Ep. 121: Ramesh Shettigar - ESG from a Finance Perspective
Ramesh Shettigar, VP, Investor Relations & Corporate Treasurer at Glatfelter, joins Count Me In to talk about ESG. In his current role, Ramesh is responsible for investor relations, global treasury, capital market financing, credit and collections, retirement plans, insurance, foreign exchange, commodities risk management, as well as supporting corporate development and strategic initiatives. This includes the management of key relationships with Glatfelter’s banks and rating agencies. In this episode, he talks how recent events have increased the importance of ESG in business, how to prioritize ESG above return objectives, how to measure ESG results, and explains what you can do to make ESG truly sustainable. Download and listen now!
Contact Ramesh: https://www.linkedin.com/in/ramesh-shettigar-9ba1243/
FULL EPISODE TRANSCRIPT
Adam: (00:00)
Hey everyone and welcome to Episode 121 of Count Me In, IMA's podcast about all things affecting the accounting and finance world. I'm your host Adam Larson, and I'm pleased to introduce you to today's featured guest, Ramesh Shettigar. Ramesh is Vice President of Investor Relations and Corporate Treasurer at Glatfelter, a leading global supplier of engineered materials. He joined my co-host Mitch to talk about ESG and its importance across the organization. Keep listening to hear about the finance team's role in ESG, prioritizing ESG over return objectives, and strategies to make ESG truly sustainable.
Mitch: (00:47)
So in your perspective, how have recent events increased the importance of ESG in business? And obviously for our listeners, we would like to get your perspective, particularly for the finance function.
Ramesh: (01:00)
Sure Mitch, I'm assuming by recent events you're referring to the pandemic, climate issues, social injustice, and corporate governance matters we've seen play out in 2020. If so I think companies play a very important role in representing to employees and their communities where they stand on these topics. The pandemic for example, has highlighted the importance of ensuring the health and safety of our employees and the communities where we operate. With regard to climate, corporations I think need to be responsible stewards of the environment in the geographies where they operate and need to abide by all local and federal environmental standards so that we can all preserve humanity's long-term health and sustainability for generations to come. We're seeing this play out in broader mega trends. For example, this move from fossil fuels and toward alternative energy sources or the plastics free movement. Working for an engineered materials company like Glatfelter, I feel incredibly proud that we have focused heavily on natural and bio-based feedstocks in our manufacturing process and our product innovation efforts are heavily focused on minimizing synthetic materials in the products we make. As it relates to social topics, employees need to know where their employers stand regarding racial, gender, and socioeconomic disparities in the workplace and if their companies are playing an active role in facilitating an environment that welcomes diversity, equity, and inclusion. Glatfelter for example, has made it very clear through an internal message from our CEO that treating people of all backgrounds fairly and consistent with our core values of mutual respect, integrity, and social responsibility is of utmost importance. We have committed to enhancing compliance training that focuses on diversity and eliminating unconscious biases. Also a meaningful portion of corporate giving will go towards causes that address social inequities and racial injustice. From a governance standpoint, I think ensuring that there is adequate board diversity in terms of experience, gender, and race is very important for investors seeking reassurance that company leadership exemplifies and values diversity. So bringing all this back to the finance question, which I think you're trying to get to, I think the long-term returns of these initiatives and the stand we take regarding ESG will ultimately be positive and rewarding for the company, its employees, and society. So I think that's how we think about what ESG does for us, particularly for the finance function.
Mitch: (03:56)
That really was beautifully said and thank you for taking us through step-by-step, I think it was a perfect response. Its great to hear those kinds of initiatives put in place and you know, your organization really taking a big step forward in making sure that everybody within the organization is on the same page. I think that clear communication is vital for making sure these ESG initiatives are effective, really is what it comes down to. And you talked about the finance function, the long-term returns. I think it's been a year now with this pandemic that you brought up and obviously there is a little bit of a light at the end of the tunnel. I think some people are starting to see it as businesses seek to return to their normal and that obviously has a different definition than it did a year from today. But how do you prioritize ESG in relation to these return objectives that you mentioned within finance?
