Keesa Schreane:

Hello and welcome to the Climate. Money. Work. Podcast, episode three. I'm Keesa Schreane. Summer is a time of respite and relaxation for many professionals, but let's be real, it's also a time to have informal fun meet-and-greet chats and get-togethers with others in our professional circles. I've recently found myself just over the last few weeks or so getting together with a couple of people at cafes for some in-person time with colleagues and old friends and even meeting some new friends who are also in the sustainable finance space and overall sustainability professions.

Also, during this time, I've gotten the opportunity to speak with folks who are interested in either A, moving into a sustainability career, or B, they are already in the sustainability role, but just want to move into another role, like finance or engineering or operations. So based on those conversations with friends, old friends, new friends, with groups who share details of their career journey with me, including what they wished they'd known early on and what they really want to understand as they progress in their journey, the Climate. Money. Work. Podcast created this series about sustainability careers.

We spoke with a few professional recruiters and industry leaders who specialize in sustainability, so they're not generalists, but they really focus on the intricacies of sustainability recruiting, and I'm so excited about this information because it comes from people who are very familiar with the sustainability job market, with those themes and those recruiting trends and not the generic stuff that you see that many recruiters talk about and discuss that cross sectors and cross industries and roles.

So who better to kick this series off than Tim Mohin, former CEO of Global Reporting Initiative, CEO of ESG Advisors, LLC, and now partner with Boston Consulting Group? Tim's ESG and Climate News Newsletter and his speaking, really they show that he not only has intimate knowledge of the market, but he also has a leadership style that focuses on developing the careers of people in this space and really bringing out the best in his teams. That's his leadership language, supporting and developing careers of not just those on his team within his company, but all of his mentees who are interested in progressing in sustainability. Here is Tim Mohin on the Climate. Money. Work. Podcast.

I am joined today by Tim Mohin, who is a recognized sustainability ESG executive. He's the former chief executive of Global Reporting Initiative, GRI, and has headed sustainability initiatives at several Fortune 500 companies, including Intel and Apple. Tim led the development of the environmental policy and the Environmental Protection Agency and the US Senate, which includes the Clean Air Act, and now he serves as an ESG advisor to large boards, chairman of the board of the Responsible Business Alliance, and also the author of Changing Business from the Inside Out. It is such a pleasure to talk to you, Tim.

Tim Mohin:

It's a thrill to be with you, Keesa. I'm really looking forward to the conversation. That's a lot of stuff on the resume, so some of those things are certainly former activities that I've done in the past, and I like to say I've been around the world of sustainability since before we had the word. Yeah, I'm happy to jump in.

Keesa Schreane:

Very impressive, very impressive. And you know what? We're in 2023 now, so let's just jump right into this. What is your opinion about what we can expect to see in ESG and sustainability? And I'm looking for a few different perspectives, so what can business leaders expect to see versus investors versus regulators and then the people, so the consumers and workers? If you could, just give me a couple of thoughts about those different stakeholders and what their expectations might be.

Tim Mohin:

Sure, I'd be glad to. As I mentioned, I've been in this field a very long time. It started off as more of an activist field with environmentalists like myself, trying to drive companies to be better at environmental issues. Then the field grew and it became environmental and social issues and then governance issues got added on. But what's happening now is that activist movement is rapidly transitioning into more of a mainstream movement and the reason for that is investors have gotten involved and so when you ask about companies got involved in this space, as primarily a reputational matter, they wanted to be seen as good corporate citizens, and so we had the birth of the corporate social responsibility movement, and that's still very much with us today and I think drives a lot of very good accomplishments.

But the new is that some of that, not all of it, is transforming into the mainstream of corporate disclosure, and you're seeing that in all sorts of things. So for example, in Europe we have the International Sustainability Standards Board, brand new, part of the International Financial Reporting Standards used in 140 countries. That is now going to have a climate disclosure standard. Just one example of many of how it's making this transition over that threshold into the mainstream and it's being driven by that second group I mentioned, or you mentioned, which was investors. Investors have seen this information for many years and for a long time I think they kind of ignored it, but now they're seeing that there's real risk and opportunity in that information and they want more of it and so that is what is really driving all of these policy changes that we're seeing around the world.

And then lastly, you mentioned consumers. Consumers are a major force for good. Consumers are increasingly aware about the environmental and social policies of the companies they buy from and they hold them accountable and if there is any slip-ups that make the press, you can see that show up in the stock price of those companies. Companies know this, they spend a lot of time on their reputation, as I said earlier, and that is being driven by this court of public opinion from consumers.

