Adam Larson: 00:20

Welcome back for another episode of Count Me In. Today, we're excited to welcome back Alyssa Vickery, the chief accounting officer at Corpay for a third appearance. Having shared her insights on leadership and CFO roles in the past, Alyssa now delves into the ESG reporting challenges brought by the new SEC rules on corporate sustainability. With her extensive experience and recent articles on this topic, she discusses the pressing need for companies to prepare for the diverse reporting requirements across various jurisdictions. Alyssa emphasizes the significance of embedding ESG principles into the core strategy of an organization beyond mere compliance.

Adam Larson: 00:56

Whether you're navigating ESG for the first time or refining your current approach, Alyssa's insights are invaluable. Join us to explore how to effectively manage reporting by thinking globally and acting locally. Tune in now for this insightful conversation. Well, Alyssa, we're really excited to have you back on Count Me In. This will be your third time on our podcast.

Adam Larson: 01:21

We've talked about leadership. We've talked about you jumping into a CFO role temporarily and what that looks like. And today we're going to be talking about ESG reporting challenges and operations, which you and your team have been working real hard and you've been writing articles about it. And so I am really excited to kind of jump in and have this be our topic today. So SEC ruling has new rules on ESG reporting.

Adam Larson: 01:43

It's brought a lot of attention to corporate sustainability. What are your some of the biggest challenges that finance teams are facing as they prepare for these new requirements?

AlissA Vickery: 01:51

Yeah, I mean, I would say, depending on the size of the company, they're quite extensive. And maybe just a level set for the audience. You know, what the standards say today, and what we're personally dealing with at Corpay. You know, the SEC did come out with a set of rules back in March of I think that's '24 now. And those rules quite frankly got a lot of people moving, including us.

AlissA Vickery: 02:12

But shortly after the rules came out by the SEC, they were quickly stayed by the SEC due to some court proceedings challenging certain of the rulings, the the constitutionality, all all the things. And so while the SEC went on pause, the rest of the world did not, which I think is the most important takeaway. So regardless of when The US regulatory environment catches up from a I'll call it the federal level, from a European standard, from a Brazilian standard, potentially even from a California standard, companies really do need to start thinking about where they may have reporting requirements. And those reporting requirements are coming up fast. And so, you know, organizationally, as you start thinking about the kinds of data that's being requested, to be reported, what we've done is we've we've viewed it from, I'll call it, the most detailed bubble of governance that might exist today in terms of what that reg looks like.

AlissA Vickery: 03:08

And for us, that's the CSRD standards that are pervasive throughout Europe. Those standards have somewhere along the lines of 1,400 different rule sets that you then have to go evaluate and figure out what's relevant. And after you figure out what's relevant, then you have to determine, alright, I I think I need to talk about this topic, but what's material to speak about within the topic? Now, upon how your organization is managed and is organized, you may be doing that every time you close the books by jurisdiction. And so for for us, that means, hey, I've got about five or six core locations globally where I close books.

AlissA Vickery: 03:48

Within those six locations, I probably have over 200 legal entities. Now what? And so that's where the challenge really comes in, and figuring out what matters, what you're required to report, what you may eventually have to report, maybe not today, but maybe four years from now. What makes the most sense for your company today? Are you going to take the partial bite of the pie?

AlissA Vickery: 04:14

Or you just gonna go ahead and eat the whole thing knowing eventually you're going to have to anyway?

Adam Larson: 04:19

So is that like a from a company company perspective, looking at taking the whole pie versus piece by piece? Because some people might not be able to dump in and do it all at once, and the piecemeal works. But is there is there a a one way that works better depending what industry you're in?

AlissA Vickery: 04:33

I'm not sure it that you get to think of it that way, unfortunately. I think you have to go and perform what's called the double materiality test. So under under the European standards, there's a couple of ways to view it. But the first and foremost is you perform what's called double materiality at the top of the house. That double materiality takes into account impact and vulnerability across the entirety of the organization.

AlissA Vickery: 04:55

And then based on, I will call it, true quantitative thresholds, starts to define what you have to do. And so, for a company, they may have a requirement at a legal entity level if they breach the assets and the number of employees test. If you don't breach those tests at the individual legal entity level, then you start to roll up. And so for us, it's it's coming down to, alright, am I going to report based on my European parent? Or am I gonna just report based on the very top of the house consolidated?