Ramesh: (04:53)
Sure. So you know, the pandemic has clearly appended organizational priorities when it comes to ESG and I think you said it well, right? We've we see the light at the end of the tunnel. We've been through this pandemic now for a year, organizations have flexed and adapted to the marketplace and what the pandemic has brought about. But if anything, the pandemic I think has elevated the social aspect of ESG, which was already gaining momentum, keeping employees safe, facilities operational, and servicing customers are high on the priority list I think for companies and in a way represent the duty of care that businesses broadly commit to as part of their ESG focus. Therefore, I think ESG should not be seen purely from a return objective, because ESG initiatives are simply the right thing to do. Yes, companies of different sizes and complexity operate in different places along the ESG continuum depending on their resource allocation to this important endeavor. And as you know, the ESG evolution is a journey and some are further along than others, but that progress should not be driven solely by ratings outcomes or objectives. It should be guided by a company's core values and commitment to social responsibility. Businesses seek input from various constituents like investors, employees, customers, and suppliers to better understand expectations and what it means to be responsible stewards in the community and that feedback guides their actions and priorities.
Mitch: (06:36)
What exactly is your method for communicating these ESG objectives with stakeholders and ultimately how do you make sure they understand your efforts and get the buy-in from them?
Ramesh: (06:50)
Sure. So our primary method of communicating our ESG objectives with stakeholders is through our sustainability report. You know, in late 2019 we formed a cross-functional ESG steering committee within Glatfelter with a primary role of overseeing the sustainability and ESG strategy for the company and providing implementation support to Glatfelter’s businesses and facilities. We worked with a third-party consultant to conduct a materiality assessment to identify our ESG priorities. Particularly since we went through a meaningful strategic transformation as a company over the last couple of years and we wanted to make sure our latest priorities aligned with the new Glatfelter. Our materiality process included peer and industry research, internal stakeholder interviews, ESG team workshops, and application of best practices. We also took into consideration the expectations and recommendations of leading ESG ratings organizations and sustainability standards such as the SASB (Sustainability Accounting Standards Board), the GRI (The Global Reporting Initiative), and UNSDGs (The United Nations Sustainable Development Goals). We evaluated topics based on their potential impact on Glatfelter, the company's ability to impact them, and our stakeholder’s interest in these topics. And we finally settled on seven priorities which are organized along the ESG pillars. Those seven areas are environmental management, innovation and environmentally responsible products, occupational health and safety, product safety and quality, community and employee engagement, corporate governance, and ethics and integrity. So focusing and elaborating our efforts in each of these areas culminated into publishing our first sustainability report in late 2020. We believe this enhanced focus on ESG is an important element of our ongoing strategic business transformation and ability to create additional value for all stakeholders.
Mitch: (09:12)
It's really impressive. I think first and foremost, proper planning and outlining these initiatives, certainly positioned you for success and then as you said, effectively communicating this to everybody involved, all stakeholders certainly I'm sure helped them truly understand the background and what their role is and what the organization's position is. So once the ball kind of gets rolling here and you have this successful plan rolled out, where can you most quickly see the results and how is the rewards from the buy-in really seen?
Ramesh: (09:54)
Yeah so Mitch you know, we've all heard the saying, “you can't manage what you don’t measure”. Right? And we recognize that as we evolve in our ESG journey and we over time establish milestones and long-term goals against which we can track our progress. But for that to effectively happen, we need the appropriate systems in place to help gather and consolidate the data centrally through which we can compare actual results to targets and have the appropriate reporting tools. While we have the resources within our operating segments and functional management to focus on the information gathering, tracking, and reporting on each of these initiatives, we need to achieve a level of automation to become efficient and seamless so that progress can be accurately measured and there is accountability. And that level of sophistication comes over time and with scale of the business. We've just gotten started on this long-term journey, but we see ourselves eventually getting there.
Mitch: (11:01)
So I know you mentioned seven priorities, seven focus areas, and outlining how that all applies to the organization as far as establishing these benchmarks or KPIs, right so you can measure your success. How many would you say, do you have in place for each of those seven areas or is it benchmarks for the overall initiative?
