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The ESG Update Episode 12: Looking in the ESG Mirror Thumbnail

The ESG Update Episode 12: Looking in the ESG Mirror

ESG Update Podcast

It’s a new year and a fresh opportunity for self-reflection! Values and mission alignment consultant Genevieve Smith of GV Advisory joins the podcast this week to discuss how we apply ESG standards internally within our own businesses.


Transcript

This transcript has been edited for clarity.

Dan Carreno, Change Finance:
Welcome to The ESG update presented by Change Finance. I'm your host, Dan Carreno. I am the head of business development at Change Finance, and we are an ETF provider dedicated to environmental, social, and governance investing. And our mission is to help investors align their portfolios with their values without sacrificing returns. This is our first episode of the new year, 2021, and if you're hearing this, congratulations, it means that you survived 2020; you're on the other side now. We believe that the new year is always a good time for self-reflection and resolutions.

So, for this episode, we're going to take a slightly different focus than usual. Instead of thinking about how ESG applies to investments, we're going to think about how ESG may apply to our businesses, and to help us think about this, I've asked Genevieve Smith from GV Advisory to join us. Genevieve is a consultant that works with organizations to align mission strategy and tactics. Genevieve, how are you, and can you tell us a bit more about how you work with companies? 

Genevieve Smith, GV Advisory:
Thank you for having me. So, I work with a lot of different organizations. Many of them have been purpose-driven, whether they're nonprofits or philanthropy, or networks of folks interested in social good, including investors on what is the “so what” of social impact. We've got all of these great fancy statements and really good rhetoric about how we're making the world a better place. I work with organizations to dissect all of their business processes and actually align their values. I also work with organizations to help them define and understand their values. 

Dan Carreno, Change Finance:
I definitely have some additional questions for you on that, but before we get to it, I did want to get your feedback on an article here from CNBC, which is titled, “These Advisors Actually ‘Walk the Talk’ When It Comes to Socially Responsible Investing.” I'll start off summarizing the article with a quote that I think kind of sums it up. It says, “For some advisors, embracing environmental, social and governance principles means more than just investing sustainably. It also means expressing their values through their practices, their corporate structures and their activities.” They highlight a few different firms here. Some organizations that we know. The article highlights BSW in Boulder, Willow investments in Massachusetts, GreenVest in Vermont, and Revalue in Michigan. They talk about a few different things about how some of these companies have converted to public benefit corporations and how some have become B Corps. It talks about some of the work that they're doing within their communities, going above and beyond just investing sustainably. Some examples are hosting leadership workshops, supporting food banks, and offering financial planning services to low and middle income households. Pretty much all of the organizations that were interviewed for the article attest that by doing this, by living their values, it is making them more profitable long-term, and it's making them more credible and trustworthy in the eyes of their clients and prospective clients. All in all, this is an example of firms going above and beyond ESG as a mode of investing. Let me take a pause there and see what you think about the article and the general scope of the industry. 

Genevieve Smith, GV Advisory:
I love it. Usually, I see headlines like this, and my skeptic's eyebrow goes straight up. When I read this, it was like, okay, I buy it. What I love about it is it highlights different vehicles, such as community involvement. Some of the organizations in the article had completed their benefit corporation certification and things like that. Somebody was buying locally sourced non-GMO foods to stock the kitchen for their employees. One thing that I talk about a lot is that nothing is neutral. Every single action we take or don't take has an impact on the world around us. Even the groceries you buy for your employees can either map up to your mission or not. We have these conversations about high-level systems change, working past injustice, and building these equitable worlds. It can feel really hairy and overwhelming. A lot of folks want to take a nap. They say we've got the ratings, but it's all squishy. None of us agree on what any of this stuff means. So, I love the accessibility of tactics like where are you buying your groceries? And how are you sourcing your water? Do you have a room for folks to park their bikes instead of drive? 

