ESG and what business leaders need to know: PwC

From key regulators to customers and employees, companies’ most important stakeholders are looking for them to take action on ESG. Companies may have made commitments, but do they have plans to execute? As a leader, how can you develop the right skills and help guide your teams?

In this episode Wes Bricker, PwC’s Vice Chair - US Trust Solutions Co-Leader, is joined by Beth Sasfai, Chief ESG Officer at Verizon, to discuss the impact of SEC’s proposed climate disclosure rules, working across stakeholders to reach your goals and the importance of telling your ESG story.

To learn more on the topics discussed today, visit PwC’s Create value through ESG.

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About the podcast participants

Wes Bricker is Vice Chair - US Trust Solutions Co-Leader at PwC. In this role he oversees the largest Trust platform in the world, bringing together the firm’s combined Audit, ESG, Digital Assurance and Tax Reporting capabilities to best help clients as they seek to build trust with their stakeholders. As co-leader, Wes is responsible for the quality of service, excellence in the work performed by over 21,000 partners and staff, developing diverse teams and driving innovation.

Beth Sasfai is Verizon’s Chief ESG Officer. In this role she is responsible for the company’s ESG strategy, disclosure, and related stakeholder advocacy. Her team is additionally responsible for governance policy, compliance with federal and state corporate and securities laws, providing legal support to the corporate secretarial function, and advising on other general corporate matters.

Episode transcript

Find episode transcript below.

ANNOUNCER:

00:00:01:00 Welcome to PwC Pulse, a podcast to provide insights to help you solve today's business challenges.

WES BRICKER:

00:00:09:00 Hi, everyone. I'm Wes Bricker, Vice Chair and US Trust Solutions co-leader at PwC. More than ever before, people are looking to businesses, large and small, to take the lead in tackling big issues facing society.

00:00:24:00 They want to know, are companies helping to address the climate crisis or are they making it worse, are business leaders pushing back against discrimination and bias by treating their people fairly?

00:00:35:00 Customers, employees, shareholders, lawmakers and regulators are laser-focused on topics like these which all fall under the broad umbrella of environmental, social, and governance or ESG.

00:00:48:00 Taking ESG seriously isn't just good for companies’ reputations, it's good for business. And while companies have long been able to craft their ESG stories, largely as they saw fit, that's beginning to change.

00:01:00:00 The world's biggest investors are seeking greater transparency, and the Securities and Exchange Commission or the SEC has proposed rules governing climate disclosures.

00:01:11:00 How can business leaders guide employees and stakeholders in these efforts? Joining us today to help us understand what this latest ESG news means for business leaders is Beth Sasfai, Chief ESG Officer at Verizon. Beth, welcome.

BETH SASFAI:

00:01:25:00 Hi. Thanks for having me.

WES BRICKER:

00:01:27:00 Of course. Before we dive in, I wanted to ask a couple of rapid-fire questions just to get us warmed up and going. So first question, what is your favorite city to visit?

BETH SASFAI:

00:01:38:00 Barcelona.

WES BRICKER:

00:01:39:00 Wonderful city. Favorite book?

BETH SASFAI:

00:01:42:00 Well, what I've been reading recently was The Crucible by Arthur Miller and it's a very interesting read right now.

WES BRICKER:

00:01:47:00 It sure is.

BETH SASFAI:

00:01:49:00 Yeah.

WES BRICKER:

00:01:49:00 Here's a fun one. What's your favorite walkup song?

BETH SASFAI:

00:01:52:00 Glory Days or anything by Bruce Springsteen?

WES BRICKER:

00:01:56:00 Who is your inspiration?

BETH SASFAI:

00:01:58:00 My dad who didn't go to college and sat with me every night after dinner at the table, teaching me how to analyze and talk about issues.

WES BRICKER:

00:02:06:00 That's wonderful.

BETH SASFAI:

00:02:07:00 Hats off to him.

WES BRICKER:

00:02:08:00 Yes.

