# data[].attributes.body
Our Commitment to Create Better Days for People and the Planet

# data[].attributes.attachment_link.readable_text
At Kellogg Company, achieving food security is at the heart of our commitment to society. But looking at hunger in isolation only addresses one part of the problem. Food security is intertwined with other major challenges. Namely, the impact of climate, the dilemma of food waste and the depletion of our natural resources. If we're going to tackle food security, we must understand all the root causes and work holistically to address them through a number of nature-based and other solutions, including boosting soil health, protecting biodiversity, halting deforestation and mitigating greenhouse gasses.

To do this, we must start with farmers, providing tools to grow more food, and assisting them in minimizing food waste and its impact on the environment. Our diverse, plant-based foods play a key role in addressing these goals as we work across our value chain to nurture our planet.

We also should provide foods that address physical, emotional and societal wellbeing, and help feed people facing hunger today. That's why we're working diligently toward our ambitious Kellogg's® Better Days commitment to create Better Days for 3 billion people by the end of 2030. To do so, we intend to nurture people and our planet by supporting 1 million farmers, especially women smallholders and workers, through programs focused on climate, social and financial literacy.

# data[].attributes.attachment_link.description
At Kellogg Company, achieving food security is at the heart of our commitment to society. But looking at hunger in isolation only addresses one part of the problem. Food security is intertwined with other major challenges. Namely, the impact of climate, the dilemma of food waste and the depletion of our natural resources.

# data[].attributes.headline
'Our Values Are Not for Sale,' Says Delta C.E.O. as Airline Considers Ending Divisive Discounts

# data[].attributes.subject
'Our Values Are Not for Sale,' Says Delta C.E.O. as Airline Considers Ending Divisive Discounts

# data[].attributes.attachment_link.readable_text
Delta Air Lines said Friday it might scrap promotional offers for all politically contentious organizations after its removal of a discount for National Rifle Association members drew a swift retaliation from Georgia lawmakers.

Ed Bastian, Delta's chief executive, said in a memo to employees that the company was "in the process of a review to end group discounts for any group of a politically divisive nature."

On Saturday, as boycott campaigns from gun safety advocates roiled corporate America in the wake of the Florida school shooting that killed 17 people, the airline said it would no longer offer a one-time discount for N.R.A. members traveling to the trade association's annual meeting in Dallas in May.

On Thursday, politicians in Georgia, where Delta is based, struck back at the company in the harshest rebuke yet of a former N.R.A. partner.

The State Senate overwhelmingly approved a version of a tax-relief bill that stripped out a $50 million sales tax exemption highly sought after by Delta. The Georgia House, which, like the Senate, is controlled by Republicans, also approved the change. Nathan Deal, the state's Republican governor, signed the bill early on Friday.

Mr. Deal said he supported the inclusion of the jet-fuel tax break provision that was removed from the bill, but would still sign it because of its reductions of personal and corporate tax rates.

"He is a great friend to Delta," Mr. Bastian wrote. "I know this action by the state legislature troubled him as it does all of us."

Delta joined United Airlines and more than a dozen other companies in severing ties with the N.R.A. following the shooting at a high school in Parkland, Fla., last month. Mr. Bastian wrote that Delta made the move after hearing statements from N.R.A. representatives about the massacre, including accusations that the news media was gleefully profiting off the deaths of students.

On Thursday, the families of several victims of the deadly attack at Sandy Hook Elementary School in Newtown, Conn., in 2012 sent a letter to Bass Pro Shops asking it to stop selling assault-style rifles. Earlier this week, Walmart, Dick's Sporting Goods and Kroger said they would limit firearms sales.

Delta's group rate to the 2018 N.R.A. convention, which the airline said generated a total of 13 ticket sales, was interpreted by many consumers to be an implicit endorsement of the gun group. "That is not the case," Mr. Bastian wrote.

"Our people and our customers have a wide range of views on how to increase safety in our schools and public places, and we are not taking sides," Mr. Bastian wrote. "Our objective in removing any implied affiliation with the N.R.A. was to remove Delta from this debate."

He stressed in the memo that Delta is "proud and honored" to be based in Atlanta and that the company supports the Second Amendment.

"I know it is not comfortable to be caught in a highly emotional debate, and many of you have received questions from customers," Mr. Bastian wrote to employees.

He added: "Our decision was not made for economic gain and our values are not for sale."

# data[].attributes.attachment_link.title
'Our Values Are Not for Sale,' Says Delta C.E.O. as Airline Considers Ending Divisive Discounts (Published 2018)

# data[].attributes.attachment_link.description
Delta Air Lines said Friday it might scrap promotional offers for all politically contentious organizations after its removal of a discount for National Rifle Association members drew a swift retaliation from Georgia lawmakers. Ed Bastian, Delta's chief executive, said in a memo to employees that the company was "in the process of a review to end group discounts for any group of a politically divisive nature."

# data[].attributes.body
"...As one of the world’s leading food and beverage companies, we have a clear responsibility to respect human rights throughout our business and broader value chain"

# data[].attributes.body
"...The Climate Transition Action Plan covers the entire lifecycle emissions of our products and packaging, across supply chain, operations, consumer use of our products, and product end of life"

# data[].attributes.attachment_link.readable_text
NET ZERO AMBITION BY 2040

In September 2021, P&G set a new ambition to achieve net zero greenhouse gas (GHG) emissions across its operations and supply chain, from raw material to retailer. P&G also shared a Climate Transition Action Plan which outlines a comprehensive approach to accelerating climate action and the key challenges ahead. In addition to the details of P&G's net zero ambition to 2040, the Climate Transition Action Plan covers the entire lifecycle emissions of our products and packaging, across supply chain, operations, consumer use of our products, and product end of life.

Ambition 2030

Reducing our carbon emissions, prioritizing water conservation and shifting to renewable electricity are just the beginning. In 2018, we took a hard look and refocused our energy toward 2030, with a new set of goals and an embrace of new practices intended not just to reduce our footprint and conserve precious resources, but to help restore the world, ultimately leaving it better than we found it.

Click to jump to each section.

Ambition 2030: Brands making a positive impact

Faced with unprecedented challenges, our brands are reinventing citizenship and enabling responsible consumption.

Goal: 100% of our leadership brands will inspire responsible consumption.

Serving five billion people gives our brands the unique opportunity to delight consumers through superior product performance and to promote conversations, influence attitudes, inspire behavior change and drive positive impact on society and the environment.

Cascade is addressing the issue of water scarcity through persuasive consumer messaging like the 'Do It Every Night' ad campaign, with has the potential to reduce household water usage across millions of US homes.

Goal: Reduce our use of virgin plastic in packaging by 50%.

Our brands are pursuing a range of solutions with the aim to make packaging more sustainable. As a company, we've committed to ensuring 100% of our packaging will be recyclable or reusable by 2030 and to reducing virgin petroleum plastic in packaging by 50% by 2030. We're innovating, collaborating and taking action to unleash the circular economy across our portfolio of brands.

2030 goal: achieve 100% recyclable or reusable packaging globally.

Refill and Reuse More Bottles.

In Europe, P&G Beauty is offering a new aluminum reusable, refillable bottle system for Pantene, Aussie, Head & Shoulders and Herbal Essences, along with fully recyclable refill pouches made with 60% less plastic than standard shampoo bottles. The new refill system will be available to as many as 200 million households across Europe and is predicted to halt the production of approximately 300 million virgin plastic bottles per year starting in 2021.

Goal: Building even greater trust through transparency.

We know consumers appreciate transparency. That's why we provide information beyond the label about our product safety standards and ingredients and we are constantly exploring new reliable and accessible ways of sharing ingredient information.

Our brand websites offer more information than ever before about our ingredients, making it easy to understand a product's ingredients as well as what we don't use. In North America we started listing the ingredients for our formulated products in SmartLabel in 2018. In 2020 we delivered our expanded transparency commitment* by sharing the ingredients in our product fragrance formulas down to 0.01%.

Product Safety Process INGREDIENT TRANSPARENCY Ingredients For Good

Saving Energy at Home

About 80% of a washing machine's energy consumption comes from heating the water. By delivering a superior performance in quick, cold cycles, Ariel and Tide have been at the forefront of driving change, helping people get the clean they need while saving time, money and energy.

