Insights from ESG leaders: Aligning the whole organization to deliver ESG success
At GreenBiz23 Datamaran spoke with Chris Librie, Senior Director of ESG, at Applied Materials, a global leader in materials engineering solutions.
See the full video here, or focus on key points of interest for you in the links below.
How has ESG evolved in recent years?
“The changes in ESG have been pretty profound over the last 15 years, it's really become a mainstream business department, it's become part of the company in a way that I could never have envisioned 15 years ago.
“One of the key things I always viewed as a barometer is, 15 years ago, I couldn't have bought a meeting with the investor relations team - now we're joined at the hip! We're working together all the time, talking with our investors, our customers, and other stakeholders. ESG is a really central business function now.”
How do you identify what is most important for stakeholders?
“We identify what our stakeholders want, first of all, through conversations with them. I spend a lot of time talking to investors, probably 40 to 50 meetings a year, with our largest investors. Datamaran is really instrumental in those discussions, helping us identify what the larger-scale changes are for our stakeholders, and also in the wider issues around ESG for our business.”
What convinced you to conduct a materiality assessment using Datamaran?
“A materiality assessment is really important in setting your strategy, I've done this at other companies as well. What's great about Datamaran is you can do it pretty quickly.
“It's easy to set up your competitive set, the stakeholders, the geographies you're operating in, and really get a glimpse into what's most material quickly. What's important about that is it then enables you to set your strategy in accordance with that.”
Who benefits from materiality assessment insights?
“In terms of the outputs from our materiality assessment, there are several different audiences. First and foremost, it is included in our sustainability report.
“It's read by customers, employees, and investors, the three key stakeholders from my point of view. It's also read internally which is really important in terms of aligning the organization. Most ESG teams are not huge, usually only a handful of people, the way we get things done is through our ability to work with others across the organization.
“ESG is a team sport, so a really good materiality assessment, one that's rooted in fact-based data, as Datamaran is, enables us to really align the organization.”
What are the pitfalls of not being attuned to stakeholder opinions?
“The issues around not doing this properly start to catch up with you in terms of your connection with your stakeholders. Also, although a lot of people like to think of ESG as a pre-competitive area, it's really not. Where there is a lot of intellectual property and differences between companies, they want to do better than each other. They want to compete for those stakeholders, particularly investor dollars. So if you're not up to the minute with your risk assessment, then you're going to fall behind and potentially pay the price with some of your stakeholders.”
How do you anticipate opportunities as well as risks?
“We take a regular pulse check, we have just completed what I call an opportunity analysis. We use Datamaran and, different from a materiality assessment, we looked at the top 20 issues and benchmarked where we are. We identified our position on those top 20 issues in ESG, and we compared ourselves to several different companies; some of them were competitors some of them were customers, and some of them were customers’ customers.
“As we looked across that matrix, we saw several opportunities that were fully laddered up, to the risk assessment we had done through Datamaran. We presented that to senior management. And it's been really impactful. Now we're starting to do the work to close those gaps.”
How connected are the board and C-suite to ESG issues?
“At Applied Materials, we feel really connected with our board and our C suite. There's a connection with our CEO and his leadership team, we talk quarterly about the progress that we're making toward the 2030 ESG goals we set, we also meet with our board every quarter. So the governance around what we're doing is pretty solid.”
Do you also consider ratings and rankings when developing an ESG strategy?
“Ratings and rankings are important to us, I think they're a great barometer of how we're doing, it's an outcome from the opportunity matrix that I talked about before. CDP is important to us and we submit a response and we look at some of the others that have proprietary models like MSCI, Sustainalytics, and ISS, and Applied Materials does pretty well across the board.”
What are the benefits of owning ESG in-house?
“There's definitely a sense of pride at Applied Materials, I think Datamaran has helped contribute to that, because of its structured approach and the fact based approach. What we've been able to do, in addition to that governance we talked about, is we've created an ESG Leadership Council. That's that team that's working across the organization in different parts of a company, whether it's the business units, the functions, and that's how we really keep moving in the right direction toward the goals that we've set.”
What ESG information is most important for decision-makers?
“Number one is the information that's really important for our leadership council, that which feeds our strategy. From our strategy, we develop annualized goals, there are actually 16 of those, and we have the usual traffic lights approach to them. We review those quarterly, to see if we're on track for that year, because when we set 2030 goals, in 2020, it seems like it's a long time. But actually, it's not that long, and we have to be making progress annually.
“Number two is the rating situation and how we are doing? What's gone up? What's going down? The opportunity matrix that I talked about earlier, it's another important decision making tool.”
How can companies get started on owning ESG?
“For companies to really supercharge ESG and really get it moving, there's a number of different steps. One is to create that internal glue, the leadership team, because it's a team approach. So the way to do that is to have goals that are aligned to your materiality assessment, and that are set and made public so that people feel committed.
“Lastly, you really need senior management commitment, whether it's the CEO or the C suite, because you need that support to drive the change and the commitment from across the company.”
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