ESG being one of the hottest topics in the boardroom today brought almost 80 NACD members together for this dynamic and active breakfast paenl. Environmental, Social and Governance investing reached the $20 trillion mark in 2018, representing one of every four dollars invested in global equities. According to State Street, 68% of funds that employ ESG standards saw improved performance. Also, ESG became a key area of focus in the 2019 proxy season.
With the category of passive investors growing exponentially in recent years, investors like Blackrock are seeking communication that is less focused on quarterly results and more focused on long-term strategy and outlook. In the activist community, their attention is turning to ESG concerns as a point of entry.
Companies need to have a communication strategy for addressing ESG initiatives, disclosures, any material risks and how they are linked to the company’s strategy, risk management controls, and plans for creating sustainable long-term value for all stakeholders. These linkages need to be meaningful to investors and measurable. Absent this information, investors will rely on databases and rating agencies to form opinions.
Key takeaways from the breakfast were:
How institutional investors take ESG issues into account and why such issues are important to them.
How the ISS rating system works and why ISS chose to create its new rating system.
How boards are addressing ESG - the format in which boards consider these issues and adjustments made to handle the increased interest from institutions.
JOHN P. KELSH is a partner at Sidley Austin, LLP in their Corporate and Capital Markets group in the firm’s Chicago office. He is co-leader of the firm’s global Corporate Governance and Executive Compensation practice area. He regularly advises numerous publicly traded corporations on a wide range of matters, with a particular focus on federal securities laws, corporate governance and executive compensation.
Mr. Kelsh regularly speaks on executive compensation and securities matters and has taught Securities Regulation at both Northwestern University and the University of Chicago. Mr. Kelsh joined the firm in 1998 and became a partner in 2004. Prior to joining the firm, he served as a law clerk to Chief Justice William H. Rehnquist of the Supreme Court of the United States and Judge David B. Sentelle of the United States Court of Appeals for the District of Columbia Circuit.
Ray A. Cameron, Managing Director, is the Head of BlackRock's Investment Stewardship team for the Americas region based in New York. In this role, Ray leads a team of specialists responsible for engagement and proxy voting activities in relation to the companies in which BlackRock invests on behalf of clients. Through direct engagement with companies, the team encourages corporate governance practices that support sustainable financial performance over the long-term.
Prior to joining BlackRock, Ray most recently managed the corporate access engagement practice at several investment banking firms, including Stifel and Cowen. In these capacities, he oversaw teams that established and enhanced constructive dialogue with hundreds of portfolio companies' boards and management teams.
Ray started his Wall Street career at Morgan Stanley on the institutional equity sales desk. After spending several years as a generalist, he became a technology specialist. It was in that capacity, he recognized the potential of corporate access as a stand-alone business opportunity. Ray is credited for creating and managing the first fully integrated corporate access team on Wall Street. His team included a diverse group of sector specialists who were responsible for driving engagements in their respective industries and enhancing relationships with corporate boards and management and with internal investment professionals within the firm.
He was subsequently recruited to re-engineer the corporate access engagement practice at Lehman Brothers. There he successfully maintained the entire team through the Lehman bankruptcy filing and the eventual acquisition of equity assets by Barclays.
Ray earned his Masters of Business Administration degree from Southern Methodist University, Dallas, Texas and his Bachelors of Business Administration degree from The University of Texas at Austin.
Cynthia Jamison, serves on the Board of Directors of Tractor Supply Company (NASDAQ:TSCO), a position she has held since 2002, where she is Chairman of the Board, after serving as Lead Director, and Chair of the Audit, Compensation & Corporate Governance Committees. Since 2013, she also serves on the Office Depot Board (NASDAQ: ODP) where she Chairs the Audit Committee and is a member of the Nominating & Governance committee. Ms Jamison was elected to serve on the Darden Restaurants Board (NYSE: DRI) in October 2014 as part of a complete Board replacement slate through Starboard Value’s proxy fight; there, she serves as Chair of the Audit Committee as well as serving on the Compensation and CEO Search committees. In May of 2015 she joined the BigLots, Inc (NYSE: BIG) Board where she sits on the Audit Committee and Chairs the Nominating and Governance Committee. Her previous Board roles includes: Horizon Organic Holdings, Cellu Tissue, Caribe Media and B&G Foods.