Keesa Schreane:

So a couple of things there I want to dig into, particularly as it relates to the corporate disclosure, moving from CSR to corporate disclosure and ISSB, but first I want to take a look at this from the perspective of the environment that we're in. When we think about the future of sustainability and sustainability practitioners, we do so, many of us, with the thought of an inflationary environment, with the thought of recession. We know that there were several tech firms that had several layoffs and then other financial firms began to follow suit at the end of 2022. I'm wondering, Tim, about your thought on what does the future for sustainability practitioners, those who are chief sustainability officers, ESG officers, what do you think that will look like as we head throughout the year?

Tim Mohin:

That's a great question, especially as we head into 2023 and we're looking at potentially another global recession, a lot of folks are saying that this is a little different when it comes to ESG, and the reason for that is many of the things we were just discussing in terms of that changing from voluntary to mandatory. In the past, voluntary things are the first things to go and the corporate sustainability professional might have been feeling a little uneasy in this upcoming recession.

I don't think that's true anymore. I actually think that ES&G is somewhat insulated from the coming recession because of these changes in policy many companies are not prepared for, so the old voluntary way of doing things is not going to be good enough in this future world of mandatory disclosure and risk assessment and so a lot of the CSOs and the companies that support them, I'm talking about consulting firms and software companies are going to be fairly insulated. In fact, just today there was a study released from Deloitte that said that 99% of the executives they surveyed said that they're going to invest more, not less, more in ESG services going forward in 2023, so I really think that this is a kind of a safe base right now.

Keesa Schreane:

So just with your tremendous work in this space, and I know you've been a mentor to many, what would be the message to those who are in the space, who have been in this space for years, but are just concerned about where their future might be? I know that we have fractional CMOs. Would you recommend they look at the fractional CSO space? So coming in, getting the department where it needs to be, and then looking to make your exit? Or would it be working as a freelancer or someone who builds their own firm? Where do you think the real opportunity is there for those in the industry?

Tim Mohin:

Yeah, I think first of all, it's a very important question because of where we are as an economy. But second of all, this fractional CSO notion is a very powerful notion because as I mentioned, many companies are under-prepared, maybe even under-informed about the changes that will affect them.

For example, last Monday, just last week, the European Union passed a new directive, the corporate sustainability reporting directive, will affect 50,000 companies, maybe more public and private, whether they're based in the European Union or not, so this is a sweeping new requirement. Many companies haven't even woken up to that fact, and so if you're one of those companies that is sort of on the beginning of the journey, a fractional CSO model makes a ton of sense because it accelerates your program from zero to 60 quite quickly without having to put a lot of investment in and gets you ready to really understand what it is you need as a company, so I think it's a wonderful model. I think a lot of the old grizzled veterans like me can do pretty well in a fractional CSO model. Absolutely, that's a great time for that.

Keesa Schreane:

Nothing old and grizzled about you, Tim, just want to point that out. So in terms of a person who's starting in on this journey, what would you recommend for them? So someone who said, "You know what? I like what Tim's saying, that sounds like me," what are their first steps? How can they become a part of that fractional CSO movement or a movement to just go out on their own at this point, given where the economy is?

Tim Mohin:

Yeah, I talk to a lot of young people, I speak at a lot of universities, and I get this question all the time and I usually answer this way. So because the field of ESG is so broad, it covers just as an example, GRI where I was an executive has 34 different standards, 34 topics. That's a lot and so it really is such a broad field that often counsel people in this field, to be good at the one thing that you are trained in, have that anchor point. Maybe it's marketing, maybe it's accounting, like me, environmental science, and then use that platform, if you will, of credibility to stretch out into this broad and diverse world of ESG.

And when you stretch out into that world, it's really understanding what I was talking about earlier of what's next. A lot of companies have been doing this for many years. I work for companies that started reporting on sustainability matters in the '90s, we called it environmental. That is an established practice, so understanding what's next, what is going to challenge companies in the future, and not only from a compliance point of view because that's somewhat of a check-the-box, but also in a value point of view, like how can companies extract value out of this investment? I think that's the advice I would give.

Keesa Schreane:

So I want to from there go back to very interesting points that you had. We talked about CSR really transforming into the corporate disclosure into the mainstream, the role of ISB. I know many folks are talking about the future of the S piece of this, so social. With climate and environment, as you said, it's called in the past, there are metrics, there are units, there's an ability to measure and the way that they don't necessarily have with social. It's more of a challenge to measure where a company is falling, what they're doing, and that's how they can report in terms of workplace environment, engagement, worker mental health, that sort of thing. Tim, where do you think we'll be going in the near term? Will we ever move to the point where we can give as much attention to the social as we do to the climate environmental piece, thus it being a serious part of corporate disclosure? And if so, how do you think we can get there with the social, which is just so hard to measure?

Tim Mohin:

It's a great question. In order to answer it, you need to step back to the paradigm we started this conversation with. In the past, we had full corporate social responsibility, sustainability reporting, which covered most of those 34 topics I mentioned, so all sorts of social issues, labor, human rights, and the supply chain, et cetera, because let's face it, that's the right thing to do.

