounding ESG factors can be opaque and confusing.
Karen Karniol-Tambour, co-chief investment officer for sustainability at Bridgewater Associates, the world’s largest hedge fund, said that sorting through that data and making sense of it is part of an investor’s job. She said answering questions about an investment’s sustainability merits may feel like a new challenge, but is not any different than answering familiar macroeconomic questions about a country’s growth rate, for example.
Karniol-Tambour made these comments during Insider’s recent virtual event, “Future of Finance,” presented by Grayscale, which took place on June 8, 2021.
This panel, titled “Sustainable Investing Pays Off?” was moderated by Bradley Saacks, senior finance reporter at Insider, and featured Karniol-Tambour along with John Hoeppner, head of US stewardship and sustainable investments at Legal & General Investment Management (LGIM) America, a division of the $1 trillion global asset manager.
Karniol-Tambour said that the key question for Bridgewater in evaluating ESG investments is what they are trying to get out of the data.
“Don’t think about what is presented to you, but [think about] what concept are you actually trying to capture,” Karniol-Tambour said.
Hoeppner said in analyzing sustainable investments, LGIM is trying to “create [its] own points of view and rely less on others.”
The firm has two key goals in mind when it looks to ESG investing, Hoeppner said. The first is to raise standards across the board with regard to disclosure and the second is to find an investment advantage by looking at subsets of ESG data that are closely linked to mispricings in the market.
Karniol-Tambour said her clients want to make the highest returns with the lowest risk possible. She said that there are many areas in which ESG factors are material to making money in a particular market.
“For example, if we’re going and deciding whether or not we think the price of copper is going to go up or down, you really just can’t do that analysis without looking at what’s the pace going to be in which it will transition away from carbon,” Karniol-Tambour said.
“Investing is not two-dimensional risk and return. It’s actually three-dimensional risk, return, and impact -or risk, return, and sustainability. And that third dimension, deserves just as much care, attention, analysis, customization.”
Multiple strategies are available to investors seeking to maximize impact. Hoeppner said that divestment, or opting out of investing in certain assets because they are not sustainable, is “overused” as a strategy. He said that LGIM, as a major investor in many public companies, prefers to use its access to have “constructive engagements” with their portfolio companies through discussions and proxy votes on how to navigate risk.
Moderator Bradley Saacks asked the panelists about the regulatory environment for ESG investing. Hoeppner mentioned that in the US today, if you are participating in a 401k or pension as part of your corporation, it is legally unclear whether or not you can have a sustainability fund in your lineup.
He said he is optimistic that regulators will sort out the issue, which he attributed to an “incorrect assumption” that ESG strategies were deployed for non-financial benefits, whereas he believes most ESG research is actually performed with the goal of reaping financial benefits.
He also expressed the hope that the Securities and Exchange Commission (SEC) enforces some sort of mandatory disclosure for climate risk for all companies, arguing that information is the basis for a free market.
Karniol-Tambour pointed to Australia’s policy of making companies report their potential exposure to modern slavery and eradicate it as an example of sound policy based on a robust data ecosystem.
Without disclosures and data, Hoeppner said, it is difficult to discern companies’ credibility on ESG issues.
“All investment managers see ESG and sustainable investing as a commercial opportunity,” Hoeppner said.
“How do you tell one asset manager from another one when everyone says that they have the best sustainability credentials? The hard answer is that you have to do your homework.”
Just over three years ago, Insider launched Better Capitalism, a section focused on how companies are moving beyond financial targets and actively contributing to a better world for their employees, customers, and other stakeholders.
Sustainability has been a key topic we’ve covered along the way, and it’s only gaining momentum in the conversation around stakeholder capitalism. Last year, Microsoft, Apple, Ford, Starbucks, and other major corporations made big pledges to reduce, eliminate, or offset their carbon emissions. In January of this year, GM announced it would only sell electric vehicles by 2035 and pledged to be completely carbon neutral by 2040.