We are proud to report that in 2019 we reached our goal set in 2010 to turn 70% of all washing machine loads globally into energy efficient cycles by 2020.

Ambition 2030: Reduce our footprint and strive for circular solutions

We are working to reduce the environmental footprint of our suppliers, buyers and manufacturing sites - sourcing sustainable materials and exploring new business models to drive circular solutions.

Goal: Reduce our greenhouse gas emissions across our operations and supply chain.

We will purchase 100% renewable electricity globally, cut most of our GHG emissions across our operations and supply chain to reach net zero greenhouse gas emissions by 2040.

In addition to carbon emissions, we will reduce our footprint in several more ways:

P&G sites will deliver a 35% increase in water efficiency and source at least five billion liters of water from circular sources

Advance at least 10 significant supply chain partnerships to drive circularity on climate, water or waste

We targeted 30% reduction in Scope 1 and 2 GHG emissions by 2020 and over-delivered by achieving a 52% reduction

100% of P&G plants are now sending Zero Manufacturing Waste to Landfill

We have already improved water efficiency by 27%, and now use over 2 billion liters from circular sources.

Goal: Protect and enhance the forests we depend on.

Trees and the products they provide are an essential part of our daily lives and can play a role in helping address climate change. By producing all of our paper towel, toilet paper, and tissue products with wood pulp sourced from responsibly managed forests, we are helping to promote forestry practices that leave a smaller environmental footprint, protect vulnerable species and make a positive impact on communities that depend on them.

For every tree we use, at least one is regrown. P&G requires that 100% of the wood pulp we source is certified by a leading third-party certification system ensuring forests are responsibly managed.

Charmin is Forest Stewardship Council® and Rainforest Alliance certified

We're working with experts to increase the number of forest acres that are Forest Stewardship Council® certified in the US and Canada

Puffs are made from softwood and hardwood fibers that were produced to meet international standards for responsible forestry

Goal: Improve livelihoods of palm smallholders by increasing yields from existing lands.

Palm Oil is an important, versatile and highly efficient natural and renewable vegetable oil. It is widely used for cooking, and in home and personal care goods, food and biofuels. Palm production globally is approximately 80 million tons per year. Palm Oil (PO) is the primary material while Palm Kernel Oil (PKO) is essentially a by-product material. P&G currently uses less than 1% of the global palm volume, mostly palm kernel oil.

At P&G we are committed to the responsible sourcing of palm meaning it does not contribute to deforestation while respecting human and labor rights. We are actively engaged as members of the Roundtable on Sustainable Palm Oil (RSPO) and support their standards to drive responsible practices across the industry.

Our Responsible sourcing policy Partners in Palm Oil

Approximately 40% of global palm oil is grown by smallholders. Enabling and ensuring sustainable farming practices has the potential to both improve lives and deliver greater environmentally-sound palm production and supply. We have been supporting RSPO training for independent smallholders in Malaysia since 2015, most recently in their work towards achieving the new RSPO Independent Smallholder Standard (RISS).
LEARN MORE ABOUT OUR SUSTAINABLE PALM EFFORTS

Ambition 2030: Partnerships for people, the planet and our business to thrive

We've put more environmental sustainability goals in place to reduce carbon emissions, protect water and find ways to repurpose waste. But we also know we can't do it alone. Solving the biggest challenges will require collaboration, which is why we're focused on partnering for greater impact across the industry, and the world.

The next decade represents a critical window to significantly decrease the carbon emitted into the atmosphere and ensure a healthy planet for present and future generations. We are committed to achieving net zero greenhouse gas emissions by 2040 and we are acting with urgency to reduce emissions this decade by taking actions designed to protect our planet.

In addition to cutting most of our GHG emissions across our operations and supply chain, we will address the remaining GHG emissions by advancing a portfolio of natural climate solutions that leverage the power of nature. Working closely with Conservation International, World Wildlife Fund and other leading climate experts, P&G will fund a range of projects designed to protect, improve and restore forests, wetlands, grasslands and peatlands, that increase carbon storage or avoid greenhouse gas emissions while supporting local communities and economic recovery.

Brazil Atlantic Forest Restoration Philippines Palawan Protection California and Germany Forest Project

Goal: Create solutions so no packaging finds its way to the ocean.

At P&G we're concerned that plastic waste in our environment is a serious problem, especially when it ends up in our rivers and oceans. It's a complex global challenge that requires a comprehensive, collaborative approach across the entire plastics lifecycle. Our brands, our suppliers and our partners have been working on a range of sustainable solutions and driving circularity so that plastic is treated as a resource that is collected, recycled and reused.

In 2019 we joined forces with industry, governments, civil society and development agencies to form The Alliance to End Plastic Waste - a non-profit organization committed to fund and incubate projects and programs that will prevent plastic waste from leaking into the environment. P&G CEO David Taylor took the lead to serve as the first Chairman of the Alliance, now comprising nearly 50 member companies and supporters across the value chain. The Alliance aims to divert millions of tons of plastic waste in more than 100 at-risk cities, improve livelihoods for millions and contribute to a circular economy.

Goal: Finding Smart Packaging Solutions.

P&G led a coalition of companies to test the use of digital watermark technology to turn packages into "intelligent objects" and accomplish sorting benefits deemed impossible for the recycling industry to achieve. Faster, more accurate sorting means less environmental pollution as more plastics go back into the circular economy at a much higher re-use quality.

Now, the HolyGrail 2.0 consortium of more than 85 companies is being facilitated by AIM, the European Brands Association. P&G is chairing the Leadership Team of HolyGrail 2.0, with the goal to enter a European test market by early 2022.

Goal: Protect Water for People and Nature.

For P&G, water is essential for both the use and production of our products. Over the last ten years, our water stewardship program has evolved alongside our growing understanding of the complex challenges facing the world's water resources, and where we can have the greatest impact.

We are focused on several ways to advance our water-saving program

Driving water efficiency in our manufacturing

Innovating to create products and campaigns that reduce in-home water use

Building partnerships to advance our conservation efforts

50 Liter Home Coalition will reinvent water use in the home

At P&G, we believe there are opportunities to develop and scale viable innovations to reinvent how water is used in cities around the world. Today, we know that the average home in the developed world is highly inefficient, using up to 500 liters of water per person each day. Showering, laundry, cooking and washing dishes in the home result in using 10% of the earth's water supply. P&G is spearheading the 50L Home Coalition to bring partners across the domestic water value chain to leverage technologies and innovations that enable a person to live on 50 liters of water per day that feels like 500 liters.

Ambition 2030: Building sustainability into our workplace and communities

Our organization has made tremendous progress against our goals and that's driven largely by the passion and ingenuity of our employees. To reach our 2030 goals, we must keep our people engaged and equipped.

Our work doesn't stop here

To get a deeper look at the details of our P&G sustainability efforts, download our 2020 Citizenship report. For more information on our 2030 goals, download our Ambition 2030 plan. This is just the start of our journey to advance progress against our environmental sustainability goals. And as we work, we'll continue identifying partners and actions we plan to take, and share our progress with you each year.

History of P&G Sustainability.

To see the full history of our environmental sustainability efforts, take a look at our timeline.

LEARN MORE

# data[].attributes.attachment_link.description
In September 2021, P&G set a new ambition to achieve net zero greenhouse gas (GHG) emissions across its operations and supply chain, from raw material to retailer. P&G also shared a Climate Transition Action Plan which outlines a comprehensive approach to accelerating climate action and the key challenges ahead.

# data[].attributes.body
GLOBAL INVESTORS DRIVING BUSINESS TRANSITION:
Climate Action 100+ is an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.

# data[].attributes.attachment_link.readable_text
As providers of transition materials, mining companies play a vital role in decarbonisation. Some are, however, exposed to significant transition risks. For the first time, this standard will provide investors with the necessary metrics to help assess diversified mining companies' transition plans to net zero. The Standard will now enter pilot mode, in which metrics will be tested for practicality and feed into a final metrics list. Assessment results from this pilot will enrich investor engagements with new, impactful insights.

# data[].attributes.attachment_link.description
Climate Action 100+ is an investor-led initiative to ensure the world's largest corporate greenhouse gas emitters take necessary action on climate change.

# data[].attributes.body
“Our ESG agenda cannot just be a separate layer that sits above what we do day to day. It is embedded in what we do and creates concrete examples of the empathy I see in
our firm every day as we work to serve our clients, customers and communities.”

