With the recent proliferation of sometimes conflicting standards around sustainability and impact reporting, companies across the globe are seeking trusted partners to help them determine and measure sustainability metrics that are truly material to the business and its stakeholders and also generate real value. To this end, Workiva – a global software-as-a-service company – has developed a suite of products to help companies make real progress on their sustainability journeys. In this episode, Chad Reed sits down with Mandi McReynolds, VP of Global Environment, Social and Governance at Workiva and the host of the ESG Talk podcast. Chad and Mandi discuss the at times differing perceptions of company executives and sustainability practitioners, the emerging role of AI in sustainability reporting and the evolving nomenclature surrounding efforts to generate and report sustainable impact.
With the recent proliferation of sometimes conflicting standards around sustainability and impact reporting, companies across the globe are seeking trusted partners to help them determine and measure sustainability metrics that are truly material to the business and its stakeholders and also generate real value. To this end, Workiva – a global software-as-a-service company – has developed a suite of products to help companies make real progress on their sustainability journeys.
In this episode, Chad Reed sits down with Mandi McReynolds, VP of Global Environment, Social and Governance at Workiva and the host of the ESG Talk podcast. Chad and Mandi discuss the at times differing perceptions of company executives and sustainability practitioners, the emerging role of AI in sustainability reporting and the evolving nomenclature surrounding efforts to generate and report sustainable impact.
Links:
Workiva 2023 Global ESG Practitioner Survey
Register’s Annual Great Bicycle Ride Across Iowa (RAGBRAI)
Episode recorded October 4, 2023
Email your feedback to Chad, Gil, and Hilary at climatepositive@hasi.com or tweet them to @ClimatePosiPod.
Chad Reed: I'm Chad Reed.
Hillary Langer: I'm Hillary Langer.
Gil Jenkins: I'm Gil Jenkins.
Chad: This is Climate Positive.
Mandi McReynolds: Everything has a risk and opportunity and a cost. I think you have to take a step back and just say, "Okay, what's the risk to our business? What would be the fines? What would be the reputational damage?" Have that dialogue, maybe in a risk scenario workshop and say, "Okay, how do we think about what would happen if we were to have some issues happen in different states or countries?"
Hilary: With the proliferation of sometimes conflicting standards for sustainability and impact reporting, companies need trusted partners to help them define and measure sustainability metrics that are not only material to their businesses and stakeholders but that also generate real value. To this end, Workiva – a global software-as-a-service platform – has developed products that help companies advance their sustainability goals.
In this episode, Chad Reed sits down with Mandi McReynolds, VP of Global Environment, Social and Governance at Workiva and the host of the “ESG Talk” podcast. Chad and Mandi discuss the perceptions of company executives and sustainability practitioners, the emerging role of AI in sustainability reporting and the evolving nomenclature surrounding efforts to generate and report sustainable impact.
Chad: Mandi, thank you so much for joining us today. It's a real pleasure to have you.
Mandi: I'm so glad to be with you. This is going to be a lot of fun, Chad.
Chad: Excellent. Well, first I want to start with your background. Tell us a bit about where you grew up and your early career.
Mandi: Sure. When I started out in my career, I was deep in the S discipline, the social discipline. I've had the privilege to work in environment social governance across four different industries, looking at government nonprofit to higher education. Then I served at a Fortune 500 financial service firm, a multinational firm, to technology today with Workiva. It really leveraged this opportunity for me to see how environment, social, and governance transcends different industries. Some challenges are the same. Some challenges are different.
More often than not, in all those roles and all those experiences, it was really about the ability to see how societal impact, or environment impact, could benefit business results for the company. Oftentimes, CEOs and organizations would bring me in to work and operate in that way. I could see how they played off of each other for mutual benefit and mutual impact. That's really why my career path had followed on that piece. I often joke I was good at different parts of the S discipline with influence of environment. One lucky day, our CEO asked me to chair environment social and governance task force for the Fortune 500 company.
I was very thankful for that work with the CEO and our chief legal officer, chief marketing officer, and others. We were early days before a lot of people had the ESG on their radar, but we learned a lot and a lot through exploration. Also, I tell people very candidly, I have a notebook of 17 failures that I made or lessons learned that I made from those early days. That's really leveraged to where I am today working for Workiva. I have the privilege to work with our executive board team on implementing environment, social, and governance across our business, as well as working with our thousands of customers in the world around how they bring transparency and accuracy to data and reporting for it.