In the future, as some of these issues, not all of them, make their way into the mainstream of corporate disclosure, the answer to your question is, which of those social issues will make it over that threshold? And the way to look at it is value, so the reason that climate disclosure has been the first to make it into that mainstream is because investors see value in terms of identifying risks and opportunities in their portfolio from climate information, so they're demanding that. I always say that policy is a lagging indicator. It always is trying to fix a problem that's been around a while. Climate disclosure, unified, comparable, reliable assured climate disclosure, that's what they're trying to fix because that's not the way the voluntary markets work.

When it comes to social, following that same model, what really provides value to the investor? What would be inclusive in a financial statement in that social space? You start looking at this area of human capital. If anything the pandemic taught us, it's the importance of human capital. We took an entirely office-based workforce and we set them at home and all of the issues that came from that. You look at issues of health, safety, mental health. You look at all of these issues and you say, "Some of those really tell you the story of whether a company's going to be successful."

And my favorite example is the one of employee engagement. It's often overlooked, but it can be a key leverage point for company success. When I worked for AMD, we actually looked at employee engagement and the number of employees involved in corporate responsibility activities, we found a huge crossover, and those who bring their cause to work make work their cause was our mantra, and you really start to see the companies that are better at being good corporate citizens actually engage their employees more, and an engaged employee is an employee want because they tend to give their full being to the job. And so that's what I've been looking for in terms of the next suite of social issues, it's health, safety, and things like engagement that will start to get into that mainstream.

Keesa Schreane:

Who's doing a good job of quantifying that? I hear what you're saying when the employee is able to bring their best self, then that's where you get innovation, that's where you see the sweet spot. But you mentioned that what's valuable to the investors is what's going to get recognized in terms of corporate disclosure. How can we begin to quantify what employees bring, how they bring it, and just the amount of the importance that has on the bottom line?

Tim Mohin:

Yeah, that one is the Wild West, totally TBD. There's a lot of different methods out there. Everything from the tried and true safety measures, lost day case rate, recordable rates, things that we all know and love, to the more esoteric diversity, equity, and inclusion, harder to measure things, but super important. Gathering up the bundle of issues called human capital, and I actually hate that word because humans are not capital, but when you gather up these social issues into a bucket of issues that has business value, then you need to have clear ways to measure, to your point, and clear ways to compare those measures, and that's really the hard work. That hard work has not been done yet. There's just too many standards out there, and in order to get it into that mainstream, you have to have a single global standard that companies can use to not only measure but report on these issues.

Keesa Schreane:

I like to talk a bit more about the social, but going outside of the corporate to talk about some of the broader things that we see at play here and to get your thought on what really has legs and what we expect to see moving forward. So we know that there's this whole notion of the future of shareholder democracy, and we're seeing that in individuals may have a greater voice in mutual funds and that space. In terms of voting, I think Vanguard and Schwab are moving and innovating on this, and I'm wondering, is this something that you really feel that is going to take legs, if you will, take form, and move forward? And if so, what does that mean for educating the masses, educating retail investors about what ESG means, what sustainability means, and how they should think about it for their portfolios if you have a 401(k) or a pension.

Tim Mohin:

Such a great question because I think it's a sleeper issue. Many people may not be aware, but BlackRock, which is the world's largest asset manager, managing something like $8 trillion is on a campaign now to democratize their voting rights, essentially own shareholder proxy resolutions, which is amazing. But I think most shareholders are people who are investing their retirement funds and a 401(k) and don't really think about where it's being invested and they're going to be like, "What is this?", and probably throw it away. That's the reality of the situation, so your point about education is very well-taken, and potentially there's room for a campaign, an NGO of sorts to help those consumers who are going to be baffled by the choices.

It's like in California, every time they do an election, there's all these ballot resolutions and the voters in California need to be experts on the policy. It's the same when it comes to shareholder proxies now because many people are not experts on this stuff and they're going to be swayed by one side or another. So that is the big new world we're heading into and I don't think that many of the shareholders are really quite prepared for it.

Keesa Schreane:

What are the first steps to get everyone ready? They're not there yet. It is up to people like us to go out and educate who's best positioned to do so, and what are just the first steps in getting that done, do you think?

Tim Mohin:

Yeah, I mean, you're exactly right. It's education. I don't know if you've had this experience like I have, trying to explain what you do to a parent or a relative. It's hard, right? "What is it you do again? Are you a salesman? I don't understand." These issues are not necessarily in people's minds and so you can see some opportunity here, frankly, for NGOs that are trying to push one side or another.