# data[].attributes.body
"Research by BlackRock4,5 has established a correlation between sustainability and traditional factors such as quality and low volatility, which themselves indicate resilience. As a result, we would expect sustainable companies to be more resilient during downturns. "

# data[].attributes.headline
CERES Case Studies - Advice for Energy Companies

# data[].attributes.subject
CERES Case Studies - Advice for Energy Companies

# data[].attributes.body
"This report details how the rapid clean energy deployment underway can and must embrace local stakeholders’ needs for local jobs, economic benefits and protection of environmental habitats."

# data[].attributes.attachment_link.readable_text
All of our resources are available for free, but we require users to be logged in to download our reports. Please log in below, or if you are a new user, register a new account. Once you are logged in you can access any of our reports, tools and other resources.

# data[].attributes.attachment_link.title
Practices for Just, Sustainable and Equitable Development of Clean Energy

# data[].attributes.attachment_link.description
All of our resources are available for free, but we require users to be logged in to download our reports. Please log in below, or if you are a new user, register a new account. Once you are logged in you can access any of our reports, tools and other resources.

# data[].attributes.body
"In 2019, we reduced our absolute emissions by 14.6%, or 0.64 million metric tons, the equivalent of more than 138,000 passenger vehicles being driven for a year Award-winning, fuel-saving EcoBoost technology is available on more than 80% of our nameplates, and has now been used in 8 million engines worldwide"

# data[].attributes.headline
Business Roundtable - Concept Press Release

# data[].attributes.subject
Business Roundtable - Concept Press Release

# data[].attributes.body
"By taking a broader, more complete view of corporate purpose, boards can focus on creating long-term value, better serving everyone – investors, employees, communities, suppliers and customers,” said Bill McNabb, former CEO of Vanguard."

# data[].attributes.attachment_link.readable_text
WASHINGTON - Business Roundtable today announced the release of a new Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders - customers, employees, suppliers, communities and shareholders.

Since 1978, Business Roundtable has periodically issued Principles of Corporate Governance. Each version of the document issued since 1997 has endorsed principles of shareholder primacy - that corporations exist principally to serve shareholders. With today's announcement, the new Statement supersedes previous statements and outlines a modern standard for corporate responsibility.

" The American dream is alive, but fraying," said Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable. " Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community's unwavering commitment to continue to push for an economy that serves all Americans. "

" This new statement better reflects the way corporations can and should operate today," added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee. " It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders."

Industry leaders also lent their support for the updated Business Roundtable Statement, citing the positive impact this commitment will have on long-term value creation:

" I welcome this thoughtful statement by Business Roundtable CEOs on the Purpose of a Corporation. By taking a broader, more complete view of corporate purpose, boards can focus on creating long-term value, better serving everyone - investors, employees, communities, suppliers and customers," said Bill McNabb, former CEO of Vanguard.

" CEOs work to generate profits and return value to shareholders, but the best-run companies do more. They put the customer first and invest in their employees and communities. In the end, it's the most promising way to build long-term value," said Tricia Griffith, President and CEO of Progressive Corporation.

" This is tremendous news because it is more critical than ever that businesses in the 21st century are focused on generating long-term value for all stakeholders and addressing the challenges we face, which will result in shared prosperity and sustainability for both business and society," said Darren Walker, President of the Ford Foundation.

The Business Roundtable Statement on the Purpose of a Corporation is below and the full list of signatories is available here.
Statement on the Purpose of a Corporation
Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.

Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth.

While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:

Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.

Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.

Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.

Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.

Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.

# data[].attributes.attachment_link.title
Business Roundtable Redefines the Purpose of a Corporation to Promote 'An Economy That Serves All Americans'

# data[].attributes.attachment_link.description
WASHINGTON - Business Roundtable today announced the release of a new Statement on the Purpose of a Corporation signed by...

# data[].attributes.headline
2020 Edelman Trust Barometer: Ethics and Competence

# data[].attributes.subject
2020 Edelman Trust Barometer: Ethics and Competence

# data[].attributes.body
"The 2020 Edelman Trust Barometer explores the relationship between people’s trust in societal institutions and uncovers what business and government leaders can do to address concerns around technological advancements and the need to anticipate and prepare their companies, their nations and the world for the next wave of innovation."

# data[].attributes.attachment_link.title
2020 Edelman Trust Barometer: Ethics and Competence

# data[].attributes.attachment_link.description
The 2020 Edelman Trust Barometer explores the relationship between people's trust in societal institutions and uncovers what business and government leaders ...

# data[].attributes.body
"Building on our commitment to environmental impact reduction through successful completion of our 2012 – 2020 Greenhouse Gas, waste and water withdrawal reduction goals, we are renewing our commitment to ambitious climate action. Our goal is to become carbon neutral across our internal operations by 2030 and catalyze similar reductions throughout our value chain, as recognized by the Science Based Target Initiative."

# data[].attributes.attachment_link.readable_text
Four values define our company and culture

Excellence

We can only change patient's lives when we perform at our best together. This happens when we focus on what matters, agree who does what and measure our outcomes.

Courage

Breakthroughs start by challenging convention, especially in the face of uncertainty or adversity. This happens when we think big, speak up and are decisive.

Equity

We believe that every person deserves to be seen, heard and cared for. This happens when we are inclusive, act with integrity and reduce health care disparities.

Joy

We give ourselves to our work, but it also gives to us. We find joy when we take pride, recognize one another and have fun.

Watch for a glimpse into the lives of Pfizer scientists as they work to help end the
​​​​​​​COVID-19 pandemic and reflect on the personal impact of their work.

But first, a look at where we've been as we take a look to our future.

Our new approach to ESG helps us to advance on our purpose, drive positive impact relevant to the breakthroughs we aim to deliver, demonstrate the value they bring to patients and other stakeholders and govern our operations and impact on society.

Pfizer has consistently supported and prioritized its ESG-related programs and commitments. 2020 marked an important inflection point when it comes to the role of corporations in society, and I am very proud of the ways in which Pfizer stepped up to lead."

Chairman and Chief Executive Officer

Environment

Building on our commitment to environmental impact reduction through successful completion of our 2012 - 2020 Greenhouse Gas, waste and water withdrawal reduction goals, we are renewing our commitment to ambitious climate action. Our goal is to become carbon neutral across our internal operations by 2030 and catalyze similar reductions throughout our value chain, as recognized by the Science Based Target Initiative. We further aim to reduce the environmental impact of our medicines throughout the product lifecycle through the development of sustainability criteria to measure our progress.

Social

As the COVID-19 pandemic magnifies disparities for underserved communities, Pfizer is working to address the complex issues we face as a global society and create a healthier, more equitable world for all. Through our partnerships and programs, we are seeking to expand affordable access to our breakthrough medicines and vaccines, particularly among underserved communities. As we look to protect all people from the burden of infectious and other diseases, we are also focused on creating opportunities to advance diversity, equity, and inclusion across our workforce and those with whom we do business.

As we work to meet patient and societal needs, we are committed to acting ethically, thoughtfully and responsibly and continually prioritizing safety and transparency in all that we do. Our compliance program supports proactive business-led quality and compliance governance built around elements of effective risk management. The Board of Directors is critical to our governance by representing shareholders' interests and seeking to enhance long-term shareholder value. The Board is composed of a majority of independent Directors, reflecting diversity with respect to gender, age, race, ethnicity, background, professional experience and perspectives.

Pfizer's ESG Report

Our Environmental, Social and Governance (ESG) report represents a new chapter in Pfizer's commitment to enhance stakeholder awareness of our priority ESG issues and disclose how our performance on non-financial metrics is contributing to long-term value creation and a sustainable, responsible and patient-centric business model.

Download the report

# data[].attributes.attachment_link.description
Four values define our company and culture Excellence We can only change patient's lives when we perform at our best together. This happens when we focus on what matters, agree who does what and measure our outcomes. Courage Breakthroughs start by challenging convention, especially in the face of uncertainty or adversity.

# data[].attributes.headline
The Investor Revolution - Shareholders are getting serious about sustainability.

# data[].attributes.subject
The Investor Revolution - Shareholders are getting serious about sustainability.

# data[].attributes.body
"Analysis of interviews with 70 executives in 43 global institutional investing firms suggests that ESG is now a priority for these leaders and that corporations will soon be held accountable by shareholders for their ESG performance.