Chad: As you alluded to, you're now the VP of Global environment, social, and governance at Workiva. Tell us more specifically, what does that entail, both broadly on a day-to-day basis?
Mandi: Sure. I tell individuals, I know we've had this conversation before, that you have a really amazing job when you work for a company where you work with the board and you work with your executive team identifying what are the business value drivers for environment, social, governance. For us, we really looked at it from our growth strategy. It's a big part of our growth strategy as an organization. It's a huge part of how we show up in our brand and our responsible brand. It's how we grow in our investor capital, and that's also how we model the way as global compliance, and risk, and regulatory becomes a pressure for us as a global company.
From there we identified four key ESG targets in innovation, people, philanthropy, as well as environment, that would drive that mutual value forward for our business. I also get to serve as a subject matter expert. I'm actually a person in the job who works with the world's smartest engineers in research and development department on how they build ESG reporting product for customers who are global and tackling this complex land that needs transparency and accuracy, auditability, data and reporting, that have the same financial rigor that you would have for non-financial rigor.
Oftentimes, I tell people, our team is very innovative. We're beta one testers, we're constantly telling the problems to our product team, like how do we make this easier? How do we make pulse-checking materiality a reality for the world? It's fun to be able to give back to the profession in that way.
Chad: Absolutely. It seems that value creation is very much tied to Workiva's commitment to ESG and sustainability. Tell us a little bit more about your ESG sustainability-related product offerings. You talked a little bit there, but if you just tell us a little bit, what exactly are you providing companies that help them demonstrate and generate that value?
Mandi: Our ESG reporting solution really takes things from what I call data all the way to disclosure. It is the end-to-end platform that puts all your data into one location. I'll make it down super simple for individuals. Think about all the places that your data exists. As our own company, it might exist in Concur, which is our purchasing area, our travel area, booking. It might exist in Workday. You're able to pull all of that in and then even more.
Really, through our program, it's designed where you can get all of your subject matter expertise to pull in their data, have it reviewed, have the process that you need. You're not doing it on email and Slack. I don't know about you, but you can't pass an audit when you're living through, "Oh, let me go find the Slack that person sent me that has the information." It's really pulling it all together, so that it can be audited, assured, and trusted just as you would your financial data, and ultimately to the reporting platform. Whether you report in an HTML format or you report in a Word document. The end-to-end platform for data and reporting and disclosure.
Chad: Got it. Let's turn to the various ESG sustainability reporting regimes. As you know, there are so many. We'll touch on just a few of them and more that the discussion how they interplay, right? Obviously, there are the voluntary standards at the global level. There's a Global Reporting Initiative or GRI, International Sustainability Standards Board, or ISSB, which was recently formed in the last year or so. Also, recently released its Global Reporting Standards. As you know there are publicly mandated, or compliance, standards both in Europe, the Corporate Sustainability Reporting Directive or CSRD as well as potentially in the U.S. I hope this podcast can be released before the SEC comes out with its finalized mandatory climate disclosure rule, which we do expect, at least the last I heard this month, in October.
How should professionals in the ESG space, other executives in the company, think about these, and sometimes overlapping, maybe at times conflicting, reporting regimes and how they're being rolled out and refined?
Mandi: Yes, I'm an optimist, I always like to start with hope first, then doom. I think one of the things that I really encourage financial professionals, and sustainability professionals, and risk professionals, to think about is you're dealing with this global landscape. Remember the fact that we do tax, right? Tax has global agreement of some coin. It operates differently by country. Guess what? It operates differently by state and federal. We have in our toolkit the resiliency and the know-how on how to operate. It does take really aligning and what I'm seeing across the board, with colleagues, your tech, your talent, and potentially consultants or advisors or teachers to help you in the areas where you need it.
Really how people are approaching that landscape is taking those three levers and saying, how do I get ready now for transformation? Because it's already happening. I was talking to my own team, like, we're preparing for all this global and, state and federal regulation and we were laughing. I was like, "2025 is like the Super Bowl, right?" We all need to be ready for the Super Bowl, because that's when a lot of these regulations are going to start to roll. Guess what? Limited assurances is coming in 2026 for a lot of groups. We have to be ready now.