Ramesh: (11:26)
I would say it's benchmark for the overall initiative. You know we, as I mentioned, we've got these seven key areas or seven key priorities that we've outlined, and then underneath them come, whether it is water quality or energy consumption or waste reduction, product recalls or first-time quality metrics from customers that measure us and measure our performance. I would say the KPIs do exist underneath each of these priorities, but they vary, in terms of scale and in terms of the tracking of how each of these KPIs are performing. So I think some are more quantitative than qualitative, clearly community and employee engagement or corporate governance, these are things that have a qualitative element to it, but when it comes to environmental management for example, carbon emissions or water consumption or energy usage, are very very specific and measurable metrics.
Mitch: (12:44)
That's excellent and that was definitely part of my question also is the qualitative versus quantitative aspects of it just knowing how qualitative many elements of ESG really is. So that's fantastic and, you know, you outlined such a clear plan, the communication, the benchmarking, I think it's all incredibly valuable for listeners to kind of see how it's in practice. I guess from a bit of a higher level, if you were to offer advice, what kind of strategies or best practices can you recommend for making a focus on ESG truly sustainable for the life of a business. If somebody were to be interested in bringing an ESG project forward within their organization, or maybe it's in place already and they want to drive it further, what are some of those best practices that you've seen along the way with your company?
Ramesh: (13:36)
Yeah so Mitch, I think for ESG to be truly sustainable it needs to become part of the company's culture and that takes time, right? But it starts with the tone at the top, having a sustainability policy that has been articulated and endorsed by the CEO and reviewed periodically by the board is good practice and evidence that the company is taking ESG seriously. This really serves as the backbone of the company's ESG mandate and investors are looking for this level of commitment from the companies they follow and the companies they invest in. There also needs to be board commitment and oversight of a company's ESG strategy and programming. Beyond that, depending on the size and complexity of an organization, we're starting to see C-suite level engagement and accountability through the establishment of chief sustainability officers that drive ESG across the organization. And like I mentioned before, I think once a company puts the measurement and reporting infrastructure in place, it can be managed more effectively. And by tying compensation to long-term sustainability, which some companies are doing, we will see meaningful progress take place over time. Here again, this will happen as ESG and sustainability become embedded in the fabric of a company's culture and business and investment decisions are made through the lens of sustainability.
Closing: (15:13)
This has been Count Me In, IMA's podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard, and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.
FULL EPISODE TRANSCRIPT
Adam: (00:00)
Hey everyone and welcome to Episode 121 of Count Me In, IMA's podcast about all things affecting the accounting and finance world. I'm your host Adam Larson, and I'm pleased to introduce you to today's featured guest, Ramesh Shettigar. Ramesh is Vice President of Investor Relations and Corporate Treasurer at Glatfelter, a leading global supplier of engineered materials. He joined my co-host Mitch to talk about ESG and its importance across the organization. Keep listening to hear about the finance team's role in ESG, prioritizing ESG over return objectives, and strategies to make ESG truly sustainable.
Mitch: (00:47)
So in your perspective, how have recent events increased the importance of ESG in business? And obviously for our listeners, we would like to get your perspective, particularly for the finance function.