AlissA Vickery: 05:30

And so, I'm not sure if there's Certainly less is easier, just in the context of going and executing. But it could be depending upon the size of the organization. Again, how it's organized. Yeah. How the offices are even set up.

AlissA Vickery: 05:46

Because if you start thinking about greenhouse gas greenhouse gas emissions, well, are fundamentally, at least for, I'll call it, non manufacturing type companies, they're they're being generated by your employee base. By your employee base as they show up in the office, as they work remote, as they drive their vehicles, as they travel for work. Say, if you're flying internationally versus flying domestically, whether domestically means within Germany or if it means, you know, within The United States, you are emitting those greenhouse gases, and how do you measure them? And then how ultimately do you report them on a consistent basis globally, potentially?

Adam Larson: 06:28

Talk about overwhelming. That just feels overwhelming. Just you describing that, I'm like, oh my goodness. How does somebody like start, like, get started? Like, okay, I wanna

AlissA Vickery: 06:36

Yes. I would say the first thing we did was try to get educated. So there are clearly experts in the field. You know, the the accounting firms make a living off of, trying to assess what matters and what's coming up next in the industry. But frankly, you know, getting in front of those experts, helping Yeah.

AlissA Vickery: 06:53

Understanding what the landscape of regulatory framework looks like. Educating your leadership around you, educating your board who may have oversight responsibility for something that they're not even aware of just yet. Figuring out where in the organization it might lie, and then having the understanding that even from, like, my seat where I the reason I've taken it on from a leadership perspective is I know that ultimately, those outputs are likely to have to be audited. Mhmm. And if I'm leading the efforts for managing the relationship with my external auditor, then I wanna make sure that that data is collected, analyzed, calculated, reported in a consistent manner, regardless of which entities we're talking about.

AlissA Vickery: 07:35

So that ultimately, what the auditors would then try to opine on, at least to have some confidence it was rolled up in a manner no different than perhaps the quality with which I closed the books from a financial reporting perspective. Beyond that, it's learning who your peers within your organization are, who need to be key stakeholders. Mhmm. And so, in most organizations, this is gonna be sustainability officers. It's going to be investor relations, potentially, or PR.

AlissA Vickery: 08:05

Because there is a bit of a here's how we think about it as an organization and how we speak to it outside of our organization perspective. There is a regulatory and legal compliance to it. So my general counsel is very engaged and involved. But it can't just be those individuals who sit at the corporate level. It has to be disseminated within the organization.

AlissA Vickery: 08:25

Again, back to how are you organizationally structured and how do you then force the people within the layers where it actually is a European reg, not a US reg that I'm trying to help manage. I need to ensure that those individuals have it on their radar, and it's something that they care about, and something that they understand how they're gonna go and execute on. So the term we've coined internally, and perhaps it's not unique to us, but is think globally, but act locally. And if you can act locally, you have the ability to create buy in at the level at which all the data would need to be reported and collected. And then fundamentally, you may be able to have controls around that data so that when it comes up and it actually is reported consolidated, you've got a quality output.

Adam Larson: 09:16

Yeah. That's I mean, because it's audit, because it will be audited, because of all that stuff coming, it makes a lot of sense for somebody from the finance team to lead that. But as I've talked to others about, you know, this type of a topic, they all say the same thing where you need a wide ranging group of stakeholders from the organization to create that buy in. But also it helps to become a genuine part of your strategy as an organization, because it's not just about reporting rules. Let's get all those reports good and we're good to go.

Adam Larson: 09:44

It has to be more than that. Right?

AlissA Vickery: 09:45

A %. I mean, it has to be, I'll call it legally accurate for for one. You can't just go out there and just say something for the sake of checking a box. Yeah. It has to be truly part of who you are and who your corporate vision.

AlissA Vickery: 09:58

But I think ultimately, it then helps to permeate the culture. If this is something that investors, something that the shareholder public, or that consumers and regulators are concerned about, then it must be something that we take very seriously as well, and that we're concerned about. And it's not so to say that it's not something that was on our radar, but you just were never in a in a situation or in a requirement to report on it historically. It just puts a different kind of line of sight into that data, the importance of the data, and the right individuals who are part of the process to collect ensure the quality.

Adam Larson: 10:37

So you were saying earlier that, you know, Brazil, Europe, maybe even California, and eventually maybe the SEC, and who knows wherever else your organization works, what is it like kind of having to deal with those different rule sets within your organization?