To respond to this shift in focus, companies must publish a statement of purpose, provide investors with integrated financial and ESG reports, increase the involvement of middle managers in ESG issues, invest in robust IT systems, and improve internal systems for measuring and reporting ESG and impact performance information."

# data[].attributes.attachment_link.readable_text
Idea in Brief

The Problem

For years, environmental, social, and governance (ESG) issues were a secondary concern for investors. Today institutional investors and pension funds have grown too large to diversify away from systemic risks, so they must consider the environmental and social impact of their portfolio.

A New Outlook

Interviews with 70 executives in 43 global institutional investing firms found that ESG is top of mind for these executives. Corporations will soon be held accountable by shareholders for their ESG performance.

What It Means for Companies

To respond, companies must publish a statement of purpose, share an integrated report with investors, increase the involvement of middle managers, and improve internal systems for measuring and reporting ESG and impact performance information.

Most corporate leaders understand that businesses have a key role to play in tackling urgent challenges such as climate change. But many of them also believe that pursuing a sustainability agenda runs counter to the wishes of their shareholders. Sure, some heads of large investment firms say they care about sustainability, but in practice, investors, portfolio managers, and sell-side analysts rarely engage corporate executives on environmental, social, and governance (ESG) issues. The impression among business leaders is that ESG just hasn't gone mainstream in the investment community.

That perception is outdated. We recently interviewed 70 senior executives at 43 global institutional investing firms, including the world's three biggest asset managers (BlackRock, Vanguard, and State Street) and giant asset owners such as the California Public Employees' Retirement System (CalPERS), the California State Teachers' Retirement System (CalSTRS), and the government pension funds of Japan, Sweden, and the Netherlands. We know of no other research effort that involved so many senior leaders at so many of the largest investment firms. We found that ESG was almost universally top of mind for these executives.

Of course, investors have been voicing concerns about sustainability for several decades. But not until recently have they translated their words into action. Most of the investment leaders in our study described meaningful steps their firms are taking to integrate sustainability issues into their investing criteria. It was clear to us that corporate leaders will soon be held accountable by shareholders for ESG performance-if they aren't already.

"ESG issues have become much more important for us as long-term investors," Cyrus Taraporevala, president and CEO of State Street Global Advisors, told us, expressing a view echoed in many of our interviews. "We seek to analyze material issues such as climate risk, board quality, or cybersecurity in terms of how they impact financial value in a positive or a negative way. That's the integrative approach we are increasingly taking for all of our investments." (Note, Robert Eccles has consulted for State Street and several other institutions named in this article.)

The numbers back up the view that the capital markets are in the midst of a sea change. In 2006, when the UN-backed Principles for Responsible Investment (PRI) was launched, 63 investment companies (asset owners, asset managers, and service providers) with $6.5 trillion in assets under management (AUM) signed a commitment to incorporate ESG issues into their investment decisions. By April 2018, the number of signatories had grown to 1,715 and represented $81.7 trillion in AUM. According to a 2018 global survey by FTSE Russell, more than half of global asset owners are currently implementing or evaluating ESG considerations in their investment strategy.

Yet many corporate managers seem to be unaware of this new reality. In a recent survey by Bank of America Merrill Lynch, U.S. executives underestimated the percentage of their company's shares held by firms employing sustainable investing strategies. The average estimate was 5%; the actual percentage is more like 25%.

Sustainable investing encompasses a menu of strategies that can be used in combination. Here are seven common ones:

Negative/exclusionary screening (eliminating companies in industries or countries deemed objectionable )

Norms-based screening (eliminating companies that violate some set of norms, such as the Ten Principles of the UN Global Compact)

Positive/best-in-class screening (selecting companies with especially strong ESG performance)

Sustainability-themed investing (such as in a fund focused on access to clean water or renewable energy)

ESG integration (including ESG factors in fundamental analysis)

Active ownership (engaging deeply with portfolio companies)

Impact investing (looking for companies that make a positive impact on an ESG issue while still earning a market return)

A noteworthy example of sustainable investing is the strategy developed by Mats Andersson (a former CEO of AP4), Patrick Bolton (a professor at Columbia), and Frédéric Samama (a cohead of institutional clients coverage at Amundi Asset Management) that enables long-term passive investors to hedge climate risk without sacrificing returns. The strategy is based on building a portfolio of companies that have a carbon footprint 50% smaller than benchmarks and have 50% less exposure to "stranded assets" (such as fossil fuel assets that have become nonperforming or obsolete as a result of legislation, decreased demand, or other factors). This model, outlined in the Financial Analysts Journal article "Hedging Climate Risk," has been used by AP4, CalSTRS, the New York State Common Retirement Fund, the New Zealand Superannuation Fund, and many others. Today some $50 billion in assets are being managed using this strategy.

The first step corporate leaders can take to prepare for this shift in focus is to recognize the forces driving it. Once they understand why investors now care so much about ESG issues, they can make changes within their organizations to maximize long-term value for shareholders.

What's Driving the Change

Over the past five years or so, investors have become increasingly interested in ESG issues. Six factors are acting as tailwinds for this heightened focus.

The size of investment firms.

The investment industry is highly concentrated. The top five asset managers hold 22.7% of externally managed assets, and the top 10 hold 34%. Large investment firms are now so big that modern portfolio theory-which holds that investors can limit volatility and maximize returns in a portfolio by combining investments from asset classes with varying levels of risk-cannot be used to mitigate system-level risks. A small investment firm might be able to hedge against climate change and other system-level risks by investing in "doom" stocks, such as gold, or in shares of companies that build survival shelters, for example. But firms that have trillions of dollars under management have no hedge against the global economy; in short, they have become too big to let the planet fail. What's more, large asset owners such as pension funds are forced to take a long-term view because they have long-term liabilities-they must plan to pay out retirements for the next 100 years. As Hiro Mizuno, the chief investment officer of Japan's $1.6 trillion Government Pension Investment Fund, noted, "We are a classic universal owner with intergenerational responsibilities and thus have an inherently long-term view."

Financial returns.

Many corporate managers still equate sustainable investing with its predecessor, socially responsible investing (SRI), and believe that adhering to its principles entails sacrificing some financial return in order to make the world a better place. That view is outdated. A study by Harvard Business School's George Serafeim and colleagues (which included one of us, Eccles) found that companies that developed organizational processes to measure, manage, and communicate performance on ESG issues in the early 1990s outperformed a carefully matched control group over the next 18 years. In a different study, Serafeim and his colleagues demonstrated the positive relationship between high performance on relevant ESG issues and superior financial performance. Evidence from investors corroborates that: A 2017 study by Nordea Equity Research (the largest financial services group in the Nordic region) reported that from 2012 to 2015, the companies with the highest ESG ratings outperformed the lowest-rated firms by as much as 40%. In 2018, Bank of America Merrill Lynch found that firms with a better ESG record than their peers produced higher three-year returns, were more likely to become high-quality stocks, were less likely to have large price declines, and were less likely to go bankrupt. Also in 2018, Amundi Asset Management found that the relative importance of ESG factors varies by region. For European portfolios, governance is particularly important for determining outperformance. For North American portfolios, environmental factors are the most significant.

The key to the new generation of sustainable investing is that it focuses only on "material" ESG issues that impacta firm's valuation-for example, greenhouse gas emissions are material for an electric utility company but not for a financial services firm; supply chain management is material for an apparel company using low-cost workers in developing countries but not for a pharmaceutical company.

Sustainable investing is about materiality. A company that spends vast sums of money trying to address every conceivable environmental, social, and governance (ESG) issue will likely see its financial performance suffer; however, companies that focus on material issues tend to outperform those that don't.

Materiality varies by industry. The Sustainability Accounting Standards Board (SASB) has identified the material ESG issues for all 77 industries in its classification system. For example, material issues for companies in food retail and distribution include greenhouse gas emissions, energy management, access and affordability, fair labor practices, and fair marketing and advertising. For internet and media services the list includes energy management, water and wastewater management, data security and customer privacy, diversity and inclusion, and competitive behavior.