Dan Carreno, Change Finance:
Thinking about the financial industry at large, where do you think that financial firms are doing well and hitting the marks in terms of actually being the types of businesses we think we should be? And where do you think maybe we're falling a bit short? 

Genevieve Smith, GV Advisory:
Huge question and from my point of view, which is coming at this from the non-profit world, so admittedly I may have a different set of standards than somebody coming from Wall Street, I think there's a lot of really positive movement in the public relations. I don't say that to be cheeky or as a backhanded compliment. I do think that there is a lot of really great rhetoric that does change the conversation. Many investor networks have done a good job on statements and speaking out against racial injustice. The fact that these networks exist, organizations like Transform Finance, or Majority Action, and The Interfaith Center on Corporate Responsibility, is great. The fact that they have so many signatories is great. 

Dan Carreno, Change Finance:
That’s interesting feedback and is not the direction I thought that you might go. There is this big focus on greenwashing in the financial services industry right now. You've got big companies to come out there saying all the right things, but when you look under the hood, they're not really doing all that much. You seem to have a different perception of it. You're saying that the rhetoric and the public statements themselves are meaningful. 

Genevieve Smith, GV Advisory:
There’s a huge “but.” PR without action is garbage. That said, as I've been navigating how to engage with leaders across industries on what is essentially giving up power in changing how they're doing business, that can be a hard conversation. The PR gives us something to hold on to. The PR gives us a vehicle by which to hold these organizations accountable. I think the question is whether or not we hold them accountable. So, the thing that I love about these big statements is not that they're big statements, but rather that we have it in writing that you committed to this. I look at it as another tool in our policy advocacy toolbox. You said that you were committed to not only making more diverse hires but focusing on inclusion and creating a culture of belonging. Show us how you've been listening. So, it's for that reason that I like the PR. The fact that conversations about whether or not capitalism is working, the fact that those conversations are more on the main stage, like the fact that the article we're discussing is on CNBC, is kind of a win.

Dan Carreno, Change Finance:
Let me make a statement and get your feedback. Maybe you can correct me, if I'm wrong. My perception is that when we think about ESG as financial services firms, we don't have a huge environmental footprint. We're not industrial companies. It's always great to offset emissions where you can and to source renewable energy, but more often than not, it seems like in our business, the S is the heavier lift. Sometimes it feels more difficult. To become carbon neutral as an organization, there's a clear path on how you do that. You go out, and you purchase your carbon offsets, you put out your press release, and off you go. But to build a more socially just organization involves a lot of hard work. Can you speak to that a little bit more and maybe give some examples in terms of how organizations have approached that in a successful way?

Genevieve Smith, GV Advisory:
I love that call-out between the E and S. We can measure carbon. It's still kind of squishy, but I would say it's the least squishy of the three big letters. The big caveat to all of this is everything is always changing. And in work like this, especially when we're talking about purpose-driven work and values-driven work, no matter what industry you're in, things shift and change and people change and grow. One idea that I love is that everything's on wheels. If we approach this work thinking there's a formula for being socially just, you have to throw that out immediately. This work is so dynamic, and the wind shifts directions. The key is remembering that it's adaptable work and it's squishy work, and it's never not going to be squishy. As business leaders, we must have a conversation with ourselves to understand whether or not we're up for it. Of course, I want everybody to be up for it, but to approach it as though it's another tech governance issue, isn't what this work is. Being really clear upfront with ourselves and our teams to say this will get a little uncomfortable, and we're probably going to mess up, but we believe in it, and here's why. And just because it doesn't all happen overnight, and the minute you think you've got it, you're going to need to change, doesn't mean it's not worth it. And that doesn't mean that you won't still be driving change forward.

Dan Carreno, Change Finance:
I think that's a perfect segue for my last question for you. But before I get to that question, to sum up, what I believe I just heard from you is that number one, it's never going to be perfect, and two, you're not necessarily ever going to be done. It is a process that you're going to have to implement in your organization and adhere to and then optimize over time.