AlissA Vickery: 10:51

Right. So I would say it's quite challenging, as you might I think that the one nice thing about it though, at this point in the- in the process is there does seem to be a meaningful amount of overlap. So, I think one of the things, perhaps, the corporate community is hopeful for, especially those of us who do business in multiple jurisdictions- Mhmm. Is that there will be a rationalization and an and an alignment of the various standards. Because there are multiple standards under which each of the regs have been written or intended to comply with.

AlissA Vickery: 11:24

Yeah. Which you wouldn't think would be all that different. And I think it does depend on industry how different they are. But creating alignment, creating a bit of a mapping as well, which is something that we're working on with with some third party vendors to ensure as we go to comply in Brazil, where I have to report locally, if they're going to go through the process to gather the data to enable them to report on a standalone basis for the country of Brazil, well, in theory, I should be able to leverage that same information for purposes of my European report. Because of my structure, ironically, Brazil will be included as part of my European top of the house.

AlissA Vickery: 12:02

And so, similarly for California, their scope is much more narrow. It's it's primarily focused on greenhouse gas emissions. So scope one, two, and three. Those definitions tend to be far more explicit, and so a little less interpretation. But time will tell as regulators start to actually ingest the information that's reported as to how much alignment really exists.

AlissA Vickery: 12:25

And I think that's when it gets a little tricky. Because what you think might be enough, and probably is enough depending upon where we're doing business, it ultimately may not be exactly what California was looking for. Right? And so, it it creates a little bit of a challenge in our ability to just kinda keep up, you will.

Adam Larson: 12:43

Yeah. So with all those different changing regulations and things, you know, having to stay on top of that, have you guys been able to use different technologies and data analytics to kinda play a role in kind of enhancing this process? Because I'm sure that it's you're not all sitting there with a notebook. Well, California changed. Let's write it down in our our banker's notebook.

AlissA Vickery: 13:01

Right. So I think there are a number of tools out there to help companies to help manage the process. We've selected a vendor that we've done a lot of business with in the past, around sort of our Sarbanes Oxley and SEC compliance. Okay. So that we use this this, solution that's developed by Workiva.

AlissA Vickery: 13:19

And we've basically bolted on a module. And we've done that purposefully, because one, there is global understanding how to use the tool.

Adam Larson: 13:26

Mhmm.

AlissA Vickery: 13:28

The tool has been developed in the module specifically by the vendor to basically manage the disparate work streams that would inherently be required to be able to gather the data. Not too dissimilar from how you might structure a global ERP, to where fundamentally, I'll have my rule set. I'll have mapped that into the underlying standards. So, that that apply within Europe, that apply in Brazil. But then ultimately, as I create workflow and assign, hey, I need your greenhouse scope one greenhouse gas emissions generated by coal.

AlissA Vickery: 14:07

We don't actually have coal products, but it's it's a really nice, like, visual example. So everybody who would report that on a stand alone basis would receive some workflow management, an email notifying them time to submit your data, and they would submit it up through the tool. I can see it sort of in a, I'll call it, our line of business level or a legal entity level to then ultimately roll it up. And so I I do think having things sit in sort of electronic frameworks that are sort of built to help manage the data is super helpful. No no different than I would say from closing the books, and reporting revenue and financial results.

AlissA Vickery: 14:46

Having something that helps facilitate that is meaningful and useful. There will also be a requirement, if you're doing business in Europe, to document your double materiality assessment. And that'll be an annual assessment that companies have to go through. The first time is always the most difficult because you're trying to figure out what you care about. Mhmm.

AlissA Vickery: 15:05

Once you figure it out the that that first round, you probably have some refinement at the edges that occurs over the following years. But having it in one place, and for us, having it all in the same place as we ultimately collect and report and record

Adam Larson: 15:21

Yeah.

AlissA Vickery: 15:21

I think will will become an advantage an advantageous approach to the work because I can direct my auditors to the same tool to execute all their procedures from.

Adam Larson: 15:34

Yeah. Wow. That that definitely simplifies the process, but it sounds like there's a lot of legwork to do to get it to that point where you're you can do that.

AlissA Vickery: 15:42

Right. Unfortunately. And I would say, you know, my team, we are a bit of a SME in the organization when it comes to use of the Workiva platforms, but it it does require some third party assistance for sure. Some real project management and planning. We've we've opted to utilize a third party vendor to assist us.