You don't just show up to the Super Bowl in 2025. We're mapping out what does the next three years look like so that our team is fit and ready to meet the demands of regulation that are coming. That means we may pull the lever of technology. It may mean we've got to invest more in staff. We were talking about cross-functional training, how we level up all these teams together internally. How do we look at then maybe the lever of a teacher or consultant to come in? I think the hope is one, we've done this before everyone. Let's keep knowing that we have the power to do it again. Two, look at the different levers you have and start getting fit now.
Chad: Yes, that's great but in the US specifically, where it's an interesting climate here around ESG and sustainability, as you know, we're seeing different states issue, at times, conflicting regulations on mandate, as one state recently did, certain climate emissions reporting, others discourage it at best. What would you say to US companies that are navigating this increasingly challenging and complex landscape?
Mandi: Yes, I also look at the financial service lens that we had long ago, different regulations when it came to investment practices across different states. Again, it's nothing new. Let's take a step back and look at how you can navigate. The first navigation you can is participate. I'm really proud of our CFO Jill, and myself. We're really active in how those state policies with other CEOs are coming together, and we're not doing it alone. It's coming together and saying how can this policy be shaped so that we still have some capital market freedom and flexibility per industry?
Oh, by the way, if we're going to choose to be different from the federal standard or be different from the international standard, which you may in the states you operate in and the associations you partner in, then let's be really clear what we mean by the definition. Because in absence of definition at the state level, you may end up having more damage done to the capital market of the economy of our state. How do we do that and move forward? I really encourage people to participate in the process, make sure that your voice is heard, that you can shine in regulatory areas by ensuring that your team is ready, that you're participating.
The second piece that I would say is, it's really important to come back to the business value purpose of your organization. If you're reporting to report transparency for transparency's sake, that was a great line from one of our customers, Cognizant, at an Amplify session. She's like, "Then you're going to chase everything." If you come back to what is central to your business, and you engage in the process that way, then there's a lot more understanding of how this is going to impact the capital markets in your organization. Everything has a risk and opportunity and a cost.
I think you have to take a step back and just say, "Okay, what's the risk to our business? What would be the fines? Does that outweigh? What would be the reputational damage?" Sit down with your cross-functional finance, risk, sustainability team and have that dialogue, maybe in a risk scenario workshop and say, "Okay, how do we think about both from a reputational damage to a financial damage would happen if we were to have some issues happen in different states or countries?"
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Chad: Moving a bit to ESG practitioners and the executives that they work for, you recently conducted your second annual ESG practitioner survey. You polled over 900 professionals in the field globally, across North America, Europe, Asia. Why does Workiva first conduct this annual survey and then what are the key takeaways that you got from it?
Mandi: Yes. I am so proud of the team that they do this because this is such a rich data set that is missing and was missing in the market several years ago. Because you would have all these random surveys. I was like, "Okay, is that person a student? Are they interested in ESG? Who takes these surveys?" We realized that there wasn't a dedicated survey for people like you and myself who are true practitioners in the field. You could live in finance, you could live in sustainability, you could live in different parts of the business, but is 50% or more of your job dedicated to ESG strategy and reporting?
That's what made the survey so unique, as well as the depth of what you just talked about, the industry markets and the global market, to help compare and contrast what we can learn from this evolving field. The first survey showed us that actually, most people say, "How long has ESG reporting been around?" People are like, "Europe, they've been doing it for over a decade." Didn't matter. Actually, wherever you were in the world, most companies said they were on a three-year or less journey with environment, social, governance. They almost brought comfort to the field that like, "Hey, you're not alone."
Now, interesting enough, fast forward one year, what are some things that we saw that have changed? Number one, it's getting complex. You already addressed that 74% of our respondents expect it to be required to comply with two or more global regulations. There are about two or more global regulations so to think that most of us in the industry are only going to have to comply to one, that's really not the reality of the global landscape. Whether you're in the US or whether you're in APEC or Europe. This one, I think you would find interesting.
