Data, integration and global alignment: Salesforce’s approach to ESG
Posted in GreenBiz
May 3, 2022

Data, integration and global alignment: Salesforce’s approach to ESG

This new series illuminates the diverse impact of ESG issues across industries and explores how leading companies are measuring, managing and disclosing these issues.

I spoke with Sunya Norman, vice president of ESG strategy and engagement at Salesforce, about partnering with the finance team on disclosure, reaching net zero on residual emissions and the need for international alignment on ESG disclosure.

We briefly discussed the Value Reporting Foundation (VRF) consolidation into the IFRS Foundation to help form the International Sustainability Standards Board (ISSB), which just issued its first two exposure draft standards for market feedback.

Neil Stewart: Your title, VP of ESG strategy and engagement, seems to sum up Salesforce’s approach to ESG. But this concept of tying environmental and social issues to strategy is not a given for some businesses. How do you do it?

Sunya Norman: You’re right that my role is all about tying ESG initiatives and accountability, and transparency to our core business operations. When I think about success factors, I think about three things. One is that impact has been a part of Salesforce’s DNA since we were founded 23 years ago. Our leadership team has always said that business can be a powerful platform for positive social and environmental change, and Salesforce brings that to life.

The second factor is a focus on trust. I think one of the most exciting things about ESG, especially the transparency piece of ESG, is deepening trust with key stakeholders. Employees tell me all the time that one of the main reasons they joined Salesforce was that they’d read about our environmental and social programs, and it really resonated with them and their personal values. So, we’re winning talent, and we’re winning customers in part because folks are finding that alignment with us.

What finance does really well is setting up internal controls, collaborating with third parties … and interacting with the board and other executives on a regular cadence. So we’re taking those best practices and applying them to our ESG processes.

The final success factor is the ability to translate and inspire. Internally, we work with many different business functions, and we need to find out what they’re focused on, how they function, who their core stakeholders are, where the alignment might be with respect to measurement, goal-setting and transparency, and how we can create shared value. Salesforce has also been voluntarily reporting ESG data for over a decade through our Stakeholder Impact Report. It has been great to bring everyone along on our ESG journey.

Stewart: For many companies, ESG is still siloed and separate from the finance function. But it seems like Salesforce is different. What does your financial reporting process bring to sustainability disclosure?

Norman: Our partnership with the finance team has been incredibly powerful. What finance does really well is setting up internal controls, collaborating with third parties like assurance firms and interacting with the board and other executives on a regular cadence. So we’re taking those best practices and applying them to our ESG processes and reporting. That means everything from how we collect the data to working with the same external auditor that oversees our financial reporting. It means engaging various members of the board and proactively communicating with our stakeholders. One example of this collaboration was Salesforce’s first Task Force for Climate-related Financial Disclosures report in October.

Stewart: Salesforce has already reached net-zero residual emissions and 100 percent renewable energy. What makes those achievements meaningful against the backdrop of so many net-zero announcements that may not always have consistent, comparable and reliable data to back them up?

Norman: There are two things I’m most proud of about these accomplishments, and the first is transparency. For renewable energy, Salesforce is transparent about the projects we’re investing in, where they are, what they do. For net zero, our sustainability team recently produced a climate action plan that details exactly what we mean when we say we have net-zero residual emissions, what we’re working towards in the near term and long term, how we’re looking across our business to integrate climate action in everything from public policy engagement to emissions reductions around the business.

The other thing we’re proud of is collaboration. We need to bring others along with us, and Salesforce has been a founding member of initiatives like the Clean Energy Buyers Alliance and the Business Alliance to Scale Climate Solutions. They share best practices that make it easier for other businesses to do what we’ve done. Or in some cases we’ve been the one gaining best practices from others.

Consistency, comparability and standards are all critical pieces of the puzzle.

It’s clear that we’re in a climate crisis, and everyone needs to be working towards a net-zero future, whether they’re a business or government or investor or individual. We’ve been on this journey for over a decade now, working towards renewable energy and emissions goals. Achieving those two milestones was really exciting, but we also recognize that the work doesn’t stop there. We have to continue to maintain these achievements year over year, and as a growing multinational business with increasingly complex operations, that work will never be done.

Stewart: At the Value Reporting Foundation, we’ve always taken the approach that ESG disclosure is not an end in itself, and that standards don’t just serve the user or the investor but also the company. How have sustainability data and disclosure fed into better decision-making for senior management and the board at Salesforce?

Norman: As a leading CRM [platform], Salesforce is all about data. One of the ways that that has come to life is Net Zero Cloud, which is built on Salesforce. It’s a carbon accounting product that we originally created to help our own executive teams track progress towards these major goals like 100 percent renewable energy and net-zero emissions. Now we’ve brought it to market in the hopes that our customers can get the same value, visibility and efficiency from understanding their carbon footprint and where they need to take action.

With that kind of visibility into our own footprint, we were able to hone in on areas to accelerate. For example, this fiscal year we’ll start tying our executive compensation to our ESG performance, including equality and other social metrics as well as environmental metrics. Last year, Salesforce unveiled a Sustainability Exhibit, which is essentially a climate contract that encourages our suppliers to take climate action by setting science-based targets and deliver carbon neutral products and services to Salesforce. So, we’re constantly seeing how we can influence our full value chain and how we can bring others along with us.

Stewart: How important are consistency and comparability in ESG data for investors, and what role do standards serve?

Norman: Consistency, comparability and standards are all critical pieces of the puzzle. We’ve developed a strong public policy stance around those elements over the last year, for example in our response to the [U.S. Securities and Exchange Commission’s] climate consultation and other requests for comments. We support mandatory ESG reporting. With clear guidelines and clear global standards, corporates will be able to deliver decision-useful information. That’s what we’re all after: Investors want to know if they should be investing in Salesforce, employees want to know if they should be working for us, and customers want to know if they should be doing business with us.

So we’re excited about the consolidation of the VRF and the IFRS Foundation, bringing together the best of the best from the standards organizations. And we’re excited that the SEC and the ISSB are both building on best practices widely embraced by the market, like the TCFD recommendations. There are tremendous efficiencies to be gained in terms of resources and staff time if all of us are approaching ESG in a similar way versus a “choose your own adventure” model.

For multinationals like Salesforce, it will be critical for there to be collaboration and alignment between U.S. standards and international standards. There will always be tweaks for a particular region, but as businesses grow and they operate in more  regions around the world, we need a common core of reporting ESG information.

May 3, 2022 at 02:16PM

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