AlissA Vickery: 16:01

So, we've hired them on a consultative basis. They have extensive experience and knowledge helping other clients.

Adam Larson: 16:06

Yeah.

AlissA Vickery: 16:07

Not just in our industry, but, you know, just within within the environment to adopt the standards, perform double materiality assessments, and ultimately help them define sort of the rules that are the most relevant material. And then ultimately identify the gaps in the process that they may then may then need to go work and close as an organization before they can effectively get to the reporting phase.

Adam Larson: 16:32

Have you seen that this ESG reporting, these new reports, have you seen it influencing like the risk management strategy of the organization as you've been going through that with the company?

AlissA Vickery: 16:41

I would say only on the- on the edges at this point.

Adam Larson: 16:44

Okay.

AlissA Vickery: 16:45

Again, because we're not in that manufacturing space

Adam Larson: 16:48

Yeah.

AlissA Vickery: 16:49

Typically, I would call it the whole ESG framework isn't something specifically the e side Yeah. Which seems to be the thing that creates the most incremental work for companies. It's not something that we've been hyper focused on. Do we have health health and safety? Yes.

AlissA Vickery: 17:03

Do we have recycling programs? Yes. Do we have people first programs and resource groups for our employee base and engagement service? Yes. We have all of that stuff.

AlissA Vickery: 17:13

We just have never sort of packeted it up in a way that was more aligned with sort of where these standards are headed. Mhmm. And so so from a risk management strategy perspective, yes, it it is in there. It's something we're talking about at the, the the highest levels of the organization. But today, it is still a little bit on the fringe as a supplement to the broader corporate sustainability reporting that that we've historically put out there for the broader market.

Adam Larson: 17:41

Yeah. I I found that as I talk to folks in different industries, certain industries are very hyper focused on aspects of it because it affects many aspects of their business, especially the trucking companies, manufacturing companies, they're super in there, but you know, if you, if you have a software business, you don't necessarily have to worry about like, okay, like what about my servers, things like that, but there's not a lot of other aspects of it that really affect them and it's kind of hard to find that balance, I

AlissA Vickery: 18:07

feel Right. And I think that's fundamentally why the whole, is it relevant? Yes. Is it material? Maybe.

AlissA Vickery: 18:13

Assessment comes into play. And so really being thoughtful about who you are as an organization. What is meaningful to a reader? What is meaningful to a regulator? More to come on that, I am sure.

AlissA Vickery: 18:23

But you're trying to make judgment calls based on how we understand our our value proposition works. But ultimately, I think it's figuring out it's not so hard to figure out what you do as an org and your third party partners, like in terms of infrastructure, like you said. I think it's that value chain proposition. So that when you get to scope three, that's when it becomes a little more challenging because you do have to make judgment calls and draw the line somewhere Mhmm. Because that picks up on somebody else's process.

Adam Larson: 18:55

Can you just describe what scope three is? Because I've people mention it a lot, and other times, they don't always what is that? What is the scope three as part of the process? So

AlissA Vickery: 19:03

scope three is sort of it's beyond your direct and indirect greenhouse gas emissions. It's it's sort of what does your value chain also produce in terms of GHG? And that that can mean a lot of different things. So, hey, I have a card and it has a chip, and then that chip is then manufactured by a third party to my card manufacturer. So how far down the value chain do you go?

AlissA Vickery: 19:29

How far back do you collect those greenhouse gas emissions to ultimately then report upon? That's way more difficult to analyze than how much energy did my facility in London use.

Adam Larson: 19:42

Yeah. I can imagine that that would get pretty nitty gritty depending on how complicated like, if you're man in the manufacturing business, that would get really complicated.

AlissA Vickery: 19:50

Absolutely. Absolutely. Because the number of inputs I mean, in theory, a lot of companies are not vertically integrated. And so to the extent they're using partially manufactured products to then build their own product, it can become cumbersome in a hurry.

Adam Larson: 20:07

Yeah. What did that look like when when you were kind of digging into this process? You know, you've mentioned that, you know, you guys brought in a third party. What did that look like from a as you kind of readjusted your team to kind of focus on this?