You and I were just talking earlier about CFO and CEO engagement. There's a disconnect between executives and the managers doing the work around rigor. I thought that part was one of the more surprising statistics. 62% of executives strongly agree that their company applies the same due diligence to ESG reporting as they do to financial reporting but the managers say half that, almost half that, 32% say it's the same rigor. People can't see us, but you're laughing as well.
Chad: That's not encouraging. That's not a good sign.
Mandi: It's not encouraging that there's that disconnect, but I look at that as really good, safe, sweet engagement, understanding the strategy level has been elevated. It took us 100 years to get financial reporting right, and guess what? In 2008, we didn't get it right. I see this as a huge opportunity and a wake-up call for managers and mid-level managers and the new role of the ESG controllership to start to step up and say, "Hey, we've got work to do as we head to the Super Bowl moment of 2025." It's our opportunity to give it the playbook it needs because guess what? We didn't get it right in 2008 and we've got to get it right as we head towards larger global stock takes of 2030, 2050.
Those are the interesting findings to me, is the complexity is growing and then we're seeing the others. There's obviously, innovation is key. 97% think innovation's going to happen and practitioners really believe they're starting to drive business value. That number has shot up to 90% over what it was the year before. That part is encouraging to me is even though we're working on the rigor, we're finding the value for the business.
Chad: Absolutely. That ensures the sustainability of ESG professionals. I'm sure. Now I want to go to you, Workiva. You've talked a lot about how can you apply generative AI to ESG and sustainability. I'll be honest, this is not a topic that I thought about almost at all before we recently reconnected again. Walk us through the domains where you believe AI can complement human efforts to drive both stronger ESG or sustainability reporting and performance.
Mandi: You and I talked a lot about it being like small offices. Offices of one, offices of five, or variants of true. Part-time teams, cross-functional teams, and this is where I get super excited about generative AI. Generative AI has been around in the ESG space, and you would know it from the Asset management space. We use different types of AI to crawl for language, crawl through reporting, build our portfolios. That's been around what's new is how we think about it as taking away the vacuum task, the task that sucks the time away from people like you and myself and our colleagues.
Let's say you're working on a policy. Plugging in, how should Workiva think about a travel policy in reflection of the upcoming SEC regulation? Then that intuitive AI that's in a nice secure platform, it can begin to generate things that are based off of founding evidence. One thing my team, they're playing with right now with generative AI, is we have our ESG report. How many times do you have to go out and repost minute notes in a more condensed executive summary?
Chad: More often than I’d like, for sure.
Mandi: More often than you would like. Vacuum test. How often do you have to try to write an article for internal employees?
Chad: Yes.
Mandi: What if you already had your shared report and you could take it, and this is what we do, we copied it, put it into an intuitive generative AI for ESG, and then we see this incredible result of language we could adapt the tone to be a more casual tone. It’s still audited and it’s still assured and it’s still trusted. We could tweak it to have that intranet feel of language for our employees. Now all of a sudden that time-suck task just turned into something very practical and easy that still allows the team to focus on strategy while communication becomes a lever.
The future of AI is super exciting to me and I look forward to the day you and I don't have to do executive summaries. We can just copy and paste the minute notes and see it spit out stuff for us. We can also begin to focus on the other tasks that matter most to our business value.
Chad: Absolutely. I’d love to connect offline on this as well because we need to get some generative AI.
Mandi: We could talk all day about compliance side, gap analysis of AI, there’s also performance side, there’s stakeholder management. There’s so much more to AI than just the reporting side, but that’s a little flavor of where the future’s going.
Chad: Finally, before we go to the hot seat, let’s turn to the nomenclature surrounding ESG. In this discussion, I’ve used ESG and sustainability interchangeably. Increasingly many folks find the ESG acronym at the same time confusing and sometimes polarizing. Should we be using a different term, whether it’s sustainability or impact, or both when we refer to these reporting and other initiatives that do identify risks and opportunities and generate value on the basis of environmental, social, and governance concerns?
Mandi: Yes. I think one is, you have to think about it from globally. We're going to have a global context or agreement like tax, but it's going to be localized. Language is going to be the same way. We struggle in this balance of sustainability may be more used holistically for ESG in the European market. Lat Am it flexes, pending where you are in Lat Am. APEC is still working on that language development of sustainability in some countries, yes, and others no. In the US, you use the term, and most people think environment but when you say ESG, they think more holistically. As we navigate this, let's look ahead to the next three years.