I'll use an example of the ExxonMobil vote last year, which actually was the high watermark because institutional investors, not retail investors, actually pushed an environmental resolution over the top, it won against the board of ExxonMobil to get climate activists onto the board. That's a big deal. But it only happens when you have all the shares or most of the shares voting the same way and in order to get retail investors all on that page, you really need to do the education. So I don't have all the answers here, Keesa, I think that this is going to be really tough. It almost becomes a political campaign, as I mentioned in the California example, but it's definitely the future.

Keesa Schreane:

I mean, that rocked 2021, right, with Exxon. So it sounds like you're saying that each stakeholder, if you will, each one has a role, whether they're the institutional investor, whether they're the business, the nonprofits, NGOs, they all have a role in developing this narrative and making sure that folks are educated, is that-

Tim Mohin:

Exactly, exactly.

Keesa Schreane:

... Tim, this has been a fantastic conversation. I want to talk more now about what you are focused on now and then how people can get in touch with you. But what is your greatest goal right now? What are you working on that you're super excited about?

Tim Mohin:

I'm excited about a lot of things. I'm at a point in my career where I find myself in this interesting position. A good friend of mine said, "It's an overnight sensation 30 years in the making," and I thought that was perfect because I've been at this very long time, and all of a sudden, everybody wants to know what I know. It's like a kid in the candy store at this point in my career trying to figure out what to do next. I've got my own individual consultancy that's working very well, but I'm also considering maybe broadening the impact by working with some larger institutions. At this point, no decisions have been made, so that's where I am.

Keesa Schreane:

Right. That's amazing, and so tell us for folks who... Oh, yes, of course.

Tim Mohin:

I'm looking at your book. I also have a book and I have another book that I'm now outlining and considering of writing because when I wrote my book, it was 10 years ago, believe it or not, about the practice of corporate responsibility in a big company. That practice has changed. It got kicked upstairs. Now it's in the C-suite, it's in the board. What are the common skills in that space now? And that's the book that I have in my head.

Keesa Schreane:

The common skills that are in this space now. Things have changed tremendously over the last 10 years. Just taking that, this is the last question, if you had to go back and give yourself some advice from when you started this journey, what advice from a career perspective would you have told yourself as you embarked on the journey? Would you say you would have gone into the public space or public sector versus not-for-profit, working for a GRI maybe early in your career? What do you think would've made the difference? What sort of advice would you have given yourself?

Tim Mohin:

Oh, that's a good question. 20/20 hindsight, right?

Keesa Schreane:

Yeah, yeah.

Tim Mohin:

When I got out of school, and I won't even date myself here, but it was a long time ago, there wasn't a choice to work in corporations. It was basically NGOs or the government. I went government. And so looking back now, that was the right choice at the time for making the biggest impact, so if you're about making impact, always look for the choice that makes the biggest impact. Now, corporations, I think, are the right choice, and when I moved from government into the private sector, that was quite new, and so I don't know that I'd change anything there. I think it was the right choice at the time and continues to look pretty good.

The choice going forward, perhaps for everybody listening to this is perhaps in the financial space, financial institutions are at the top of many people's lists of the institutions that can make the most change. When you look at climate change as one of the existential threats of our time, it's going to take trillions of dollars per year to transition the economy to a low-carbon economy. There's huge opportunities in that, there are huge costs in that, there's lots of investment that is going to go into this field, and I think they don't necessarily understand the whys and wherefores of ESG and so there's this big movement towards the financial sector. If I were going to give myself advice, I'd say, "Go work in that sector."

Keesa Schreane:

Yeah, and there you have it. Tim, let us know how to get in touch with you, your fantastic newsletter. How can we get access to those things?

Tim Mohin:

Oh, thank you. It's on my LinkedIn page, which is Tim Mohin, and I have a website at timmohin.com and you can reach me at tim@timmohin.com. That's a lot of my name right there, so you can find me. The newsletter goes out once a week on Fridays. We're up to almost 22,000 subscribers now. The point of the newsletter is to take all of this sort of jargony, hard-to-understand stuff and make it accessible to a broader range of people, especially young people who are trying to get into this field. Thank you for the opportunity and thanks for allowing me to plug my newsletter.

Keesa Schreane:

Absolutely, and I want you to come back again and plug that book. Keep me posted on that.

Tim Mohin:

I sure will and thanks for the opportunity.

Keesa Schreane:

Tim Mohin. Thank you so much for joining us, Tim.

Tim Mohin:

All right. Thank you. Take care.

Keesa Schreane:

Thanks for joining us on today's episode of Climate. Money. Work. Please follow the show wherever you're listening right now. If you have any questions, feedback, or pitches, please get in touch with the team at cmw@shrugcontent.com. Again, that's C-M-W @ shrug, S-H-R-U-G, content dot com. Now you can learn more about the show at keesaschreane.com/podcast. You can find me on LinkedIn, Twitter, and Instagram. I'm Keesa Schreane and thank you for listening. Be well.