Over the past 12-18 months, businesses across the U.S. have faced increasing backlash over their "woke" sustainability agendas. As ESG becomes increasingly politized, how can organizations avoid derailing the momentum and progress already made?
On April 5th, Ichor CEO Eric Eve sat down with Competent Boards CEO Helle Bank Jørgensen for Reuters Responsible Business USA 2023's closing keynote. Watch the video to learn how your business can remain true to its sustainability ambition, increase positive action, and sustain commercial activity amidst increasing external pressure.
[00:05] Helle Bank Jørgensen:
We're going to discuss the elephant in the room. Maybe it's the mosquito in the room. Anyone here feel the mosquito of the ESG backlash? Yeah, one hand. Oh, two hands, but you don't really dare to put up your hands, do you? Because this is the elephant in the room. I have one brave person in this room, and that's Eric.
And before I ask you why you dare be up here with me, you know the drill from yesterday: might be giving him my book, Stewards of the Future. Today I'm going to use my, not presidential, but my moderational veto. And whatever you decide, I decide something else. No, I decide probably the same as you do.
So, Eric, we are going to talk about, what's going on outside the windows here.
[01:03] Eric Eve:
Very good. Very good. Helle, thank you so much for having me. Just starting off with the mosquito (or the elephant) in the room, and I've listened to some of the discussion over the last two days. If I got five different organizations here today and put you in a room together this afternoon and say let's get to a common definition of ESG, EJ, DEI, CSR, you would struggle. You’d struggle, and I've seen that struggle in recent months. And much of the struggle is because we spend so much time focused on the brand, the verbiage, and we talk past each other.
So, step one is to get to clarity on common definitions. Step two, our work can't be relevant unless it's tied to a set of values, which is critically important, and we often lose sight of that. And step three, as your colleagues have been struggling with in recent days and months in the context of war, inflation, recession, our work must be relevant to our businesses. It has to be relevant.
You know, when I take on a new client, we don't start by talking about a philanthropic exercise or how this will be marketed. We have to understand how these businesses make money. And here–it's a global phenomenon–but let's just focus on the U.S. You know, there's been, one, a democratization of economic, political, and social capital, and that's an irreversible trend. Just in the U.S., when you think that 89% of the population by the year 2050 will live in cities, and when you think that 37 trillion dollars of wealth will pass from my parents’ generation and my generation to millennials and Gen Z's, we know that over the course of the next 10, 20 years, urbanization will continue. We know gentrification will continue, and that impacts all of our businesses. And so, we have to think about our work in the context of making our businesses successful – or clients for many of you.
[03:46] Helle Bank Jørgensen:
Totally agree. Some of you have asked [if I’m] working for Reuters. I’m not. Competent Boards – we educate boards of directors and business leaders like you, and I actually just came from one of those sessions. We had Erica Carp, and some of you might know Erica saying, “Pay attention,” as one of the things, and that is exactly what you’re also saying. We need to pay attention to what is really in the first principle. What is it that really matters, you know, in terms of companies. And stay focused because that is one of these things. Pay attention.
How do we stay focused on the core values and avoid being swayed by all this political rhetoric, external pressure? Oh, you should do that! No, you should do that! How do we stay that course?
[04:38] Eric Eve:
This is a great question, Helle, and it’s the one that I most commonly get from clients. First of all, for all of you, it's hard work. It is hard work. But the first thing you have to do is recognize the dissonance between political cycles and business cycles. You have to recognize that dissonance, and you have to understand.
In my career, I’ve been blessed to work in politics and government. I’ve engaged journalists in the back of Air Force One. I’ve engaged the New York City Press Corps. Tough groups, tough groups to navigate, but a political cycle is something that lasts 18 to 24 months, one. Two, it's driven by a series of financial objectives often measured on a monthly basis and then events, primaries, debates, but then it's over. It's over. And so, the media and the influencers that cover that environment, they are working towards a zero-sum event. And you have to recognize the dissonance between what all of you have to do and what that is. Don't ignore it, but just don't be consumed by it. So, you have a critical role in educating your clients on that tension, that dissonance.