I love what you said about the word impact. We have to remember that this is about dual impact, double impact, on society and business. I'm seeing more people lean into impact because that's also where the global regulation alignment will be in the Super Bowl year of 2025 and 2026. I'm also seeing very progressive CFOs and very interesting teams cross-functionally or together forming around sustainable finance. I think that's something that we can think about when we're talking about the sustainability of an organization, we're talking about sustainable financing, responsible financing.
When we're talking about society, our capital has the opportunity to create sustainability. In order for us to meet the SDGs, Workiva is a member of the CFOs for the UN SDGs, really looking at this idea of, to meet the SDGs, private sector has to step up. You know this from your work at your organization. They have to make those financial investments in order for us to have a sustainable impact. I think sustainable finance is something we're going to see really take off in the next several years as we look to the future.
Chad: Well, thank you very much, Mandi. We're almost done, but first, we have the hot seat, so we ask you for your immediate reactions to the following statements. One thing I changed my mind on is--
Mandi: I'm going to take a term from one of our founders. I came to Workiva because I just loved his style around this. It was, “Leaders own failure, success is owned by the team.” I used to think accountability was owned by everyone. When I came to Workiva, it just culturally really made me realize how much that is true. Everyone wants to be on a winning team, a positive team, but you've got to own the failures so that you can all move forward. What happens is everyone then takes accountability. I used to think everyone takes accountability.
As a leader, if you take accountability of the failure, then everyone starts to step up and take accountability. I've really changed my mind and my approach on that since working with one of our founders.
Chad: I love that mantra. Next one. When I need to recharge, I--
Mandi: I wake up without an alarm very early. For everyone that knows me, I do that. I'm an introvert at heart, but I'm very extrovert in my role for work. I take spiritual time, reflection time in the morning really seriously, setting the tone of gratitude and prayerful gratitude with my cup of coffee and using that to feel what I need to get through the day.
Chad: I'm also a morning person and more of an introvert.
Mandi: Yes, there you go.
Chad: Many commonalities to those of us in the field. You produce a weekly podcast, ESG Talk, which is very good in addition to all your other responsibilities that we've talked about a bit earlier. The key ingredient to your productivity is--
Mandi: It's all a team sport. There's engineers behind the recording engineers as we have today, and Lauren who's on the cause. I always have to say, the team definitely is key. I would say more than anything prep. You may not be the smartest person in the room, but preparation is key, plus opportunity. When you're prepared, you're ready for opportunity. Cy Wakeman used to say, "Change is only hard for the unready, so be ready." I think that preparation makes productivity possible.
Chad: Another great mantra. I want my kids to know--
Mandi: I say this to my daughter when I drop her off every morning. Let the spirit help you be kind, gracious, and wise.
Chad: That's lovely. Did you actually grow up in Iowa?
Mandi: I've lived all over. I lived in Flint, Michigan, Scranton, Pennsylvania. Before The Office, nobody knew what that was. Cincinnati, Kentucky area, then Iowa.
Chad: Okay, but you have spent a lot of time in Iowa.
Mandi: Yes.
Chad: What would you say is the most underrated part of the state?
Mandi: I'm a biker. I love to bike. We have this awesome bike ride across Iowa. It's an entire week. It's called RAGBRAI. It's 400 some miles or 500 miles depending on the route. It changes route every day. It is incredible to see the farmland, the small communities to the bigger towns, or I call the bigger cities depending on where you've lived your life. That way of really people opening up their homes and also there is nothing like our biking trail system. There's a 16-mile loop trail near one of our house areas, and you can just get out and go but if you live in a backcountry area, you can get out and go for 20 miles and you only see one car. Our biking culture is unreal.
Chad: That's lovely. Awesome. Okay, well finally, to me, climate positive means--
Mandi: Transparency plus accuracy equals positive impact.
Chad: Excellent. This has been really fun, Mandi. Thank you so much for joining us. Again, you have your own podcast called ESG Talk that we encourage everyone to check out as well. I really appreciate your time today and look forward to staying in touch.
Mandi: Likewise, Chad. Thanks, everyone, for tuning in. It was a great time together.
Chad: Thank you.
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I'm Chad Reed.
And this is Climate Positive.