Ramesh: (01:00)
Sure Mitch, I'm assuming by recent events you're referring to the pandemic, climate issues, social injustice, and corporate governance matters we've seen play out in 2020. If so I think companies play a very important role in representing to employees and their communities where they stand on these topics. The pandemic for example, has highlighted the importance of ensuring the health and safety of our employees and the communities where we operate. With regard to climate, corporations I think need to be responsible stewards of the environment in the geographies where they operate and need to abide by all local and federal environmental standards so that we can all preserve humanity's long-term health and sustainability for generations to come. We're seeing this play out in broader mega trends. For example, this move from fossil fuels and toward alternative energy sources or the plastics free movement. Working for an engineered materials company like Glatfelter, I feel incredibly proud that we have focused heavily on natural and bio-based feedstocks in our manufacturing process and our product innovation efforts are heavily focused on minimizing synthetic materials in the products we make. As it relates to social topics, employees need to know where their employers stand regarding racial, gender, and socioeconomic disparities in the workplace and if their companies are playing an active role in facilitating an environment that welcomes diversity, equity, and inclusion. Glatfelter for example, has made it very clear through an internal message from our CEO that treating people of all backgrounds fairly and consistent with our core values of mutual respect, integrity, and social responsibility is of utmost importance. We have committed to enhancing compliance training that focuses on diversity and eliminating unconscious biases. Also a meaningful portion of corporate giving will go towards causes that address social inequities and racial injustice. From a governance standpoint, I think ensuring that there is adequate board diversity in terms of experience, gender, and race is very important for investors seeking reassurance that company leadership exemplifies and values diversity. So bringing all this back to the finance question, which I think you're trying to get to, I think the long-term returns of these initiatives and the stand we take regarding ESG will ultimately be positive and rewarding for the company, its employees, and society. So I think that's how we think about what ESG does for us, particularly for the finance function.
Mitch: (03:56)
That really was beautifully said and thank you for taking us through step-by-step, I think it was a perfect response. Its great to hear those kinds of initiatives put in place and you know, your organization really taking a big step forward in making sure that everybody within the organization is on the same page. I think that clear communication is vital for making sure these ESG initiatives are effective, really is what it comes down to. And you talked about the finance function, the long-term returns. I think it's been a year now with this pandemic that you brought up and obviously there is a little bit of a light at the end of the tunnel. I think some people are starting to see it as businesses seek to return to their normal and that obviously has a different definition than it did a year from today. But how do you prioritize ESG in relation to these return objectives that you mentioned within finance?
Ramesh: (04:53)
Sure. So you know, the pandemic has clearly appended organizational priorities when it comes to ESG and I think you said it well, right? We've we see the light at the end of the tunnel. We've been through this pandemic now for a year, organizations have flexed and adapted to the marketplace and what the pandemic has brought about. But if anything, the pandemic I think has elevated the social aspect of ESG, which was already gaining momentum, keeping employees safe, facilities operational, and servicing customers are high on the priority list I think for companies and in a way represent the duty of care that businesses broadly commit to as part of their ESG focus. Therefore, I think ESG should not be seen purely from a return objective, because ESG initiatives are simply the right thing to do. Yes, companies of different sizes and complexity operate in different places along the ESG continuum depending on their resource allocation to this important endeavor. And as you know, the ESG evolution is a journey and some are further along than others, but that progress should not be driven solely by ratings outcomes or objectives. It should be guided by a company's core values and commitment to social responsibility. Businesses seek input from various constituents like investors, employees, customers, and suppliers to better understand expectations and what it means to be responsible stewards in the community and that feedback guides their actions and priorities.
Mitch: (06:36)
What exactly is your method for communicating these ESG objectives with stakeholders and ultimately how do you make sure they understand your efforts and get the buy-in from them?
Ramesh: (06:50)
Sure. So our primary method of communicating our ESG objectives with stakeholders is through our sustainability report. You know, in late 2019 we formed a cross-functional ESG steering committee within Glatfelter with a primary role of overseeing the sustainability and ESG strategy for the company and providing implementation support to Glatfelter’s businesses and facilities. We worked with a third-party consultant to conduct a materiality assessment to identify our ESG priorities. Particularly since we went through a meaningful strategic transformation as a company over the last couple of years and we wanted to make sure our latest priorities aligned with the new Glatfelter. Our materiality process included peer and industry research, internal stakeholder interviews, ESG team workshops, and application of best practices. We also took into consideration the expectations and recommendations of leading ESG ratings organizations and sustainability standards such as the SASB (Sustainability Accounting Standards Board), the GRI (The Global Reporting Initiative), and UNSDGs (The United Nations Sustainable Development Goals). We evaluated topics based on their potential impact on Glatfelter, the company's ability to impact them, and our stakeholder’s interest in these topics. And we finally settled on seven priorities which are organized along the ESG pillars. Those seven areas are environmental management, innovation and environmentally responsible products, occupational health and safety, product safety and quality, community and employee engagement, corporate governance, and ethics and integrity. So focusing and elaborating our efforts in each of these areas culminated into publishing our first sustainability report in late 2020. We believe this enhanced focus on ESG is an important element of our ongoing strategic business transformation and ability to create additional value for all stakeholders.
