Green Strategies president Roger Ballentine explains to Sara Gutterman what ESG actually measures, why investor and younger-generation pressure is pushing companies to disclose climate performance, and how consumers can separate greenwashing from real action.
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Sara Gutterman: I'm here today with Roger Ballantyne, president of Green Strategies. What is and why has it become so important?
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Roger Ballentine: It is considerations outside of what happens for us traditionally been considered for business and investing issues. And those considerations b at the environment being social and how companies deal with it actually matters to how successful that company is going to be. And frankly, as an investor, whether or not you want to invest in the company. So it's just this integration of of factors and considerations important in society and important to the planet, that therefore they must be a relevance to business and investors.
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Sara Gutterman: Can you tell us what you're seeing in the market with respect to trends and areas of focus, with respect to ESG?
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Roger Ballentine: One of the most direct effects I've seen on companies is when their investors start asking them questions about the tell us your ESG policy. Tell us your climate policy. Tell us what you're doing on diversity. And the more those questions are being asked, the more you're going to say, hey, are we doing enough? Particularly millennials are already having they're already mainstream actors in our economy.
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Roger Ballentine: So companies that are thinking strategically, you know, have to have those kind of stakeholders in mind. Well, who are they and what do they care about? What's pretty clear. And in fact, there's tons of polling and data to show this as a younger generations hold a lot of these issues in higher priority than previous older generation. So when they care about these issues, that matters to companies.
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Roger Ballentine: Because why they're your employees, they're your customers. They're your consumers you need to sell to increasingly, they're the people on the other side of your business to business relationships. So those expectations of a growing segment of the population. Any company knows they have to kind of be responsive to that and see where those stakeholders are going because they want to be there.
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Sara Gutterman: Thanks, Roger. You know, you mentioned millennials and older Gen Z. And our data shows that those audience segments are on the receiving end of trillions of dollars of inheritance from grandparents and parents. They have a tremendous amount of annual spending power. They have an inherent ethic of DNA, and they do care about corporate sustainability and ESG. You know, for those audience segments, what are kind of the primary PSG elements that they should be looking for when either purchasing products from companies or making investment decisions?
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Roger Ballentine: Information about what companies are doing or how climate change, what their strategies are, what their emissions footprints are. Most of that is available smart companies that are doing well or kind of push, they're pushing that information out. So use the consumer and trying to make these choices have access to that information, because they understand that ESG and climate in particular, if they outperform their competitors, that is a source of competitive advantage.
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Sara Gutterman: Can you tell us a little bit, a little bit about what's in the pipeline and coming down the pike with respect to disclosure requirements and what consumers should be looking for with respect to that enhanced accountability and transparency.
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Roger Ballentine: Reporting practices that were once very niche, with very few companies doing more and more companies are doing it to the extent now that most of the big companies around the world, the volunteer providing lots of additional information now for climate, the SEC steps in and just lights up, match what was already, you know, a smaller environment. So over the next three years, depending on when the rule gets, pretty much every public company in America is going to have to start really opening around.
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Roger Ballentine: What are you doing about climate change? What are your emissions? Tell us your strategy such that consumers will have information.
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Sara Gutterman: How can the average consumer decipher between greenwashing and authentic ESG and corporate sustainability initiatives?
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Roger Ballentine: Yeah. It's hard. It really is, because it can get quite technical in in an evolving space like this, which is really new and different. There will be information which is hard to decipher what it really means. Company may tell me they're doing something. Do I know that that's really a good thing or not a good thing? There's going to be some challenges, but one thing you can count on is a broad array of stakeholders to prove.
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Roger Ballentine: Will be constantly kind of pressuring, monitoring, deciphering, and driving a more, more consistent practice on behalf of companies towards things that actually have impact. But the theory behind all of this is that more information is better than less information.
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Sara Gutterman: Where should consumers go to learn more and get more information about ESG, to educate themselves about what's happening and what they should be looking for?
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Roger Ballentine: Do you want to align your work, your daily life, and your investments with your values to the best extent you can? If you're kind of deciding between a couple of companies, starting with their sustainability reports, they all have them. But if you read and compare, you can start to get a sense of what? How real is this? Wow, that really does sound like they're doing more somebody else.
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Roger Ballentine: It's a good piece of information, not unbiased, but good piece of information. Then there are ratings agencies that kind of evaluate company and others different metrics and generally share that information. They're not getting it exactly right in terms of how they're doing that. But it's getting better. Still allow you to compare which at the end of the day is what matters, because that competitive nature of of company now competing to do better on ESG issues, that's a good thing.
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Roger Ballentine: You want more of that. It happens to be the way and the pathway to doing better as business.
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Sara Gutterman: All right. Any other last comments or advice or tips for our audience?
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Roger Ballentine: So you have the power vote work. Invest your values. It'll be good for you. It'll be good for the world.