At the same time, the demand for ESG investing – which integrates environmental, social, and governance goals with investment – has skyrocketed, while more companies have agreed to report on their progress on ESG criteria.
Helping to lead this movement is Klaus Schwab, executive chairman and founder of the World Economic Forum, who convenes economic and political leaders annually to discuss innovative ways to reshape and advance industries. During Insider’s climate-focused virtual event, Act to Impact, on April 20, Schwab said the surge in interest in ESG means customers, investors, and leaders are focused on accountability. He also noted that there are over 300 ESG proxy issues headed to vote this spring.
“Leaders have a new mindset,” Schwab told Insider. “We have a new social consciousness.”
He also spoke about how the pandemic has only increased people’s alertness and sensitivity to corporate social responsibility, which includes how companies treat the environment.
The event also featured insight from David Sproul, the Global Deputy Chief Executive of Deloitte; Rebecca Marmot, the Chief Sustainability Officer of Unilever; Ruth Davis, the Director of IBM’s Call for Code initiative; Alice Sharp, the Artistic Director of Invisible Dust; and more.
Insider is investing more into our sustainability coverage by launching our newsletter, Insider Sustainability. With our new sustainability reporter, Karen K. Ho (who previously wrote for Quartz), at the helm, we’re highlighting the ways in which government, businesses, and society are coalescing responsible climate choice with their practices.
When Klaus Schwab thinks of climate change, he thinks of his grandchildren and their future. Schwab, the founder and executive chairman of the World Economic Forum, is worried – but hopeful.
“Many people have a tendency to see our fight against climate change as a cost, as something that is negative,” Schwab said. “Yes, it may be to a certain extent, but it’s also a great opportunity.”
For the economic leader, tackling climate change means leadership innovation. Company executives, investors, consumers, and political leaders will have to find ways to work together to enact change, he said.
And that means new economic opportunities: new infrastructure projects such as the one Congress is debating, new developments in technologies such as carbon sequestration, and new products such as expanded options for electric cars.
Schwab credits a good portion of his philosophy on climate change to Bill Gates, who he said is a leader in the green movement.
“Gates talks about how, in order to decarbonize the world or to make it carbon-neutral by 2050, a lot of new technological progress has to be achieved,” Schwab said. “I see here a great opportunity because we can move into an age of green innovation.”
Signs of this age of green innovation have increased in the past year. ESG investments, or investments that apply environmental, social, and governance principles to a company’s performance, have seen record growth and are projected to increase in the future, reports showed.
US assets under management that used ESG criteria increased 42% over the past two years to $17 trillion in 2020, up from $12 trillion in 2018, showed a 2020 report from the US Forum for Sustainable and Responsible Investment.
A growing number of companies have pledged large green initiatives. GM, America’s largest car manufacturer, said it would go carbon-neutral in its global products and operations by 2040. Apple committed to being 100% carbon-neutral for its supply chain and products by 2030.
Schwab is energized by these changes and believes the trend toward a more stakeholder-centric view of the world is ahead.
“I’m really excited,” he said, adding that society has changed over the past few years. “We have a new mindset. We have a new social consciousness.”
Insider spoke with Schwab about his new mindset and how leaders plan to embrace the ESG movement. Our interview has been edited for length and clarity.
There’s more and more recognition that a viable economy not only relies on treating people well but treating the climate well. Do you think CEOs have fully adopted this mindset that treating the climate well is good for shareholders?
So the executives who have a longer-term thinking have clearly adopted this mindset. And if you look, there are two reasons – they are very obvious. So there’s first an economic reason. I think what we have learned from the coronavirus is that prevention – the cost of prevention is much lesser compared to the cost of responding afterward to the damage. So we have a situation where you have a kind of free ride because you don’t have to integrate all your external costs into your business model, but someone will have to pay for it. And it will be down the road.
And my fear is that we may end up like tobacco companies, which means, we will be in a situation where, down the line, you will have class action. Already today, investors recognize this danger, this risk. There are investors who hesitate to provide capital to companies who really are damaging the environment.
