Finance Leaders Discuss Why ESG Is an Imperative for Business Growth

How can companies “walk the talk” to create value for society and improve business outcomes by investing in environmental, social, and governance (ESG) efforts? Barbara Larson, a finance leader at Workday, joined McKinsey & Company partner Giulia Siccardo and Ann Dennison, executive vice president and CFO at Nasdaq, to discuss this topic and more at Conversations for a Changing World.

Almost 9 in 10 (87%) people believe a company should create value for society, not only its shareholders. But only half think that companies actually place people over profit, said Giulia Siccardo, partner and environmental, social, and governance (ESG) expert at McKinsey & Company. Siccardo added there’s much at stake in closing that gap, because companies that invest in ESG are able to deliver higher returns to shareholders.

At our digital event Conversations for a Changing World, Siccardo teed up a discussion on how companies can “walk the talk” when it comes to ESG. Ann Dennison, executive vice president and CFO at Nasdaq, and Barbara Larson, senior vice president of accounting, tax, and treasury at Workday, shared deeper insights on how organizations can roll out these efforts. 

Dennison explained that Nasdaq has begun helping to shape ESG reporting in the U.S. “We believe in a sustainable future, and we believe we can be part of helping to build a sustainable future,” Dennison said of Nasdaq, which has been carbon neutral for three years.

“ESG has to be part of your overall business strategy, not a side job.” 

Ann Dennison Executive Vice President and Chief Financial Officer Nasdaq

As one example of its progress: In August, the SEC approved Nasdaq’s new rule requiring listed companies to annually disclose board-level diversity statistics using a standardized template. “We believe this is about transparency that will help build a better reporting framework for the future, and help drive knowledge and diversity across the listed companies,” Dennison said.

ESG isn’t a nice-to-have. For Nasdaq, Dennison said, ESG is imperative for growth. “Gone are the days of the investor being the only stakeholder,” she said. An organization’s stakeholder base now includes its customers, employees, and communities.

“If you want to grow your investor base, you need to be focused on ESG,” Dennison said.

Nasdaq provides several solutions to help companies do that. With its ESG Data Hub, investment managers enter their diversity data, while asset owners assess that data to determine how to allocate their dollars. Nasdaq OneReport assists corporate clients in navigating the reporting complexity of ESG. And with Nasdaq’s carbon removal marketplace, corporate clients can procure offsets to neutralize their carbon footprint.

To bolster its own ESG reporting, Nasdaq placed its ESG function within its finance function within the past year. That shift in its ESG reporting structure is part of Nasdaq’s long-term vision, Dennison said, “to fully leverage our data across the organization.” For instance, Nasdaq has used Workday data to get a holistic look at its suppliers’ diversity. “Without that data, we can’t have a plan,” Dennison said.

Dennison shared three strategies for CFOs to meet their own ESG goals:

  • “ESG has to be part of your overall business strategy, not a side job,” Dennison said. It should be part of board-level conversations and objectives.

  • Think about the long-term strategy. “Then break that down into smaller pieces in the short term,” shared Dennison. That should include identifying near-term key performance indicators.

  • “Use your data in the most powerful way,” she explained. Automate where you can.

Interested in learning more? Watch the full session here.

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