00:02:10:00 So let's jump in. First question that I'd really like to get started with, it's really about your career journey. You have a fascinating journey. You started out at Verizon in the Office of the General Counsel, you have a litigation background, and now you're the Chief ESG Officer at Verizon. Take us through that journey a bit.

BETH SASFAI:

00:02:29:00 Yeah, I've done a lot of different things at the company. I came out of a law firm and went into our regulatory team in the General Counsel's Office litigating rate regulated cases before the Board of Public Utilities. And I learned the company, it was a great way to start.

00:02:45:00 Before I got this Chief ESG role, I was doing a lot of governance work with the Board of Directors, my team led governance policy. And that really enabled me to pull together a lot of the things I'd been doing at the company, right?

00:02:58:00 I understood the business strategy. I'd been in litigation, as you said, so I had kind of a view towards how to handle and think about systemic risk.

00:03:06:00 I had a lot of contacts from being in litigation, I learned how to kind of master new areas. And so then, you know, in the governance role, our board oversees, obviously, all sorts of risks, issues, financial and non-financial. So I got kind of a firsthand seat there.

WES BRICKER:

00:03:21:00 It's a long journey. And sometimes we talk about ESG, sometimes we talk about sustainability. ESG is broader than that. It touches many aspects of business and the impact of business. What are some of the skillsets that you see being required to really address ESG?

BETH SASFAI:

00:03:42:00 ESG is only successful at a company if you foster collaboration, consensus, you've got to spend a lot of time with business leaders, helping them understand what are the company's key ESG issues? How do these fit into our strategy, right? How do we think about integration?

00:03:59:00 And you've got to kind of be able to bring very different people with different agendas to the table, achieve consensus, whether it's around setting a climate commitment, or how we're going to talk about our diversity goals, you really need to be able to build those relationships.

00:04:13:00 And the other thing I would say that is very important is being a proactive person. So if you're reactive in an ESG role with everything that's going on right now in this ecosystem, you're going to be doing a lot of things that may not actually affect the bottom line or be that important to your ESG strategy.

WES BRICKER:

00:04:30:00 I love that point. And it really feeds into my next question around a jarring gap really, between business leaders and customers and employees.

00:04:41:00 Our research has shown us that a majority of people would rather work for or buy from companies that take ESG seriously and at the same time, we found there's really a disconnect between what executives say they're doing on ESG and what consumers perceive.

00:04:55:00 So our work with clients has really shown us that clear ESG reporting and transparency is one really good way to build trust.

00:05:03:00 How do you see companies building trust with stakeholders like employees and consumers when it comes to ESG?

BETH SASFAI:

00:05:08:00 I think reporting is all about transparency. And it is one of the key ways to build trust with various stakeholders, right, with investors, with your customers, with broader stakeholders, and certainly with your employees.

00:05:22:00 I think one of the real challenges is making sure that you're thinking about your audience, and you're talking about your ESG issues and performance and commitment in a way that they can understand, right?

00:05:32:00 And one of the things I've seen in the last year, as my team has matured, is our ability to take some of our ESG investor-focused reporting, and make it a little more digestible. So how do we think about it when we're talking to customers who may or may not have a lot of familiarity with intricate cybersecurity procedures, right, or how do we talk to our employees about our climate goals? Do they know what net-zero means?

00:05:55:00 And so I think part of it is transparency. And part of building trust is educating and helping people understand kind of what's important and what ought to be important to them.

WES BRICKER:

00:06:05:00 It's a really good point. As companies tell their story over time, companies have told their ESG story sort of their own way. And then as that information was more widely used, there's a desire to compare performance. How is one business model comparing to the next or even within a peer group, how does one company compared to the next? That's a big shift in terms of the standards--

BETH SASFAI:

00:06:28:00 Yeah.

WES BRICKER:

00:06:28:00 --and the rules that companies are using to tell their story. How do you see that coming together?

BETH SASFAI:

00:06:33:00 I think there's some tension, right? Everywhere I go now, everyone wants to talk about data. And Verizon has been very focused on data and our ESG journey.

00:06:42:00 It's frankly not so easy to do a lot of quantitative reporting, you've got to preassure metrics, you need to understand what you're measuring, you need controls. So that can be challenging.