But there’s also a moral reason. I’m thinking of my grandchildren. I don’t want to have them facing a crisis that may be much worse compared to what we are seeing today with the COVID-19 pandemic.
Do you believe that investors are recognizing the risk?
I said investors who are thinking long term. Of course, if you want to make a fast buck, it’s a different matter.
But in the end, I think companies will recognize they will be better off economically if they take care of nature, because young people – I mean, at least my employees – they don’t want to work anymore for a company or for an organization that is damaging nature.
And I think clients and customers do not want to buy the products of such a company. So I think it’s in the direct, commercial business interest of companies to take care of the planet.
Here in the US, the Securities and Exchange Commission just created an ESG task force to promote the disclosure and transparency of ESG criteria. And a report showed that over 300 ESG proxies are headed to a vote this spring. How do you feel about the surge and attention to ESG reporting?
I think it’s a great evolution. Some people would say even a revolution. But we should not forget that the ESG metrics – so measuring responsibility – are only part of a total integrated system.
It starts with defining your strategies, where you have to take into account the present and maybe even future expectations of your stakeholders. So it’s a strategy formulation. It’s the responsibility of the board. Then it is of course execution, not only inside the company itself but also in the supplying network. And at the end, you have some measurement system, the ESG metrics.
So we should not look at ESG metrics just as some kind of a formal, additional reporting system. I think to do ESG performance in the right way, you have to look at it as an ecosystem, which integrates a company as a whole.
There are those who are still against certain ESG metrics, for example, the billionaire investor Warren Buffett recently urged shareholders to reject proposals for more transparency of climate-related risks and diversity and inclusion efforts. What would you say to Buffett and others who reject more transparency?
I would like to have a discussion with him.
I would tell him: “Look, I can understand that on the level of Berkshire Hathaway, which is a kind of conglomerate, you will have difficulties measuring the ESG responsibility of each of your companies where you have a shareholding in. So, here, I would understand.”
But as far as his companies are concerned, where he has invested in, I would tell him: “Look, particularly because you are very heavily exposed to the insurance business, why don’t you engage actively into more ESG of responsibility? Because it may backfire on you one day, in your insurance business. You may be caught by not having an integrated policy where you pursue profitability but also take care of people and the planet.”
President Joe Biden is asking Congress to approve hundreds of billions of dollars to remake transit infrastructure in the US in a plan that the White House says will fight climate change. What do you think of this kind of package?
It’s not enough to hold only corporations responsible. I think we have a common responsibility, all stakeholders of global society, which means corporations have to absolve a lot of their responsibilities in this respect, but it’s also us individual consumers, and it’s the government.
And the government has to contribute to fighting climate change by creating the necessary incentives and also disincentives. I think there are still too many governments around the world that provide subsidies for activities that actually are damaging the climate. And I think we need the government to step in to build the necessary infrastructures.
What we need is an integrated approach. We cannot fight climate change by doing here a little bit, there a little bit. We need to have an integrated ecosystem approach. And I think here the government has a major role to play, to provide the kind of integrated vision for the future.
Going back to the corporate world for a minute: Doesn’t the case of Danone and the recent ousting of its CEO show that focusing on ESG metrics can lead to a nonconfidence vote of shareholders?
Yes, so we have the famous case of Danone. The CEO was ousted and the criticism was that he has been devoting his time and his attention much too much to the ESG dimension, and not necessarily giving sufficient attention to his shareholders. But I think that’s a wrong dichotomy.
We shouldn’t make an artificial polarization between profitability on the one hand and people and the planet on the other hand. I think the art of good management today is to create the right balance and not to be too much just keeping in mind stakeholders or shareholders. I’ll give you a practical example – if we compare Danone with Unilever.
Unilever is certainly recognized worldwide as a company that is at the forefront of ESG thinking, but at the same time the share price of Unilever has doubled more or less in the past 10 years. The share price of Danone has quite had some difficulties, especially over the past year. Shareholders are also stakeholders. Unilever is an example that you can give [attention] to your shareholders as well as your other stakeholders.
