What It Means To Shape A Sustainable Business
At the heart of it, corporate sustainability is about creating real value for long-term investors while creating a healthy company culture.
We speak with Nasdaq Global Head of Sustainability Evan Harvey about his role, Nasdaq’s understanding of corporate responsibility, and how serving our clients has evolved throughout the years.
Talk to us about your role at Nasdaq and what it means to be Global Head of Sustainability.
It’s a role that I have grown into and grown with as Nasdaq has expanded its understanding of – and commitment to – corporate sustainability. I had been working here for six years before this role existed, managing market data insight platforms like Nasdaq Online. I used to have long conversations with John Jacobs, who then ran both Nasdaq Marketing and Indexes, about ways to make more efficient markets and drive more sustainable business practices. The concept of “corporate sustainability” was just emerging from the shadows of CSR and Philanthropy as a distinct management discipline, but very few exchanges were focused on it. Our leadership and support really helped to create an industry-wide movement. We created sustainability awareness through a UN multinational project and business consensus via our trade association, the WFE. In 2010, only a small handful of stock exchanges focused on ESG; now virtually all of them do.
In the last decade, Nasdaq has continually broadened its understanding of what it means to be a sustainable business: not only by creating real, long-term value for investors, but also by finding new sources of performance data, becoming more transparent about our values, and engaging meaningfully with more diverse stakeholders. Now we look at ESG as part of a healthy and productive corporate culture, emblematic of our purpose, and that makes me very proud.
What does ESG look like at Nasdaq today? In what ways do we lean in?
It’s important to define terms. ESG (or environmental, social, and governance) excellence is driven by data; we must measure our performance in order to deliver positive impacts. So ESG is about gathering all kinds of data (carbon emissions, energy efficiency, data privacy, diversity and inclusion, board practices) from all kinds of people (Facilities, the People team, Corporate Secretary, Procurement) in order to benchmark performance and disclose our improvement. We disclose this data in traditional reporting channels, like the Proxy Statement and our annual Sustainability Report, but also directly to investors, specialist ratings firms, B2B clients, and surveys. Nasdaq ESG is just like Nasdaq generally – driven by innovation, measurability, efficiency, and outperformance.
Elaborate on the importance of ESG reporting. What has Nasdaq’s ESG reporting shown?
Once upon a time, ESG reporting (otherwise thought of, tellingly, as “non-financial reporting”) was thought of as superfluous, somehow not tied to the real bottom line. But as things evolved – through a growing regulatory focus, the acceleration of economic and environmental crises, more rigorous academic and analytical research – it became clear that there is a real connection between ESG performance and financial performance, even if that connection is difficult to make. Public companies that sought to avoid investor scrutiny by not disclosing this data were soon, by the same route, inviting it. In five years, the number of ESG reporters in the S&P500 flipped from 20% to 90%.
With the outsize influence of rankings and ratings firms – which affect a company’s ability to find and retain investors, credit, business, and even staff – the importance of disclosing key data points is paramount. Nasdaq made many ESG scoring improvements in 2020 (ISS, Sustainalytics, MSCI) and received many related honors (Dow Jones Sustainability Index, a perfect score from the Human Rights Campaign), but it has taken years to get here.
So we are uniquely able to advise and educate companies and clients in this process; we have hosted events, moderated panels, engaged the media and published two versions of our ESG Reporting Guide in order to help mainstream this practice. Our new listing rule proposal, focused of board diversity and transparency, is further testament to this commitment.
Through Nasdaq GoodWorks we work with charities and organizations. What is the importance of having a program like this at Nasdaq?
This is the more personal side of our work, and it clearly strikes a chord with our employees. We created the GoodWorks program in 2015 in order to achieve three goals: provide a standardized channel for employee-led philanthropy and volunteerism, expand the reach and engagement of that program across the organization, and create meaningful impact in the communities where we all live and work. The numbers affirm that we have done so, with more than 1200 separate charitable firms benefitted so far – and nearly $5M in community impact.
What trends did we see rise in 2020?
2020 was all about the pandemic and social justice – in both the ESG realm and broader society, of course. There are now more direct and irrefutable correlations between how a company runs its business and how people live their lives. Just think about the implications in terms of employee health and safety, commuting and travel, access to medical care, family care, productivity and technology. Companies may struggle to measure and report this – as they do with most social performance statistics – but they are much less likely to deny the connection.
How will we be further leaning into ESG topics in 2021?
The next year will be focused on purpose. The Nasdaq Purpose Initiative – working in tandem with the Entrepreneurial Center and the Educational Foundation and other resources – will focus on addressing real social and economic issues that ultimately directly impact our business. We want to bring more women and diverse participants into the entrepreneurial pipeline; give them the tools and access to create jobs and build sustainable businesses. We want investors to better understand the markets, to make smarter decisions and invest for the long term. In short, we want the capital markets to extend their beneficial and stabilizing influence to everyone who has, for one reason or another, been left out. I can’t think of a greater pipeline for all of our products and services, but moreover a greater purpose for this organization.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.