A study by Mozaffar Khan, George Serafeim, and Aaron Yoon provides empirical evidence that good performance on material issues contributes to higher financial returns. Most tellingly, the researchers found that whereas firms with good ratings on material sustainability issues significantly outperform firms with poor ratings on those issues, firms with good ratings on immaterial issues do no better than firms with poor ratings on those issues.

Mainstream investors now look for evidence that their portfolio companies are focused on the material ESG issues that matter to financial performance, rather than on some ill-defined commitment to "sustainability."

Growing demand.

Asset owners such as pension funds are increasingly demanding sustainable investing strategies from their asset managers. Mary Jane McQuillen, portfolio manager and head of the ESG investment program at ClearBridge Investments (an active manager with $145 billion in AUM), says that in recent years her firm has seen a marked increase in the number of new inquiries mentioning ESG. What's driving this growing demand? Not only are sophisticated asset owners aware that sustainable investing improves returns, but many of them, including high-net-worth individuals, are also focused on the nonfinancial outcomes. "Our wealthiest clients want to know their investments are making a difference to make the world a better place," noted Rina Kupferschmid-Rojas, head of sustainable finance at UBS Group, which has the largest wealth-management business in the world, at $2.4 trillion.

The demand for ESG investment options is so high that many asset management firms are rushing to pull together new offerings. Sustainable and impact investment at UBS Asset Management has more than tripled since December 2016, with $17 billion in AUM. "We have seen very strong asset growth in our Sustainable and Impact offering," said Michael Baldinger, the unit's head, "and client demand has simply accelerated over the past 24 months."

Asset owners no longer have to be convinced that sustainable investing is important. "We used to have to put a lot of effort into explaining to our colleagues in the broad investment community why ESG is important," noted Eva Halvarsson, the CEO of Swedish pension fund AP2. "Now the focus is on how we can most effectively capture value from ESG integration."

An evolving view of fiduciary duty.

A corollary to the mistaken belief that sustainable investing means sacrificing some financial return is the belief that fiduciary duty means focusing only on returns-thereby ignoring ESG factors that can affect them, particularly over time. However, more recent legal opinions and regulatory guidelines make it clear that it is a violation of fiduciary duty not to consider such factors. Although adoption of this new understanding has been slow in the United States, other countries, such as Canada, the UK, and Sweden, are taking steps to redefine the fiduciary duty concept. On November 28, 2018, the Swedish parliament approved major reforms requiring the four main national pension funds to become "exemplary" in the field of sustainable investment. As Will Martindale, head of policy at PRI, bluntly put it to shareholders, "Failing to integrate ESG issues is a failure of fiduciary duty."

Trickle-down within investment firms.

It is one thing for the CEO or chief investment officer of a major investment firm to espouse sustainable investing and quite another for it to be practiced by the analysts and portfolio managers who make the day-to-day investment decisions. Historically, the ESG group at investment firms was separate from portfolio managers and sector analysts (on both the buy side and the sell side) in much the same way that corporate social responsibility groups were historically separate from business units. Now senior leaders are making sure that ESG analysis is being integrated into the fundamental financial activities carried out by analysts and portfolio managers. The big Dutch pension fund ABP, for example, has a program for full ESG integration across all asset classes. "Responsible investment is central to our investment philosophy," said Claudia Kruse, the managing director of global responsible investment and governance for APG (ABP's asset manager). "Portfolio managers are accountable for assessing every investment in the context of risk, return, costs, and ESG. This has been an internal cultural evolution."

This shift will change the way investors engage with companies-and the way corporate executives view sustainability. The two key conversations-an investment team talking to a company's CEO and CFO, and the investor's ESG team members talking to their corporate counterparts-will be fused into one hardheaded conversation about material ESG issues. When it becomes clear that the people who decide whether to buy or sell a company's stock have internalized ESG into their calculations, the business leaders will be forced to do the same within their companies.

The integration of ESG into financial analysis at BlackRock, the world's largest asset manager, with $6.1 trillion under management, is illustrative. The firm's CEO, Larry Fink, has promoted the importance of sustainable investing for several years-but full integration of ESG criteria into the firm's investment strategies has not happened overnight. Tariq Fancy, the chief investment officer of sustainable investing at BlackRock, equates integrating ESG considerations into traditional financial analysis to an exercise in behavior change. "Some investors are naturally inclined to do it. Others, depending on their asset class, geography, and investment style, take more time to see the investment value," he says. Fancy's background is as an investor-not someone from an environmental or social NGO-which gives him credibility in dealing with the investment teams. Given the size of BlackRock, changing investor behavior across the organization will require time and hard work. "But if we can do it at BlackRock, we can do it across capitalism," he says.

Making the job of Fancy and other chief investment officers easier is the fact that the workforce is increasingly made up of Millennials, for whom ESG is central to any business analysis. Halvarsson told us that 20% of AP2's employees are Millennials. "They expect us to integrate sustainability as a natural part of our daily work," she said.

More ESG activism by investors.

Shareholder activism is on the rise in financial markets-and ESG is increasingly becoming a focus of these interventions. Historically, equity and fixed-income investors have been hands-off, keeping the stock or bond when they like it and selling it when they don't or when they think it's reached its peak value. But active managers who intend to hold a stock for a long time and passive managers who hold a stock forever have an incentive to see that companies address the material ESG issues that will improve their financial performance. One form of active engagement is proxy resolutions and proxy voting, an aspect of the active ownership strategy for sustainable investing. According to the ESG research and advisory firm Institutional Shareholder Services, 476 environmental and social (E&S) shareholder resolutions had been filed in the United States as of August 10, 2018. The share of total resolutions focused on E&S has grown from around 33% in the 2006 to 2010 time period to around 45% from 2011 to 2016. By 2017, it stood at just over 50%. Leading topics for these resolutions include climate change and other environmental issues, human rights, human capital management, and diversity in the workforce and on corporate boards.

Even some activist hedge funds are moving into sustainable investing. For example, JANA Partners has launched its JANA Impact Capital Fund (JIC) and partnered with CalSTRS to encourage Apple to address the overuse of its iPhones by children and teenagers. (Disclosure: One of us, Eccles, is on JIC's advisory board.) According to Charles Penner, a partner at JANA and the co-portfolio manager at JIC, the pressure has worked. "Apple quickly affirmed its commitment to the safety of its youngest customers the day after we raised our concerns, and it has since released new controls," he said. Jeff Ubben, the CEO of ValueAct Capital, launched its ValueAct Spring Fund at the start of 2018 and took its first position in the global power company AES. Since Ubben joined the AES board, the company has accelerated its transition from coal to renewable energy sources and has become the first publicly traded U.S. power company to make its climate disclosures in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures. As the company accelerates its carbon reduction goals, it is attracting European and Canadian ESG-oriented investors that had previously avoided it. Ubben told us, "Our goal is for each ValueAct Spring Fund portfolio company to earn a sustainability premium in its stock price for the long-term environmental and social value that is being generated."

Investors that do not have the scale and resources of firms such as BlackRock or the activist orientation of JANA are partnering with groups such as Hermes Equity Ownership Services (Hermes EOS) to engage companies on ESG issues. As of September 2018, Hermes EOS represented 45 asset owner and asset manager clients, with $468 billion in AUM. In 2017, it worked with 659 companies on 1,704 issues related to the environment, ethics, governance, strategy, risk, and communications, making progress on about one-third of them. "We aren't just seeking information," explained Hans-Christoph Hirt, the head of Hermes EOS. "We are trying to change something."

Another group, Climate Action 100+, which includes more than 320 investors representing $32 trillion in AUM, is lobbying the largest greenhouse gas emitters to address climate change at the board level and set targets to cut emissions. Anne Simpson, head of strategy at CalPERS, described the coalition as "the irresistible force" pressing on the "immovable object" of large emitters that do not want to change. "There has never been a global gathering of so many large institutional investors with such clarity of intent," she observed.

What's Holding Back ESG Investing

Despite the forces propelling ESG investing forward, there are still barriers to overcome. The biggest obstacle to investment is that most sustainability reporting by companies is aimed not at investors but at other stakeholders, such as NGOs, and is thus of little use to investors. To be sure, there are data vendors that scour through an assortment of source materials, including whatever reports or data they can get from companies, to provide some assessment of ESG performance. But this is a poor substitute for comprehensive ESG information reported directly by the company.