00:06:52:00 But what I do find in a lot of the engagement with our investors in particular, and some of our other stakeholders, they care about the story. And they care about the qualitative narrative. They want to understand what's your governance? How are you thinking about risk management? What's your strategy?

00:07:07:00 The metrics are important, but they're not everything. And so as we think about pulling a lot of our reporting into SEC filings, one of the things my team is struggling with is how to do that, but still preserve some of these more narrative discussions that maybe won't make their way into filing. So how do we not lose that?

WES BRICKER:

00:07:25:00 I love your points about being proactive, telling the story, doing so with data and credibility and transparency, that undoubtedly takes you across the entire organization from operations and strategy, how the business is making decisions. It's a multifunctional approach.

00:07:45:00 How do you see maybe something like an ESG controller that really connects dots across the middle of the organization, or even an ESG steering committee? What's the best way that you have found or good approaches to tying together a multidisciplinary effort like this?

BETH SASFAI:

00:08:02:00 You definitely need a cross-functional team, right? When the Board of Directors built out my centralized team, that was exactly what they had in mind, a team that could look across legal, finance, sustainability, the business, and think about how we're setting commitments, how we're meeting goals, making sure that everybody has the information that they need in order to operate in the space.

00:08:24:00 And as we think about addressing things like the SEC rules, we've formed a cross-functional team between my ESG team sustainability and finance, very close tight-knit team, there's a lot to do right now, and making sure that we're all sharing information.

00:08:39:00 I don't know if it's as important where you sit as it is that you've got folks who understand that the mission is collaboration. I sit under the General Counsel, I spend most of my time working with our Controller and our Chief Financial Officer.

WES BRICKER:

00:08:51:00 Which really goes to the point that ESG is across the entire organization. It's enterprise wide. But it can also be a differentiator. It can be a differentiator for performance, way of better understanding a business model. How do you see those issues really coming together? ESG as a differentiator for companies.

BETH SASFAI:

00:09:15:00 I think as the space gets more mature, companies will be better at differentiating themselves using ESG. I mean, right now, right, you need to be a responsible business. That's table stakes. Your customers want to see you as a partner who's helpful to them.

00:09:29:00 The next step is sort of how do you help your customers meet their goals. Are you creating solutions that help them meet their goals? You know, does Verizon have our own net-zero goal? Yes, we do. And how does that feed into their goals and how they're meeting their goals?

00:09:42:00 And then I think the taking-it-up-a-notch step really is can you help shape customer behavior in what you're doing. And I've seen some companies really innovating in this space, trying to use their branding, their marketing, their advertising to change customer behavior to either be more climate-conscious or more conscious of being diverse and inclusive, that's really a win.

WES BRICKER:

00:10:04:00 I love that point that changing behavior is really driving outcomes within the company--

BETH SASFAI:

00:10:09:00 Yeah.

WES BRICKER:

00:10:10:00 --and across society. And that really reflects ESG as an important topic for business, but also as a way to change the conversation, whether its employees or customers. How have you seen it change the relationship maybe with customers, employees, or even the board?

BETH SASFAI:

00:10:27:00 Yeah. So with employees, I've definitely seen us evolve in the last couple of years where employees understand the value of being transparent and talking about what we're doing.

00:10:38:00 I think they understand now that our reporting, our ESG reporting is a great way to explain all of the terrific governance processes and procedures, our values, all these things we have in place, how do we talk about our impact.

00:10:51:00 And so I have people really proactively coming to me now lobbying to be in the ESG report and give us data and make sure that what they're doing is captured.

00:10:59:00 So that's been a conversation that's changed. With our board, our board from day one has been amazing. They set a tone from the top, they've been really supportive in terms of resources, and in terms of helping us prioritize.

00:11:12:00 And I think I've seen that conversation change now to helping us be more strategic. With so much going on in the space, where should we really focus, what outcomes should we be focused on, and that's always helpful to have the backing of your board like that.

WES BRICKER:

00:11:25:00 Really important.