What company stands out to you as doing especially well when it comes to tackling climate change?
I’m looking at the hardest-hit companies, hardest in terms of those being confronted with a major need for transformation. Here – if I look at the oil industry – I take as an example Total, the French oil company. Total is one of the 70 companies that the World Economic Forum brought together to commit to report on the ESG metrics we have developed with the International Business Council, under the guidance of Bank of America’s CEO, Brian Moynihan, together with the Big Four audit companies.
If we’re talking about persons, I would say Bill Gates. I just read his newest book [“How to Avoid a Climate Disaster”]. I think he has a very great contribution to offer us. Because he says, “Look, we need a systemic approach to fight climate change. Even if we take all of our goodwill, it will not be enough. What we need is innovation.”
He talks about how in order to decarbonize the world or to make it carbon-neutral by 2050, a lot of new technological progress has to be achieved. Our present technology does not suffice to get to the target in 2050. So I see here a great opportunity because we can move into an age of green innovation.
Many people have a tendency to see our fight against climate change as a cost, as something that is negative. Yes, it may be to a certain extent, but it’s also a great opportunity.
If I look at the young generations – the World Economic Forum has a community of 10,000 young leaders – if I talk to them, they have a different mindset. They have a different picture of the world.
It’s not only the material dimension, income, or GDP. It’s well-being. And climate change is interconnected with pollution. It’s interconnected with life expectancy. It’s interconnected with a lot of health issues. So if we want to invest in our well-being, then we have to invest in fighting climate change.
Recently, a number of major corporations such as GM and Apple have made pledges to go carbon-neutral – GM by 2040, and Apple by 2030. Do you think these timelines are realistic? And are they fast enough?
We speak about a carbon-free world by 2050. That’s the objective of the Paris Agreement. Most countries have subscribed to this objective. And many, many companies have now also issued statements that they would achieve carbon neutrality.
Now, we have to be aware that the situation is not the same for each company. We have the energy companies – the Exxons, the Chevrons, and so on – that will have much more challenges to reach this objective of carbon neutrality in 2050, compared to Google, or even a car manufacturer that understands the technology to make this transformation to the electric car.
So it’s good if companies that have fewer challenges, such as the high-tech companies, provide an example by setting very ambitious objectives. But again, I come back to this: Setting objectives is not enough. Being measured in the execution is important, and here the ESGs come in again.
Do you think the energy-sector companies such as Chevron and Exxon have fully bought into the stakeholder-capitalism model? Have they bought into addressing climate change?
I would answer that in the following way: If they haven’t bought in yet, into the stakeholder concept, they are on the wrong side of history, because I’m deeply convinced that we are now really at an inflection point where society as a whole does not tolerate any more companies that are damaging nature or that are not upholding diversity and social justice.
I think we have a completely new social consciousness. We now also have a world where every deficiency can be reported very fast, and that can create a negative reaction. So if I were Exxon or a company that’s really challenged – we should not forget, these companies need a complete transformation of their business models – I would commit to the stakeholder concept, but would also try to create understanding in the public. For me, being in the energy sector, it may be much more difficult compared to a company that’s already producing products that do not necessarily damage the environment. So it’s a communications effort.
How are you feeling about the corporate fight to tackle climate change? What, if anything, are you excited about?
I’m really excited because, as I just mentioned, we have a new mindset. We have a new social consciousness. People like Greta Thunberg got very aware that something is wrong here in our lifestyles – that either we will have to suffer down the road or our children will have to suffer.
So we are now in a situation where climate change, or the attention given to climate change, provides a higher sensitivity for other deficiencies that we have.
I mentioned already a lack of inclusion, a lack of social justice, a system that is not necessarily fair in providing everybody with the necessary opportunities. And I think the pandemic has contributed to this new alertness, to this new sensitivity. Some people may say this is inconvenient because we pinpoint weaknesses in our society, but it’s a wake-up call to adapt and to make sure that we have better lives. That’s what we’re fighting for.