Several organizations-such as the Climate Disclosure Standards Board, Global Reporting Initiative (GRI), and the Sustainability Accounting Standards Board (or SASB, where one of us, Eccles, was the founding chairman)-are trying to fill this gap. However, no governments are thus far mandating the use of the standards. And even when companies choose to adopt them, the reported numbers are rarely subject to a rigorous audit by a third party.

While the world of ESG data still feels a bit like the Wild West, substantial progress in improving the quality and availability of information is being made through market forces, the efforts of NGOs, and, in some territories, regulation-such as an EU directive requiring all companies of a certain size to report nonfinancial information once a year. "The quality of ESG data is not perfect," BlackRock's Fancy said, "but it's rapidly improving."

Preparing for the New Era

Our research reveals five actions that companies can take to prepare for the new era of sustainable investing.

Articulate your purpose.

Larry Fink, who writes an annual letter to CEOs, created quite a stir with his 2018 missive, titled "A Sense of Purpose." He wrote, "To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society." He elaborated on this view in his 2019 letter, "Purpose & Profit," stating that "purpose is not the sole pursuit of profits but the animating force for achieving them." He further stated that "profits are in no way inconsistent with purpose-in fact, profits and purpose are inextricably linked." According to Michelle Edkins, BlackRock's global head of investment stewardship, "Some people think 'purpose' means diverting from profitability-but it doesn't." As Colin Mayer, a professor at the University of Oxford and an expert on corporate purpose, recently told us in an interview, "The purpose of a company is not just to produce profits, it is to produce solutions to problems of people and planet and in the process to produce profits."

The easiest way for board members to communicate their company's place in society is to publish a "Statement of Purpose." In it, the board articulates the company's reason for being, identifies the stakeholders most important to its continued prosperity, and lays out the time frames over which senior management's decisions are evaluated and rewarded. It is essential that this statement come from the board since its role is to represent the intergenerational obligations of the corporation. Hermes EOS has launched an engagement campaign to encourage company boards to publish just such a statement. "Clarity about the corporate purpose is fundamental for board effectiveness," explained Hermes EOS's Hirt. "It's a cornerstone of constructive engagement with investors and other stakeholders."

Improve engagement with shareholders.

Investors, both active and passive and across asset classes, are seeking deeper levels of engagement with their portfolio companies. As "sustainable investing" becomes synonymous with "investing," shareholders will want to be able to engage with the C-suite, including the CFO, and directly with the board. The "Statement of Purpose" provides a good foundation, but it should be part of a larger, integrated report for shareholders. As defined by the International Integrated Reporting Council, "an integrated report is a concise communication about how an organization's strategy, governance, performance, and prospects, in the context of its external environment, lead to the creation of value." In practice, this means that company reports should include a materiality analysis that identifies the ESG issues that affect financial performance. Such a report is an effective way to demonstrate to shareholders and other stakeholders that the company is practicing "integrated thinking" regarding its role in society. It is a way of changing the orientation from short-term financial results to long-term value creation.

The "Statement of Purpose" and an integrated report provide a good foundation for a company to start communicating its long-term plan. The Strategic Investor Initiative of CECP, a CEO-level coalition, has created a framework for executives to share the long-term strategic plans for their companies, and it hosts CEO Investor Forums in which to do so. Nearly two dozen heads of S&P 500 companies-including chief executives at 3M, Aetna, Becton Dickinson, GlaxoSmithKline, IBM, and Unilever-have presented their plans to institutional investors with some $25 trillion in assets under management.

Finally, companies should take charge of quarterly calls and not let them be driven by short-term sell-side analysts. A good start is to eliminate earnings guidance. Management can then use these calls to explain progress on ESG targets and how the targets are contributing to financial performance. This is already beginning to happen. According to a 2018 report by Goldman Sachs, nearly half of S&P companies addressed ESG topics in 4Q conference calls.

Increase involvement by middle management.

As ESG considerations at major investment firms are trickling down from the CEO and CIO level to analysts and portfolio managers, companies need to respond by increasing their own middle management's involvement in identifying and managing the material ESG issues. After all, middle managers are the ones who commit resources for achieving strategic objectives. "Real change will happen when business units are focused on what 'ESG' means for their own purpose and innovation," said Jonathan Bailey, the head of ESG investing at Neuberger Berman, an asset manager with $315 billion in AUM. "Investors and the CEO create the space, but it is middle management that will create the products and services that serve both shareholders and society."

Getting middle management more involved is the responsibility of the board and senior leaders. When appropriate, executives should include middle managers in conversations with investors. Middle managers in business units should also participate in the materiality determination process in which companies identify the ESG issues that impact their business. Top management should evaluate and reward middle managers on both financial and ESG performance, and with a longer-term perspective than quarterly or annually.

Invest in internal systems for ESG performance information.

Whereas every large company has a sophisticated and robust IT infrastructure for generating financial reports, few firms have reliable systems for measuring ESG performance. Instead, ESG information is typically generated through spreadsheets or various boutique software solutions focused on distinct topics, such as carbon emissions, supply chain, or customer retention. The result is untimely and poor-quality ESG data, which presents challenges not only to investors but to corporate managers themselves. Indeed, one of the main obstacles today for many companies wishing to produce an integrated report is that their ESG information is rarely available at the same time and in a comparable format as financial information. Developing standards for ESG information, as GRI and SASB are doing, will be helpful here. But corporate leaders can also play a vital role in speeding the pace of change in three ways.

First, they can put these standards into practice in their external reporting. Second, companies should challenge the software vendors that provide financial information to extend into ESG metrics. Some of the large software firms are already working on this-and they will work harder and faster if there is clear market demand. Third, businesses should press their audit firms to provide assurance on reported ESG performance, just as they do for financial performance. Yes, there are challenges (such as the need for standards and better and more integrated IT systems) and concerns (increased liabilities, for example) in doing so. But these are surmountable problems that must be solved to accommodate the changing focus of investors.

Improve measurement and reporting.

Some ESG issues don't affect a company's bottom line but still impact society at large. A growing segment of the investment community is interested in those impacts-and willing to allocate capital to firms that actively work to benefit society. The challenge for companies wishing to attract these investors is that there is currently no agreed-upon way of measuring a firm's "externalities"-the positive and negative effects of its products and services on society. As just one example of the challenge, consider geographical location. A windmill replacing coal in China has a greater positive impact than adding a similar windmill in Norway, where nearly all of the energy comes from hydropower.

The Impact Management Project is a network of organizations working to harmonize impact measurement and reporting initiatives. CEO Clara Barby calls it a "big tent" of people and organizations committed to creating standards that will be useful to companies and investors. Companies, like investors, are on the frontier of this effort and will be learning together. A good framework for thinking about impact is the United Nations Sustainable Development Goals (SDGs)-the 17 goals that the UN identified as necessary for a sustainable future, including eradicating poverty and hunger, ensuring responsible production and consumption, and promoting gender equality. A 2016 PwC study of sustainability reporting by 470 companies in 17 countries found that 62% mentioned the SDGs, although only 28% provided quantitative targets linked to societal impact.

CONCLUSION

A sea change in the way investors evaluate companies is under way. Its exact timing can't be predicted, but it is inevitable. Large corporations whose shares are owned by the big passive asset managers and pension funds will feel the change the soonest. But it won't be long before mid-cap companies come under this new scrutiny as well. All companies, though, should seize the opportunity to partner with investors willing to reward them for creating long-term value for society as a whole.

A version of this article appeared in the May-June 2019 issue (pp.106-116) of Harvard Business Review.

# data[].attributes.attachment_link.title
Shareholders Are Getting Serious About Sustainability

# data[].attributes.attachment_link.description
Idea in Brief The Problem For years, environmental, social, and governance (ESG) issues were a secondary concern for investors. Today institutional investors and pension funds have grown too large to diversify away from systemic risks, so they must consider the environmental and social impact of their portfolio.

# data[].attributes.headline
Research CSR Techniques -  Maastricht University

# data[].attributes.subject
Research CSR Techniques -  Maastricht University

# data[].attributes.body
"Where empirical CSR literature primarily analyses social performance in general, we show that it is precisely the heterogeneity in CSR approaches that shapes the social and financial performance of firms. Specifically, strategic CSR firms outperform CSR-as-insurance and especially corporate greenwashing firms in both realised social performance and financial performance."

