Execs at Bank of America, Deloitte, and Pfizer say good governance makes meeting environmental and social goals possible

• Companies that want to meet their environmental and social goals need strong governance to do it.
• Good governance can help companies narrow the gap between their ESG goals and their performance.
• The conversation was part of Insider's virtual event "Financing a Sustainable Future: Advancing Effective Corporate Governance," in partnership with Bank of America, which took place on Tuesday, June 14, 2022.

It can be easy to get workers excited about a company's environmental and social goals, but achieving those targets requires doing the more tedious yet essential work of establishing good governance.

That was the assessment of a panel of experts who took part in Insider's recent virtual panel, "Financing a Sustainable Future: Advancing Effective Corporate Governance."

Having clear goals for tracking and reporting on governance is just as important as any other metric a company might employ, the panelists said. The event, in partnership with Bank of America, took place Tuesday, June 14.

Improving governance measures can help companies close the gaps between their stated goals around environmental, social, and governance performance and what they're accomplishing, said Jennifer Steinmann, global sustainability and climate practice leader at Deloitte.

"A lot of organizations have now said, 'Here's what we're trying to do, and how we're trying to achieve it.' But we do see a pretty big disconnect between those organizations that are actually making that commitment relative to the action," Steinmann said.

To achieve the environmental or social goals that companies might have laid out, it's imperative to have strong governance mechanisms that can help break down targets into everyday steps many people throughout an organization can take.

"We only see 19% of organizations doing these needle-moving actions today. It shows the intention is there, the desire is there, but the action hasn't quite caught up with that yet," Steinmann said.

To ensure the scaffolding of governance reaches every part of an organization, leaders at the top have to embrace these ideas. They also need to be certain that managers — and others — lower in the company take up the cause, according to Mary Obasi, head of global climate risk at Bank of America.

"You want to make sure all your senior executives are talking about the mission, or embedding it in their respective functions, or making sure they are basically being the voice," she said. "With a large company, you want to make sure you're also mobilizing your mid-level managers, as well, to carry the torch forward in terms of what they do on a day-to-day basis. Even beyond that — your whole employee base."

Caroline Roan, chief sustainability officer at Pfizer, said good governance does more than show whether a company is abiding by its commitments. It can also help attract workers, something that's all the more important in a tight job market. By making clear how, in Pfizer's case, it's bringing life-saving vaccines to the world — and by giving clarity around how it developed them — the company can meet its goal of improving people's health and can inspire would-be workers. "It really pulls people who are truly purpose-driven," Roan said.

The ability to show what standards companies have in place and how well organizations are adhering to them rests on having good data. That can be difficult, Steinmann said, particularly when companies have to work outside their walls, such as with suppliers. "That requires quite a bit of incremental muscle that most organizations are still starting to work on," she said.

Variations in still-emerging regulations around ESG reporting, such as rules the Securities and Exchange Commission has proposed around climate-related issues, have made for a challenging time for companies.

Roan noted there are numerous reporting standards with which companies are now grappling. "It's an alphabet soup," she said.

Steinmann said having clarity around how companies should measure their ESG work would be helpful. "The area that I see potential for evolving, and hopefully sooner versus later, is really getting a consistent standard for measurement," Steinmann said. "That would really help organizations."