Okay, last question. I ask this because I know that there are other individuals in the financial services industry that feel similarly to how I do about the social work that you're referring to. To put myself out there, sometimes I feel a little nervous about saying the wrong thing or doing the wrong thing because those winds sometimes shift so rapidly. And in that environment, sometimes the easiest thing to do, the path of least resistance, is to pull back and maybe not say anything at all, or not do anything at all because then you don't want to risk saying or doing the wrong thing. What advice do you have for folks like me, the dinosaurs in the industry? 

Genevieve Smith, GV Advisory:
I love that question. Thank you for putting it out there. Talk about Pandora's box, right? We could have many conversations about it, and I hope we do have many conversations about it. I think it's important to remember that it’s a human reaction. I'll back up for a minute. One of my favorite ways to think about this is people are not afraid of change. People are afraid to lose something. Many things are changing between the pandemic, between the uprisings over the summer, between the calls for true racial justice, and many other things. All while people are living their lives and their kids are growing up. So, think about what it is that we're afraid of losing. In a professional situation, it could be fear of losing competence. All of a sudden, I'm not the smartest person in the room, and I'm the CEO. If I say the wrong thing, what does that signal for my credibility, for my reputation? There's also fear of loss of power. If we don't know all the right words, we can't control the situation or the conversation. It goes on and on.

I think first it's important to notice that that's what that is, to notice that fear is an internal conversation. I think that's where it's really important to be vulnerable, just like you are right now, and say, I don't know if this is the right thing to say. I have a thing I want to say, and I don't know if it's the right thing, which that in itself takes some guts. I also think we tend to be more preoccupied with this idea of political correctness than justice. When we're worried about saying the wrong thing or doing the wrong thing, go back to your values. That would be my invitation to everybody. Align with what you believe in, and especially in this field, what you're working towards. Then raise your hand and ask for help because when well-intentioned people say, “I'm well intentioned, and I know that I'm human and I could mess up and I can use some support, it's so much easier to have the conversation.”

I guarantee in three months or six months, I'm going to look back on a conversation that I had, maybe even this conversation, and say, “Oh, why did you do that?” But we're trying, and we should give ourselves grace for that. All of that falls under the umbrella of being nice to yourself, being honest, and being willing to be vulnerable with your teams and your colleagues and your friends. On the other side of that is being willing to learn. If you get called out, get called out because we won't know how to do better unless we know better. So if somebody, especially somebody from a community that is being affected by whatever issue you're working on, says, “Hey, this is my lived experience, and whatever you are doing is counterproductive to improving that experience,” don’t react by thinking you’re a bad person, because that makes it about us, And it's not about you, it's about this person who just opened up to you about their lived experience. If they were rude, sorry, but maybe you can handle somebody being rude to you for a minute. It's being nice to ourselves and having grace for ourselves while also checking the ego. And when somebody calls you out, say thank you to the person because they're letting you know how to do better in the future and not everybody is right all the time. There's not a handbook for this stuff, and that's why it's scary and weird, but we're never going to get anywhere if we stay quiet. 

Dan Carreno, Change Finance:
It sounds like the principles that apply to the organization also apply to the individual. It's never going to be perfect, and it's a process that you're going to have to work through continually. I think that's a good place to wrap it up, and Genevieve, I want to say it was truly a pleasure. Happy New Year to you. I hope that your 2021 is a lot better than your 2020. If folks want to get in touch with you, where should they go? 

Genevieve Smith, GV Advisory:
Thank you for having me on and having this potentially uncomfortable conversation. To get in touch, please go to my website, which is https://www.gv-advisory.com/. My email address is genevieve@gv-advisory.com.

Dan Carreno, Change Finance:
Thank you again. For anyone who is listening that wants to find Genevieve’s website or the article that we referenced before, you can always go to www.change-finance.com. The podcast library can be found under the INSIGHTS tab, and links will be provided within the podcast transcript. And of course, if you have any questions or feedback for us, you can always get in touch through the website. Thank you again, and we will be back soon with another episode of The ESG Update.