Gartner Business Quarterly

Proven guidance for C-suite action

2021 Q4

Get Set for Environmental and Social Impact

Uncover issues crucial for your business as
society changes

It’s time to treat social-impact performance with a level of rigor and oversight that’s long been applied to financial and operational performance. With Earth’s climate changing, a pandemic continuing, inequality widening and trust eroding, investors and regulators are now firmly fixed on how companies contribute to, or damage, the world at large.

However, executive leaders aren’t sure how to start and prioritize issues critical to their business.

The Q4 2021 edition offers guidance and first steps on ESG and sustainability to help executive leaders lay the groundwork to prosper while improving the world.

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    In this issue

    Profitably Improving the World
    Letter From the Editor

    It’s time to treat social-impact performance with a level of rigor and oversight that’s long been applied to financial and operational performance. That’s the only way to keep eyes on the prize and to drive and measure progress.

    With Earth’s climate changing, a pandemic continuing, inequality widening and trust eroding, investors and regulators are now firmly fixed on how companies contribute to, or damage, the world at large.

    Improvement can widen access to the swelling coffers of ESG funds and exchanges, and to sustainability-linked loans.1 If you get employees and customers involved in your efforts, you'll get an extra shot of loyalty (we’ll tell you how). And of course, your initiatives can help affect the balance of nature, the fairness of the global economy and the health and safety of nearly 8 billion people.

    Executives in every corner of the C-suite tell us they aren’t sure where to start. This edition of Gartner Business Quarterly offers a compass to help you set off in the right direction. Figuring out which issues are crucial to your business, collecting and verifying consistent data sets, setting clear lines of responsibility and accountability — the typical organization isn’t set up to tackle these challenges.

    Only 29% of internal audit executives say they are highly confident in their ability to offer assurance over environmental and social commitments and reporting.2

    In the short articles inside, you'll find real-world experience from an international group of organizations — large and midsize, private and public — including DHL, Bayer, the Asian Development Bank, Verizon, Suncor and Schneider Electric.

    GBQ helps you align with others and reach peak effectiveness so your enterprise can achieve its goals; be bold and principled; and bring employees, investors and the public along for the ride.

    Our standing departments keep you up to speed — Cutting Edge, a look at provocative new data; and Briefs, short takes about smarter spending & planning, talent & culture, growth & innovation, and data & technology.

    We welcome your feedback. Please contact me at judy.pasternak@gartner.com

    — Judy Pasternak

    How to Lift ESG Data Quality to Investment-Grade
    Bringing the rigor of enterprise financial reporting to ESG requires investment in education and training to develop consistency and appropriate controls for data collection — basics such as standard emissions factors, units of measure and system boundaries. Executives must also use this information differently. And it all takes time. So take the long view and get started now.

    ESG Measures That Matter: A Q&A With Deutsche Post DHL Group’s CFO Melanie Kreis
    CFO Melanie Kreis explains how Deutsche Post DHL Group is creating metrics, tracking progress and reporting results for social and environmental objectives in ways that mirror financial performance monitoring. The latest move: linking social impact goals to 30% of the bonuses for top executive leaders.

    Does Your Organization Need a Chief Sustainability Officer?
    Crucial to your organization’s credibility on sustainability and social issues is the way the enterprise sets up management and oversight. Each decision — reporting lines, cross-functional partnerships, accountability — is a signal of how executive leaders view the path to progress. Don’t look for an established blueprint; there is none. Here’s a look at benchmarks and examples from Schneider Electric, Suncor and Verizon.

    4 Ways Leaders Must Change the Board’s ESG Oversight
    The general counsel, corporate secretaries and other C-suite leaders must use the corporate mission statement to focus directors on core ESG values, recruit members with ESG skills and experience, update committee assignments to reflect the importance of ESG and validate ESG strategy and goals.

    Accountability Fuels a Sustainable Investment Strategy: A Q&A with CalPERS’ Anne
    Anne Simpson is the managing investment director for board governance and sustainability at CalPERS, the largest public pension fund in the U.S. She has been hailed as one of the 100 “most influential women in U.S. finance” by Barron’s, and one of the 100 “most influential leaders in the boardroom” by the National Association of Corporate Directors. Simpson discussed how CalPERS puts a premium on accountability: the board, reporting lines and compensation structure. She explains why she believes activism is more effective than divestment — with a backstage glimpse at the successful push for new directors at Exxon.

    3 Tactics From Bayer to Set Up Suppliers for Sustainability Success
    Bayer’s chief of procurement explains how the company uses specific standards, concrete examples of best practices and data sharing – even with industry rivals – to make sure vendors meet expectations on issues as disparate as environmental impact and forced labor.

    Revamp How You Decide Which ESG Issues Matter Most
    ESG issues previously deemed irrelevant to financial performance can quickly become relevant; in the last two years, the pandemic, natural disasters and social upheaval provided proof. To avoid surprises and stay competitive, the exercise known as the materiality assessment must get more strategic.

    The Whiteboard: Big Questions About Responding to Social Fractures
    If you aren’t connected to the rest of society, you don’t have a business. But when society is fragmented or polarized, how do you build that bond? At such times, organizations should work harder to add their voice to the discourse in a way that improves collective outcomes. It’s time to head to the whiteboard ...

    Innovating With Big Tech to Solve Social Problems: A Q&A With the Asian Development Bank’s Ozzeir Khan
    ADB needed help on ESG issues from digital giants such as Microsoft, Google and Amazon — companies with patient investors, deep pockets and talent benches, and a mastery of monetizing data. Khan told us about his lessons learned.

    Give Stakeholders Credit for Company ESG Efforts and They’ll Repay You With Loyalty
    Commitments to socially conscious activities aren’t enough to drive brand loyalty and advocacy. Executive leaders must go a step further: show stakeholders how they contribute to and benefit from sustainable business efforts. Let them share in your success.

    About Gartner Business Quarterly

    Gartner Business Quarterly provides business executives with insights from best practices research and the real-world experience of practitioners. The journal’s insights especially equip executives to tackle challenges that cut across the C-suite and affect multiple executive teams. Writers, contributors and data analysts are members of Gartner Research & Advisory (R&A) whose teams are led by Executive VP Mike Harris. The Gartner Business Quarterly publication is led by Editor-in-Chief Judy Pasternak with executive sponsorship by Group VP Scott Christofferson.