# data[].attributes.attachment_link.readable_text
49 Pages Posted: 25 Aug 2021 Last revised: 13 Sep 2021

Date Written: August 17, 2021

Abstract

In this paper, we identify heterogeneous CSR approaches by segregating the promised and realised social performance of firms to better understand how corporate social performance affects financial performance. Empirical CSR literature provides predominantly mixed findings on the social performance to financial performance relation because it often implicitly assumes that social performance is homogenous. We move beyond this homogeneity by observing that 50%, 24%, and 26% of the firms respectively approach strategic CSR, CSR-as-insurance, and corporate greenwashing. Where empirical CSR literature primarily analyses social performance in general, we show that it is precisely the heterogeneity in CSR approaches that shapes the social and financial performance of firms. Specifically, strategic CSR firms outperform CSR-as-insurance and especially corporate greenwashing firms in both realised social performance and financial performance.

Keywords: Strategic CSR, CSR-as-insurance, corporate greenwashing, promised to realised CSP, CFP

JEL Classification: M14, Q56, G15

# data[].attributes.attachment_link.keywords[]
corporate social performance and corporate financial performance

# data[].attributes.attachment_link.title
Heterogeneous CSR Approaches, Corporate Social Performance and Corporate Financial Performance

# data[].attributes.attachment_link.description
49 Pages Posted: 25 Aug 2021 Last revised: 13 Sep 2021 Date Written: August 17, 2021 In this paper, we identify heterogeneous CSR approaches by segregating the promised and realised social performance of firms to better understand how corporate social performance affects financial performance.

# data[].attributes.body
This report presents the joint research findings and conclusions on child labour, forced labour and human trafficking linked to global supply chains from the ILO, the Organisation for Economic Co-operation and
Development (OECD), the International Organization for Migration (IOM), and the United Nations Children’s
Fund (UNICEF), under the aegis of Alliance 8.7. It
is the first attempt by international organizations
to measure child labour, forced labour and human
trafficking in global supply chains.

# data[].attributes.body
However, priorities are important, so we are focusing on three environmental goals as we move toward 2025:

1. By 2025, we will be 100% carbon-neutral across our entire supply chain. We will do this by reducing our footprint and investing in impactful renewable projects and natural climate solutions.

2. By 2025, all our apparel products will be made from 100% recycled, reclaimed or renewable resources.

3. By 2025, our packaging will be 100% reusable, home compostable, renewable, or easily recyclable.

# data[].attributes.attachment_link.readable_text
Why

The clothing and footwear industries are responsible for around 10% of the global greenhouse gases emitted in the entire world-with the textile industry alone releasing more than 1.2 billion tons of CO2e into our atmosphere every year. The manufacture, transportation, and use and disposal of garments have a significant impact on the planet, which is only increasing as our consumption patterns continue to grow.

Patagonia is part of this industry, and our entire business is implicated in its impacts. We rely on water, chemicals and fossil fuels across our supply chain-growing cotton, recycling polyester and nylon into thread, weaving and dyeing fabrics, and transporting the gear we make to customers.

For years, we have been working throughout our value chain to reduce our environmental footprint. We hope to inspire a movement of businesses looking to do the same.

Where We Are

We partner with other companies across the globe to manufacture and transport our products. We work closely with our partners to mitigate the environmental harm of producing clothing and hold our suppliers (and ourselves) to the highest environmental standards. We have switched many of our materials and processes to alternatives that have a lower impact. We do this not because it's necessarily demanded of us, but because it's the right thing to do. We set a high bar for ourselves and work rigorously with our partners to find solutions to the hardest questions in the industry.

Over the years, we have committed to numerous initiatives aimed at reducing our environmental impact across our business, such as using only cotton grown organically in all of our products made from virgin cotton and increasing our use of recycled materials.

What's Next

Patagonia was founded with a mission to build the best products that cause the least amount of harm. That ethos guides us to take a vast look at all of the impacts our business creates. However, priorities are important, so we are focusing on four environmental goals as we move toward 2025:

1. By 2025, we will be 100% carbon-neutral across our entire supply chain. We will do this by reducing our footprint, investing in impactful renewable projects and purchasing certified carbon offsets.

2. By 2025, all our apparel products will be made from 100% recycled, reclaimed or renewable resources.

3. By 2025, our packaging will be 100% reusable, home compostable, renewable, or easily recyclable.

4. By 2030, 100% of the cotton and hemp fiber used in our line will be Regenerative Organic Certified (ROC).

# data[].attributes.attachment_link.description
Why The clothing and footwear industries are responsible for around 10% of the global greenhouse gases emitted in the entire world-with the textile industry alone releasing more than 1.2 billion tons of CO2e into our atmosphere every year.

# data[].attributes.headline
Rob Chesnut | Airbnb’s former Chief Ethics Officer on How Smart Companies Can Lead An Ethical Revolution

# data[].attributes.subject
Rob Chesnut | Airbnb’s former Chief Ethics Officer on How Smart Companies Can Lead An Ethical Revolution

# data[].attributes.body
"Excitingly, the world's different now. We're starting to rethink shareholder value. We're recognizing the damage done by companies to our environment, for example, or in factories on the other side of the world when they try to get the cheapest price on something. Instead of causing these huge problems, we need companies to step up and solve some of the world's biggest challenges. I think we've lost faith that government is going to do it and so we're looking at companies to step up. And if they don't step up, we’re seeing signs that people are going to push them hard."

# data[].attributes.attachment_link.readable_text
This article is part of the Reimagining Capitalism LinkedIn newsletter. If you want more perspectives like this one sent straight to your inbox, please *subscribe* above. Nina: Rob, thanks for taking the time to chat with me! Chief Ethics Officer. As Kanye would say, I don't know what it means, but it's provocative! I'd love to start by hearing about this role and the path that led you there.
Rob: I am thrilled to be here Nina, thanks for inviting me to be in such wonderful company - I admire so many of the people you've interviewed!As for me, my story is about rules. I've been dealing with rules my whole life. That might sound boring but it's been anything but!

I started as a federal prosecutor working on all kinds of cases for a decade or so. And then from there I went to eBay, working on regulation and fraud. Moving from federal prosecution to a corporate world might seem like a big switch, but the connecting thread was still thinking about rules: when I first started at eBay, I remember Meg Whitman, the CEO at the time, looked at me and said, "Okay, Rob, your first job is to figure out what we can sell on the site. Alcohol, guns, tobacco - what's possible."

And then from there, I went to Airbnb as their General Counsel. That role was exciting because it was an emerging category at the time and so figuring out the rules - or what they should be, from a point of integrity - was fun (and fascinating!).

I eventually took on the Chief Ethics Officer role at Airbnb, which didn't mean that I "owned ethics." I think ethics is built into the job description of being a leader, and integrity is something that we wanted everyone at Airbnb to feel like they were responsible for. My role was a lot about setting up a structure to think about and apply integrity to decision making, and being a communicator - a conscience for the company to keep integrity in the forefront of our thinking.

So, I'd say the connection across these different parts of my career has been figuring out what the law is. But a connection also is the strong belief that the law is not the standard. Meg used to talk about wanting eBay to be a well-lit marketplace since eBay, not unlike Airbnb, is in the trust business. So, if you want to build trust as part of your brand, I think you have to help people understand that as a company, you're going to do the right thing - you won't just comply with the standard, you'll set the standard.
Nina: Yes, and that's what your book, Intentional Integrity: How Smart Companies Can Lead An Ethical Revolution, is about. What do you mean by intentional integrity?
Rob: The greatest influence on my life when it comes to integrity was my mom. I tell a story in the book that we were leaving a grocery store when I was young and I distinctly remember we stopped in the parking lot on the way out. My mom was looking at the money in her hands (this was back in the old days when you actually had cash!). She looked at me and said we had to go back inside.

I followed her back in and I remember her talking to the clerk, who looked shocked. When I asked my mom what was going on, she told me we were given too much change and we had to return it because it didn't belong to us. That lesson stuck with me. I've marched my own kids back into a couple of places where I got too much change or where we didn't get rung up for something at the bottom of the cart.

My mom set the integrity thermostat for me. If a thermometer takes the temperature in the room, the thermostat sets it. And that's what good leaders do. Like my mom, they set the integrity temperature of a company. So that's what my book is about.