AlissA Vickery: 20:22

So I would say, you know, unfortunately, we utilize a lot of the same resources who do have day jobs. We haven't necessarily had the ability or the need at yet to go and hire somebody who's fully dedicated to this. Gotcha. So I think hiring a third party to help lead us along the path was certainly instrumental in not making any broader hiring decisions just yet.

Adam Larson: 20:48

Yeah.

AlissA Vickery: 20:48

We have brought in some sustainability thoughtware in the form of temporary resources to assist us. Mhmm. But for now, we are still in implementation phase. We turned on the tool. We started doing our assessment.

AlissA Vickery: 21:03

We have an idea of what options lie in front of us. We've started going down the relevant and material route. What we haven't done is started actually going to the business and saying, start collecting it. So just to give you a sense of sort of where we are in Yeah. In the process.

Adam Larson: 21:22

So you're you're real fresh from, just just getting going and trying to figure all those things out.

AlissA Vickery: 21:27

Very much so. I I would say we are more than up to speed and getting highly educated at this point. And so the the next step is quite frankly gonna be the hard one.

Adam Larson: 21:37

Yeah. It's

AlissA Vickery: 21:37

let's go measure. Let's go gather. Let's go collect. Let's go write down what our corporate governance is around these topics.

Adam Larson: 21:46

Mhmm.

AlissA Vickery: 21:47

And while it exists, I would say, in a skeletal form, it doesn't exist in the level of detail that is necessary to comply with the standards that that appear to be relevant to us.

Adam Larson: 21:58

Yeah. And I suppose that's the nice thing about the way you guys started, where you're like, you you saw the regulations coming, you're like, Hey, let's get on this, because if you wait to the last minute, you don't have the time that you're having to kind of refine things and try it out as you go.

AlissA Vickery: 22:11

No, I think that's a % right. I think we do have a little bit of the courtesy of the time. I would say, it does appear that we have reporting requirements for 2025. The good news is, I don't have to report until probably summer of twenty six.

Adam Larson: 22:27

Yeah.

AlissA Vickery: 22:27

So I I do have a little bit of, I'll call it, you know, the backward look that I'm going to be able to do. And I have the ability to take advantage of the calendar on. But it is a lot of data, and we are a large company. And so, I'm glad we got started. Because if if you don't start, it would get very difficult when you get close to those deadlines to feel confident in ultimately what you're going to report.

Adam Larson: 22:50

Well, and it's great too that you have the technology in place because I imagine, with their platform putting things in, they have different ways to to know which regulations you're going for, which will help with the reporting and knowing what you're missing, knowing what's in there, and being able to connect with folks.

AlissA Vickery: 23:04

A %. I mean, having trusted vendors who- Yeah. You know how to use their tools, and they continue to build functionality that is highly scalable and ratable throughout your organization. Yeah. It is extremely helpful in terms of this adoption.

Adam Larson: 23:23

So, I mean, the future is up in the air. You know, many regulatory changes obviously happening with the recent presidential election in The US and, you know, all the different ups and downs going on. But the rest of the world doesn't see the rest of the world is definitely going this direction. Who knows where The US is gonna go? You know, what do you think the future holds as finance leaders are trying to navigate these waters, especially for multinational organizations?

AlissA Vickery: 23:48

Yeah. I mean, I would say it does seem to be a bit of a wave, and we're riding it, and this is the first wave. Yeah. It seems like the more places you do business, the more places you are likely to have to report something.

Adam Larson: 24:03

Yeah.

AlissA Vickery: 24:04

And as we look around the globe, we know it's not just limited to the handful that we've that we've mentioned on this podcast so far. We know that that Canada has some version of standards. Mexico does. New Zealand and Australia. And so, you know, it it really does create a bit of a a rolling snowball, if you will, to where you have more people or more regulators vest vested in understanding how companies are managing this.

AlissA Vickery: 24:29

It is a global responsibility at that point.

Adam Larson: 24:31

Mhmm. Well, I it like goes back to what you said earlier, think globally but act locally, because wherever you that local thing is, you need to understand where those regulations are and how that affects the organization there and how it rolls up ultimately to the organization.

AlissA Vickery: 24:45

Absolutely. Absolutely. Well,

Adam Larson: 24:49

Alyssa, this has been a wonderful conversation. I really appreciate you coming back on our podcast, and I look forward to having you again.

AlissA Vickery: 24:55

Alright. Thank you so much. It's been fun.

Announcer: 24:59

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.