Talk for London Business School, Women in Business alumnae network: ESG: just another buzzword or an overdue necessity?
By Tamara O’Brien, TMIL’s roving reporter
Hands up now – how many of you joined your university’s alumni group? Those of you who graduated in the last 20 years, put your hands down. Ha, as I thought. Just a few waving hands from the die-hard socialites, whose uni days were the best of their lives.
For the rest of us, born before networking became an essential tool in the job-hunting box, being an alumna/alumnus was a sleepy, take-it-or-leave-it thing. Tonight though, looking at the high attendance and global representation of the LBS Alumnae Women in Business group, alumna status is clearly an opportunity to be grabbed with both hands.
I quickly had to put such musings to one side though, as Claire jumped right into her talk. Not knowing how much her audience knew, there was a fair bit of back story to whizz through that her hosts had asked Claire to share. Mediaeval scholar – corporate communications specialist – corporate reporting – Trust me, I’m listed – and how all that brought us to tonight’s talk on environmental, social and governance (ESG) reporting. And along the way, Claire’s views on:
The importance of good reporting, not just to the financial markets but to a functioning democracy
Likely upcoming international ESG reporting standards (“My money’s on the IFRS”)
The primacy of narrative, and a comply-or-explain approach to ESG, over consistent but tick-box disclosure (“A box-ticker would find all the right statements about supply chain in Boohoo’s 2020 annual report – took me 10 minutes to read the strategic report and realise nothing lay behind them”)
How non-financial issues (global pandemic, climate change) have gone from the back to very much the forefront of investors’ minds
Falcon Windsor’s mission (“Flying the banner of truth”).
“Wonderful and a bit daunting”
In introducing the Q&A session, our friendly host Tamara Tankosic thanked Claire for “her wonderful and a bit daunting talk!”, rather sweetly summing up the Claire Bodanis Experience. Because let’s face it, Claire’s extensive knowledge of reporting, and her con brio take on it, are not your standard fare. Not that our audience was daunted: they had a flood of questions, which Claire relished answering, fitting in as many as she could. Here’s a flavour.
Q: Should auditors check non-financial as well as financial information in reports?
CB: Not necessarily auditors, but someone needs to assess the information independently. I think specialist assurance companies could be the way forward. And good companies, that want to report truthfully, would welcome this scrutiny, since it helps ensure accurate information going out to the market.
Q: Have you ever had a client NOT reflect what you think they should in their ESG reporting – and what have you done about it?
CB: The most difficult situations are with companies ‘on the cusp’. They might be engaging with, say, climate change challenges, and making bold commitments, but not making any progress. You have to cut them some slack, because business is like politics – you make a great plan, then you have to balance it with conflicting priorities and stakeholder needs, budgets and so on. And to help them you need to work with them, engage, and encourage change. But if a company keeps saying the same thing and nothing changes, then suspicion sets in. In the end, you have to follow the money. What does a company’s capital expenditure programme look like – is it investing in things likely to increase or reduce emissions? Check out directors’ remuneration – what are they being rewarded for? That’s where the truth lies. Our job is to help companies tell the truth through reporting. And ultimately though, if intent and progress just don’t match, then you have to talk away.
Q: Are ESG investors calling Boards to account?
CB: Yes, they’re not getting the easy ride that they used to! In ESG generally, it’ll be interesting to see what comes out in the coming round of annual general meetings.
And finally, an ESG issue close to our audience’s hearts…
Q: Gender equality – what should be the standard?
CB: The UK has mandatory pay gap reporting. It’s not mandatory to have, say, 50% of the Board of other leadership being women (although it’s been mooted by some), and I don’t think it should be. You need to appoint those with the right experience, skills and attributes, whatever their gender. And right now, given the historical context there just aren’t enough senior women to go round. But I think that will change naturally anyway, as more women become senior leaders and new generations of directors come through. I think that’s more meaningful than having a standard or quota.
The session closed to smiles all round, and, thus inspired, the alumni (there were some men there too!) wafted off to do their networking thing. LBS Women in Business: coming soon to a Board near you?