A business cycle, as you all know, lasts roughly five years. It's measured on a quarterly basis. It is, by definition, not transactional like politics. It's transformational, and it is not a zero-sum effort. It's incremental, and it builds over time. Too often clients, you know, they see here's what's going on. Someone's indicted or Wisconsin or Chicago, I mean just in the last 24 hours. “How do I not get pulled in?” You have to be very disciplined, but first and foremost, recognize the dissonance between what's going on politically and what you have to accomplish within your business.
[07:08] Helle Bank Jørgensen:
How many here are from time to time getting a call and saying, “Now this happened. What are we going to do about that?” A few. Not that many of you, or maybe it's the same...
[07:23] Eric Eve:
…or they don't want to say.
[07:27] Helle Bank Jørgensen:
How can we give you all – I mean, I'm not for greenwashing – but a cheat sheet? Can we give a cheat sheet on: how do you actually, how do you stay the course? What are those key elements to both have a successful [business] from achieving profitability because we know that we can't be sustainable. If not, but also sustainability. What are those key elements that we can say, “put up in your cheat sheet”?
[07:58] Eric Eve:
Helle, I'll use it in exchange with a client that I recently had (a potential client), and we don't disclose our clients, but someone in the energy sector and a fairly conservative individual. He's been in this space for about 20 years, and we were talking recently, and he was beating up on woke capitalism. I said, “Well set aside the rhetoric. Set aside the rhetoric. Help me understand what you're trying to accomplish. Tell me about your business.”
And he said three things in the U.S., which I thought were fascinating. He said, “The grid in the U.S. has been built over the last 100 years to serve commercial areas, right? Our downtowns. The grid over the course of the next 40 years must be focused on serving residential areas. Why? Because we’re working there, we’re living there, we’re entertaining there, and we’re going to be charging our vehicles there. And the grid today is not built for that function.” I said, “Okay, I got that. So, tell me how your business must innovate in order to disrupt your competition.” He says, “Well, I've got to provide more power closer to where the consumers are. I've got to do it cheaply, and I've got to do it efficiently.” And then I said, “Tell me about your stakeholders.” He says, “Well, my consumers want it to be inexpensive. The regulators want it to be reliable. My employees want it to be safe, as do my consumers. And my investors want it to be profitable.” I said, “There's your sustainable agenda. All you have to do is understand who those stakeholders are, prioritize them, and innovate within your business to meet those objectives.”
So, it’s understanding who your stakeholders are, prioritizing them, having a set of values that are driving that activity, and last but not least, a clear set of metrics. And we make these metrics so complicated. I mean it – I see some of you laughing – it's like, “Oh my goodness!” Keep it simple. A simple set of metrics that you can be transparent and consistent with across all of your stakeholders. And so those are the keys. It's not terribly complicated work. It just takes a tremendous amount of focus and discipline.
[10:45] Helle Bank Jørgensen:
But I think I'll add one thing it also takes. It takes a little bit of vision. Because to think that and to say, “Okay, what will it look like?” It's not what my stakeholders want necessarily today. It is, what will they want 5, 10, 15, 20, 30 years from now? I think that's where also leadership – I'm saying to this clearly from a board of directors point of view – I want to make sure that we have directors that not only have the insight but also have that foresight to see that.
How do we ensure that we in this world we are in right now, where it's perhaps more in a political cadence, we are looking to have the courage to actually look out to the future and say, “Okay, 10 years from now, this is what my employees probably will want. This is what my customers probably want. This is what the bank is going to ask me for. This is what my insurance policy will look like, etc.”?