Mitch: (09:12)
It's really impressive. I think first and foremost, proper planning and outlining these initiatives, certainly positioned you for success and then as you said, effectively communicating this to everybody involved, all stakeholders certainly I'm sure helped them truly understand the background and what their role is and what the organization's position is. So once the ball kind of gets rolling here and you have this successful plan rolled out, where can you most quickly see the results and how is the rewards from the buy-in really seen?
Ramesh: (09:54)
Yeah so Mitch you know, we've all heard the saying, “you can't manage what you don’t measure”. Right? And we recognize that as we evolve in our ESG journey and we over time establish milestones and long-term goals against which we can track our progress. But for that to effectively happen, we need the appropriate systems in place to help gather and consolidate the data centrally through which we can compare actual results to targets and have the appropriate reporting tools. While we have the resources within our operating segments and functional management to focus on the information gathering, tracking, and reporting on each of these initiatives, we need to achieve a level of automation to become efficient and seamless so that progress can be accurately measured and there is accountability. And that level of sophistication comes over time and with scale of the business. We've just gotten started on this long-term journey, but we see ourselves eventually getting there.
Mitch: (11:01)
So I know you mentioned seven priorities, seven focus areas, and outlining how that all applies to the organization as far as establishing these benchmarks or KPIs, right so you can measure your success. How many would you say, do you have in place for each of those seven areas or is it benchmarks for the overall initiative?
Ramesh: (11:26)
I would say it's benchmark for the overall initiative. You know we, as I mentioned, we've got these seven key areas or seven key priorities that we've outlined, and then underneath them come, whether it is water quality or energy consumption or waste reduction, product recalls or first-time quality metrics from customers that measure us and measure our performance. I would say the KPIs do exist underneath each of these priorities, but they vary, in terms of scale and in terms of the tracking of how each of these KPIs are performing. So I think some are more quantitative than qualitative, clearly community and employee engagement or corporate governance, these are things that have a qualitative element to it, but when it comes to environmental management for example, carbon emissions or water consumption or energy usage, are very very specific and measurable metrics.
Mitch: (12:44)
That's excellent and that was definitely part of my question also is the qualitative versus quantitative aspects of it just knowing how qualitative many elements of ESG really is. So that's fantastic and, you know, you outlined such a clear plan, the communication, the benchmarking, I think it's all incredibly valuable for listeners to kind of see how it's in practice. I guess from a bit of a higher level, if you were to offer advice, what kind of strategies or best practices can you recommend for making a focus on ESG truly sustainable for the life of a business. If somebody were to be interested in bringing an ESG project forward within their organization, or maybe it's in place already and they want to drive it further, what are some of those best practices that you've seen along the way with your company?
Ramesh: (13:36)
Yeah so Mitch, I think for ESG to be truly sustainable it needs to become part of the company's culture and that takes time, right? But it starts with the tone at the top, having a sustainability policy that has been articulated and endorsed by the CEO and reviewed periodically by the board is good practice and evidence that the company is taking ESG seriously. This really serves as the backbone of the company's ESG mandate and investors are looking for this level of commitment from the companies they follow and the companies they invest in. There also needs to be board commitment and oversight of a company's ESG strategy and programming. Beyond that, depending on the size and complexity of an organization, we're starting to see C-suite level engagement and accountability through the establishment of chief sustainability officers that drive ESG across the organization. And like I mentioned before, I think once a company puts the measurement and reporting infrastructure in place, it can be managed more effectively. And by tying compensation to long-term sustainability, which some companies are doing, we will see meaningful progress take place over time. Here again, this will happen as ESG and sustainability become embedded in the fabric of a company's culture and business and investment decisions are made through the lens of sustainability.
Closing: (15:13)
This has been Count Me In, IMA's podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard, and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.