Nina: What prompted you to write the book?

Rob: The book actually started with the #MeToo movement. It struck me about four years ago that the world was changing - that for decades leaders were getting away, I thought, with some very bad behavior and it was being swept under the rug.

Alongside that, I saw this rubric of shareholder value taking on almost biblical worship: the idea was that any activity must be good if it was in the name of shareholder value. And I'm thinking, well, shareholder value really is all about the executives getting rich because they're the ones that benefit when the share price goes up.

Excitingly, the world's different now. We're starting to rethink shareholder value. We're recognizing the damage done by companies to our environment, for example, or in factories on the other side of the world when they try to get the cheapest price on something. Instead of causing these huge problems, we need companies to step up and solve some of the world's biggest challenges. I think we've lost faith that government is going to do it and so we're looking at companies to step up. And if they don't step up, we're seeing signs that people are going to push them hard.

Chief among these protesters will be employees. Previously, employees wouldn't say anything, right? They might've seen something they didn't like, but they didn't want to lose their job by saying something. Now, employees are talking to each other on Slack, they're posting online, they're on Glassdoor, they're tweeting. With just one blog, Susan Fowler completely changed the course of Uber. One person. It is pretty amazing! And it's not just employees, it's consumers too! We're in an age of conscious consumerism where people want to spend money with companies that resonate with them, that hold their values.

And I started seeing also very practical element: that companies operating with integrity actually perform better financially. And they actually, I think, have better cultures, more inspired workers, and customers that are more likely to be loyal to the brand. To me, it's good business and it's the right thing to do.
Nina: I love the idea that integrity isn't a trade secret - it's not IP to be held.
So, I started seeing all of this about four years ago and it struck me that I'd rather get proactive and prevent the sorts of problems that these other companies were having. And how to do that? I remember phrasing the question to our CEO at Airbnb this way: how do you drive integrity into the culture of a company?

Neither of us knew the answer that day. But my CEO told me to go big. And we didn't want to just figure it out and keep it to ourselves, like intellectual property - we wanted to share it.
Nina: What are the SparkNotes, if you will, of the book? What do you hope people take away?
Rob: Yes, absolutely. Part of it is our CEO's a little different. A lot of people don't realize this, but Brian's parents were both social workers. He grew up in an environment where it was natural and positive to be focused on doing good in the world. Brian didn't go to business school. He never ran a business before. He went to a design school where they teach ethical design, or the idea that good design is more than just something that's pretty or even functional. It has to actually be good for the environment and good for the world. And if it's not, it's bad design, as you probably know from your work at IDEO.

So, I think more than most companies, Brian's focus is on the very, very long term. He calls it an 'infinite time horizon.' He's not worried about hitting a quarterly profit number. He wants a company that has a real purpose in the world to do good things. With that as our company's north star, we're confident it is going to be successful over the long run.

Rob: Ha, the SparkNotes - I love that. I'd say there are two main takeaways. Firstly, you have to have integrity both inside and outside of the company. I start with the outside. A company has to define their purpose. What's their north star? What do they exist in the world to do.? Profit is not purpose, profit's a byproduct of purpose. And you have to understand that, once you understand your real purpose, all your decisions have to be looked at through that lens. If you're doing it right, it should inspire and unlock, not limit!
Nina: I'd love to talk about that a bit more. One of the frequently discussed problems with stakeholder capitalism as it exists today is that it doesn't offer a clear compass for how to make decisions in complex scenarios where win-win outcomes for all parties are often impossible. This brings us to the elephant in the room: Not all stakeholders are created equal. Leaders are often forced to pick favorites, and at the end of the day, we know who will always win. What does it actually look like to measure stakeholder success and hold yourself accountable to it?
Once you're looking at it through that framing, the second big takeaway is that you need to understand your stakeholders and start to measure your success by their success. Companies are really good at measuring the success of their investors, right? There are lots of metrics, every quarter. They're great. But then there is silence when you ask, well, what about your other stakeholders? How do you know they're doing well?

You do what you measure. And so, you need to measure stakeholder success.

Rob: It's not that hard. It's not that tricky. It's just different. I think the challenge is that the people running businesses today got taught in business school a particular way to look at the world. But the companies that I think are going to be most successful are going to be able to pivot and actually abandon what they were taught and pick up something new.
Nina: That tangibility is really clarifying. Could you walk us through how you measure success of some of the other stakeholders in the Airbnb ecosystem?
Let's take Airbnb. We know how to measure success for our investors. But another important stakeholder is our host. It's not enough that Airbnb be profitable, our hosts have to be successful too. If your hosts are going to be successful, you've got to understand, are they making money? Right? If you are taking such a huge percentage of the cost of the rental as your fee (to bring back more profit to shareholders), then hosts are not going to be successful.

Measuring how successful hosts are financially is one metric for that stakeholder group. But what about their general satisfaction? You can simply survey them and find out how happy they are with hosting. What do they like about it? What do they not like about it? Take insurance, for example. One thing we hear is hosts are worried about the risk of people stealing their things and damaging their property. So, we built an insurance program so that they could be successful, and we didn't charge any extra money for it.

Rob: Sure, let's take another stakeholder. Let's take guests. Your guests are successful if they're having great experiences. I mean, you could make a lot of money for a while just running a short-term rental business. But if over time your guests start having worse experiences and rating their hosts lower and lower while you're counting your money, you're ultimately going to fail. So, you need to focus on, are the guests enjoying their experience too?

Or think about communities, another stakeholder. We've heard loud and clear that communities weren't happy with Airbnb, in large part because of parties. So Airbnb has to address the community's needs in dealing with party houses and learn how to predict when something is going to be used for a party and detect it and stop it before it becomes something disruptive to your community. A lot of companies might think, "Well, that's not our problem. We're just a platform." But in reality, the community is an important stakeholder. So you can make sure the number of party houses get reported. There are always things you can do.

Thinking about these kinds of metrics might seem funny because nobody's ever done it before and because each company may need its own unique metrics because each company's stakeholders might be different. So, you can't go look at someone else's metrics and just adopt them like you can for financial metrics. That's okay. It doesn't mean it's bad because it's not standardized. It just means you need a leader that's willing to learn and grow and do things differently.
Nina: From your view at the top, what makes acting with integrity hard?
Nina: If companies adopt different metrics of success for their unique stakeholder sets, doesn't that make it hard to compare companies and look at their relative success? How do we benchmark in a stakeholder-first capitalism?

Rob: Sure, it's a great question. I think that it was easy in the old days because everybody had the same north star and that was profit. You can compare companies, by that north star, really easily. But why does it have to be that simple? Why do you have to compare? You can compare the financials, but I would love people to invest in companies for reasons beyond only the numbers. I'd love for people to start investing in companies because they want to support or vote for in a sense what the company is trying to accomplish in the world.

Rob: I think it's not always clear what's right and what's good. Two ethical, high-integrity leaders could look at the same situation and come to different conclusions. I think that's okay.
Rob Chesnut was most recently the Chief Ethics Officer of Airbnb, Inc., a role he took on in late 2019 after almost four years as Airbnb's General Counsel. He previously led eBay's North America legal team, where he founded the Internet's first ecommerce person to person platform Trust and Safety team. He was the general counsel at Chegg, Inc. for nearly 6 years, and he served 14 years with the U.S. Justice Department, where he prosecuted CIA employee Aldrich Ames for espionage. He is the author of Intentional Integrity: How Smart Companies Can Lead an Ethical Revolution (St Martin's Press, 2020).
I don't believe any one person has all the answers. This stuff is complex. But what I do believe is there's a moral element to navigating this complexity: that the world needs companies to step up and solve problems because the world has some major issues that we need to fix.

And even if we couldn't always agree on exactly what is 'integrity' and what isn't, what I think we should all be agreeing on is that integrity matters. You might not get it exactly right. There might be very reasonable minds that would disagree on it. But what we can't have is a group of leaders that think that it doesn't matter at all.

# data[].attributes.attachment_link.title
Rob Chesnut | Airbnb's former Chief Ethics Officer on How Smart Companies Can Lead An Ethical Revolution

# data[].attributes.attachment_link.description
This article is part of the Reimagining Capitalism LinkedIn newsletter. If you want more perspectives like this one sent straight to your inbox, please *subscribe* above.