[11:50] Eric Eve:
Helle, great question. The best part about my work is that we are engaging on behalf of our clients’ stakeholders and hundreds of communities thousands of times over the course of a year. I think it was President Lincoln who said, “The worst time to find a friend is when you need one.” And it's absolutely true. It is absolutely true.
I tell people, and this may not be politically correct, I don't care. The answers will not be found in Times Square or Aspen or Davos. We spend so much time in rooms like this. You have to get out into communities. And there's something absolutely magical that happens when you do this dozens of times. One, when you're asking someone versus telling someone, I don't care if it's institutional investors, employees, consumers, clients. When you're asking someone versus telling someone, it's a very different discussion, and that's whether you're in a red state or a blue state. That's just human nature.
Two, people want to be part of the problem. They don't want to be part of the solution, right?
[13:16] Helle Bank Jørgensen:
They want to be part of the solution.
Eric, Helle, and the crowd laugh.
[13:17] Eric Eve:
I'm sorry. They don’t want to be part of the problem. They want to be part of the solution. They don’t want to be part of the problem.
And so, fear constrains us. That keeps us in our corporate headquarters like, “Ah, they’re gonna be critical. Ah, they're gonna say things that aren't nice.” So, we spend a lot of time talking to each other. No! Get out and engage your most thoughtful and vocal critics first. They're criticizing because they care, right? The third thing that happens, and I've seen this not only in dozens of communities in the U.S. but in 17 countries outside the U.S.
The third thing that happens: when you're asking, not telling, when you're saying, “Hey, here is my problem. Can you help me with the solution?,” the magic happens, which is partnership. Because there you have deposited trust. You've shown some humility. You've created good will. And I've seen this time and time again, Helle, that all you really need to do is ask and then actively listen, and each of those sets of stakeholders will help you craft solutions.
[14:41] Helle Bank Jørgensen:
But is it because we have this, and I've written some articles about: “Hey, you have these activist investors, you know. It's free advice! Listen to it, right?” But is it because we are not so good at actually listening? We're better off saying, “I know the solution, and here it is”?
[15:00] Eric Eve:
Yes, we're typically not good active listeners. It's a skill, one. Two, humility is a struggle, being vulnerable and saying, “I don't have the answer to this question, but I need you to help me.” But it's really empowering for the person sitting across from you. You know, this person left her headquarters, got this big job, this big title, and she's come here to see me. Because the bar is so low, we see for clients repeatedly as soon as you happen, you now have the benefit of the doubt. Because you've humbled yourself to engage.
Two, it’s the first time anyone has asked their opinion in your sector, so that's the second disruptive advantage that you have. And the third comes with the partnership. When you have that chemistry of individuals help you craft solutions, it is a very powerful tool, and it's tough to be replicated by your competitors.
[16:22] Helle Bank Jørgensen:
I think that was during the pandemic when I said, “Well, cash is king, but care is queen,” right? And that's the same. You know, how can we expect that anyone is going to care about us if we don't care about them? And it goes to that first question we have here. How do we protect the stakeholders that may not have a seat at the table?
[16:51] Eric Eve:
Well, I think that's part of, candidly, if the “we” are those of you in these roles, I think that you have to be knowledgeable. You're there to speak on their behalf, but you have to prioritize, you know. You can't be all things to all people, so you've got to be clear about who your stakeholders are and be able to prioritize them because that gives you credibility within your institutions. But one, you have to be knowledgeable, and that goes back to the point that I was talking about earlier. I spent a number of years at a large financial institution and bumped into one of my colleagues earlier who I haven't seen in some time.
When I started at Citi, and you could figure this out pretty quickly, it was sort of a backwater function. So, I left the C-suite at 399 Park Avenue and got out on the road and [started] talking, first of all, to activists. Those were most critical. Then institutional investors, you know, pension funds. Sometimes attorney generals. Sometimes consumers. But it was really empowering because when I was back at 399 Park or presenting to the board, no one else had the insights that I brought. Now when you have a team of 40, 50, ultimately 140 people doing that around the world, your power comes from all the insights, from the ability to do just that, to glean those insights from people who don't have a seat at the table outside the room.