00:11:28:00 Let's reflect on the risk side. What are the kinds of things that keep you up at night? Given the importance of the topic to a wide set of stakeholders whether it's the SEC rules and regulatory expectations or investor expectations, customer expectations, there's a lot of expectations around this topic. Is there anything that you sort of really spend your time focusing on the risk side?

BETH SASFAI:

00:11:51:00 I worry that we're not going to get the consensus that's needed around the data and the reporting that people want. And we're going to continue to get onerous requirements from multiple places that are almost a distraction.

00:12:08:00 And I definitely see the value in reporting. Verizon is a leader in reporting, but you don't want it to just become a compliance exercise. And you do want to make sure companies have the space and the time to be aspirational, very important, to try to move the needle, and to keep their eye on the ball.

00:12:25:00 And I worry a little bit that we're going to end up with multiple competing frameworks. Even if the SEC comes out with rules, we've got, you know, a lot of European initiatives, and then we still have investors asking us for slightly different flavors of things. And all of that takes a lot of time and resources and does detract from some of the other things that I'd like companies to be able to focus on.

WES BRICKER:

00:12:45:00 Yeah and it really draws on your proactivity point--

BETH SASFAI:

00:12:48:00 Yeah.

WES BRICKER:

00:12:49:00 --really leaning in, and--

BETH SASFAI:

00:12:49:00 Yeah.

WES BRICKER:

00:12:50:00 --understanding the business model and then shaping the discussion.

BETH SASFAI:

00:12:53:00 Right.

WES BRICKER:

00:12:53:00 So maybe last question and we'll end on a positive note here. What are you most excited about on ESG as a topic and where do you see this going?

BETH SASFAI:

00:13:02:00 I am most excited about collaborating with other companies. So I've seen as the space has matured, companies learning from one another, companies challenging each other, companies working on alright, maybe we don't think this metric works, but what might work, what could we do, how are we capturing data.

00:13:19:00 And then also companies encouraging peers to do more. I mean, Verizon spent a lot of time doing green bonds and green financing, and making sure that we're encouraging the use of diverse underwriters. And we've seen peers follow suit.

00:13:32:00 I get a lot of people calling me asking me how to think about these things. We call our peers to understand, you know, if I read something in the paper, how did you come to this, how are you thinking about it. So I'm really excited to see companies learn from each other and kind of take it up a notch.

WES BRICKER:

00:13:45:00 It's a terrific point, Beth. Let me just reflect a couple of points that I heard. Being proactive--

BETH SASFAI:

00:13:51:00 Yeah.

WES BRICKER:

00:13:52:00 --really reflects the leadership that really sits at the heart of ESG. We have to be passionate about it. But we also have to be inclusive--

BETH SASFAI:

00:14:01:00 Yes.

WES BRICKER:

00:14:01:00 --across the entire enterprise. It takes everyone. Can't do this in a silo. And then also engagement. I love your point about connecting outside the organization, building a consensus because there is fragmentation.

BETH SASFAI:

00:14:14:00 Yeah.

WES BRICKER:

00:14:15:00 The more we engage, the more consistent consensus oriented this area will become.

00:14:21:00 Beth, thank you so much for joining us today. All eyes are on the business community as they take the lead on society's big challenges like ESG.

00:14:31:00 It was great to hear your insights around what that looks like in practice at Verizon, and to learn from your own career journey as well. Thank you.

BETH SASFAI:

00:14:40:00 Thanks Wes for the conversation.

WES BRICKER:

00:14:42:00 And to our listeners, thank you for joining us on this episode of PwC Pulse. For more information on these topics, visit pwc.com.

ANNOUNCER:

00:14:50:00 Thank you for joining us on the PwC Pulse podcast. Subscribe to PwC Pulse wherever you listen to your podcasts or visit pwc.com/pulsepodcast to hear our next episodes.

ANNOUNCER:

00:15:04:00 This podcast is brought to you by PwC. All Rights Reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates and may sometimes refer to the PwC Network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This podcast is for general information purposes only and should not be used as a substitute for consultation with professional advisors.