A Global Take on ESG

This blog is based on Episode 9 of theThe Corporate Director Podcast, where we interviewed Clare Wardle, General Counsel and Company Secretary for Coca-Cola European Partners.

Environment, social or sustainability, and governance: ESG. Boards are not only thinking about ESG right now, but also adopting principles and policies that drive ESG in the businesses.

In Diligent Institute’s February 2019 report, Winds of Change: Environmental Sustainability Rises to the Board Level, there was little consensus from boards on how to structure ESG oversight, but a strong consensus that ESG (1) is rising in importance on the board agenda, (2) will be discussed more frequently in the coming years, and (3) that this rise is driven by important board-level motivations.

We interviewed Clare Wardle, General Counsel and Company Secretary for Coca-Cola European Partners, about her global take on ESG.

“Every one of our environmental targets, we’re seeing that that’s going to make us a better, more sustainable business.” —Clare Wardle

We also interviewed Annie Kors, Lead Researcher for the Diligent Institute, about a related topic: how boards are impacted by an environment of intense political uncertainty and what they can do about it. This interview was based on Diligent Institute’s recent report, Governing Through the Fog: Corporate Director Perspectives on Political Uncertainty. 

At the Core of ESG

ESG definitely takes on different meanings in different regions across the globe. But one thing seems clear: ESG is not short term, and it’s not peripheral. It’s not a waste of money, and it’s not optional.

In the UK in particular, Wardle said ESG is becoming more about the long term sustainability of companies: “People tend to think sustainability is just about the green agenda, that it’s just about plastic and water and the environment,” Wardle said.

The three interrelated elements of environmental sustainability for boards to consider are:

1. The environment and the world around you
2. People in your company and in your supply chain
3. The communities that those people are a part of

“What we’ve done in terms of our overarching plan is to have a forward sustainability plan where we cover the key commitments for us in sustainability,” Wardle said.

For Coca Cola, that’s sugar, plastic, water, people in communities, and energy. “But we also recognize that sustainability doesn’t stop there,” she said.

“People tend to think sustainability is just about the green agenda. But we think of how it’s going to make this company give a sustainable return to its shareholders over the next 50 years.” – Clare Wardle

Measuring ESG

Wardle’s board decided to report on ESG on an integrated basis to represent that they’ve embedded sustainability into everything they do. “We look at our key measures on people, on environment and so forth alongside our key measures on returns to shareholders profit,” Wardle said. “It’s important to do that because the two are not completely separate.”

At Coca-Cola European Partners, there’s a CSR committee that consists of the chief executive chairman and non executive directors. They look at the strategy for sustainability and monitor the measures and KPIs. “It’s a board committee that reports back to the main board and is driving an agenda that is looked at by the whole board,” Wardle explained.

For example, in 2018 they reported the following, compared to 2010:

• 50% reduction in greenhouse gas emissions
• 16% reduction in sugar in drinks
• 11% reduction in water use
• 100% of electricity purchased from renewable sources

“It’s important that you have a dashboard for that, that you measure it, that you look at it,” Wardle said regarding ESG initiatives. Wardle also clarified that ESG outcomes won’t look the same for every business.

Wardle’s board decided to report on ESG on an integrated basis to represent that they’ve embedded sustainability into everything they do. “We look at our key measures on people, on environment and so forth alongside our key measures on returns to shareholders profit,” Wardle said. “It’s important to do that because the two are not completely separate.”

“It’s about developing good ways forward, about encouraging best practice rather than hard-wiring any particular way forward.” – Clare Wardle

Focus and Belief

ESG may be rising in importance globally, but it’s still an underemphasized aspect of business. Wardle noted a potential reason for this: “Of the two big obstacles, one is not believing that ESG governance hits your bottom line. Every one of our environmental targets, we’re seeing that that’s going to make us a better, more sustainable business.”

The other is having short-term targets and results without focusing on maintaining an awareness of what’s going on.

“Focus and belief–those are the two really key things,” Wardle said.

Leading Questions

Finally, we had three questions for Wardle to wrap up our fascinating conversation.