[18:46] Helle Bank Jørgensen:
But I think further than that, so we created this thing now called the “future boardroom,” right? What should that future boardroom look like? Who should be around that boardroom table? We can talk about it as, you know, companies as well. What should be on the agenda? And one of those things we spoke about at a conference in London: what about nature? Should nature have a seat at the table? Should those people that might not be heard have a seat at the table without knowing who asked a question? But you know, how do we ensure that we get all of that insight? Is it ChatGPT? Should we just ask?
[19:25] Eric Eve:
Yeah, I just think you have to get out. It does not take a great amount of effort, and people will share so much with you simply by asking. I know this sounds very simple, and people say it. You know, I've just seen it hundreds of times in now 18 countries. It's just a very simple concept to get out. You have to be disciplined with your time and energy because you can't be everywhere. But you just have to get out and ask. And people will tell you.
[20:08] Helle Bank Jørgensen:
So, we're back to you have two ears and one mouth? Is that it?
[20:12] Eric Eve:
Yeah, just actively listen. All the things your mother, father told you when you were little. Just listen. It's not terribly complicated.
[20:22] Helle Bank Jørgensen:
So, just sum up: what should be on that cheat sheet? When you're getting asked, “What are we going to do about all this politicization? Should we keep our head down, or should we go out and talk about what we're doing? Should we at all continue to do what we’re doing?”
[20:40] Eric Eve:
Yeah, and you have to. So, don't keep your head down. And I know, again, war, recession, massive layoffs. Many of your organizations are the first to be reduced along with other corporate staffs. So, I'm mindful of the challenge that you're facing. But step one, stay relevant to the point that I talked about earlier: understand the challenges that your organizations, the financial challenges, that your organizations are facing.
Step two, continue to engage and actively listen and synthesize and possibly activate some of those stakeholders to engage with you to own your CEO’s challenges. But the solution is absolutely not to put your head down.
I'm an eternal optimist if you couldn't tell, and we don't have a choice. We absolutely do not have a choice in our line of work. The corporations that are going to be most, the institutions – government and corporate and nonprofit – the institutions that will be most successful when we look back in five years, are the ones that kept their foot on the gas through this period of turbulence. You know, you didn't take a back seat. You weren't quiet. You kept your voice. You sustained and elevated your voice through these turbulent times.
I know we have the ability to do it. I've seen it time [and time] again. I've been around to have seen more difficult times, though these are pretty tough. But I'm optimistic that we've got what it takes to bring this global sustainable perspective to boardrooms and help all of your corporations, all of your organizations and institutions, grow.
[22:57] Helle Bank Jørgensen:
And I guess this is where you say, “Hey if there ever were a time to stand up, this is now.”
[23:05] Eric Eve:
Yeah, if it were easy, anyone could do it. Anyone could do it.
[23:10] Helle Bank Jørgensen:
So, do we have leaders in this room?
[23:13] Eric Eve:
Absolutely.
[23:14] Helle Bank Jørgensen:
One hand. I saw one hand. Okay, two hands. How many leaders do we have in this room? You're allowed to put two hands up at the same time. Good, one leader with two hands, and I know I am going to be kicked off the stage. Unless, are we allowed to continue? Was that a “yes”? I didn't hear it, did you?
[23:45] Eric Eve:
I think he said, I don't know, maybe yes. Maybe take one more question.
[23: 50] Helle Bank Jørgensen:
Okay, anyone, last question. I can't see the questions on the screen anymore. So, anyone in the audience? See now they all leave.
[24:01] Eric Eve:
It's lunchtime, Helle.
[24:03] Helle Bank Jørgensen:
Okay, no more questions. One last question from me to all of you. Should we say that Eric is a steward of the future? Yes.