Prior to her full-time Board service, Cynthia had an executive career as a “Crisis CFO”. In that capacity, she served as a partner with Tatum, LLP from June 1999 through May 2009. She has been the Chief Financial Officer or Chief Operating Officer of several publicly and privately held companies including eMac, Inc, a joint venture between McDonald’s Corporation and KKR & Co. L.P., and Cosi, Inc. (NASDAQ:COSI), the casual dining chain, SurePayroll, a payroll processing firm, and and Illinois Superconductor, a radio frequency cellular technology company. From 2006 on, Cindie was in a Managing Partner role within Tatum, and served in several additional capacities, including as Managing Partner of the CFO Services practice where she led 300+ CFO partners and sat on the firm’s Operating Committee. From 2009 until her retirement in 2012 she served as the Chief Financial Officer of AquaSpy, Inc., an Australian environmentally responsible irrigation company. She still serves on that (private) board and remains a personal investor in the company. Prior to her CFO roles, she held executive positions of increasing responsibility at Arthur Andersen, Kraft General Foods, Hewitt Associates , Allied Domecq (Dunkin’ Donuts/Baskin Robbins) and Chart House Enterprises.
She is a frequent keynote speaker on CFO and Boardroom topics, and quoted as a financial/economic expert in Forbes, the Wall Street Journal, Newsweek, CFO Magazine, Agenda, Board Member and the Economist. She is also an NACD Board Leadership Fellow and was awarded the “Top 100 Director” honor in 2017.
Marija Kramer is the Head of ISS’ ESG Analytics Business. She is responsible for the teams which enable investors to develop and integrate responsible investing policies and practices, engage on responsible investment issues, and monitor portfolio company practices through in-depth research and screening solutions. Marija also oversees the dedicated climate team which provides data, analytics and advisory services to help financial market participants understand, measure, and act on climate-related risks across all asset classes. She is responsible for new ESG product development, working closely with industry constituents and partners to advance ESG solutions for the benefit of institutional investors. A member of ISS’ Leadership Team, Marija has been instrumental in identifying and securing external growth opportunities, globally, for the ISS ESG business.
Dr. Kathryn J. Jackson serves on corporate boards, is the Director, Energy & Technology Consulting for
KeySource, Inc., and is an Advisor and Consultant to Energy Impact Partners, Strategic equity investment firm
focused on energy, energy management, and sustainable generation. Previously she was the Chief Technology
Officer at RTI responsible to transform the research activities to align with corporate strategy, develop technology
platforms to drive growth and integrate business units, and to leverage internal capabilities by collaborating with
key customers, consortia, academia and government partners. She now consults with government, industry, and
academia to drive new technologies to market, solve energy and environmental problems, and improve the
innovation effectiveness and investment value.
Dr. Jackson served as the chief technology officer and senior vice president at Westinghouse Electric Company,
responsible for leading the company’s research and development activities. She also led the company’s
environmental sustainability initiatives aimed at minimizing the impact of global business activities on the
environment. Initially she held the position of vice president of Strategy, Research and Technology at
Westinghouse, responsible for the development of technology-based growth strategies.
Dr. Jackson joined Westinghouse from Tennessee Valley Authority (TVA), where she was the executive vice
president of River Systems Operations and Environment and the corporate environmental officer. In her 17 years
with TVA, she was responsible for the management of the 6,000 megawatt hydropower system, flood control,
navigation, dam safety, public lands management, environmental services, and research and development
Dr. Jackson worked for Alcoa Corporation as a technology forecaster responsible for Alcoa’s Research and
Development strategy and for technology-based acquisition analysis. Formerly she held also a post-doctoral
fellow at the National Academy of Engineering focused on policies to facilitate investment in technology and
commercialization of research results.
Dr. Jackson serves on the board of directors of Portland Gas and Electric a vertically integrated utility in Portland,
Oregon, Cameco, headquartered in Saskatchewan, Canada, one of the world’s largest uranium producers, a
significant supplier of conversion services and one of two Candu fuel manufacturers in Canada, and EQT a shale
gas exploration and production company with focused operations in Appalachian Basin and headquartered in
Pittsburgh, PA. She previously served on the board of Hydro One in Ontario, Canada responsible for electricity
transmission and distribution in the Province and was a board member of Rice Energy, an independent natural gas
and oil company focused on acquisition, exploration, and development of natural gas and oil properties in the
Appalachian Basin. Prior to this she served as Chair of the board of directors for ISO New England, Inc.,
responsible for operating New England’s bulk power system and wholesale electricity market and managing the
region’s comprehensive planning processes.
Dr. Jackson is also an advisor to Carnegie Mellon University’s Engineering School and the Complex Engineered
Systems program, and is on the advisory board of the Carnegie Mellon Electricity Industry Center. She is on the
Board of Visitors for the Swanson School of Engineering at the University of Pittsburgh. Previously she served
on the board of directors of the Electric Power Research Institute (EPRI), as well as its Governance & Nominating
and Executive committees. She was appointed by President Clinton to serve on the National Recreation Lakes
Study Commission to make recommendations on the management of natural resources, public lakes, and public
lands for multi-purposes.
Dr. Jackson earned a bachelor’s degree in physics from Grove City College. She has a master’s degree in
industrial engineering management from the University of Pittsburgh, and master’s and doctorate degrees in
engineering and public policy from Carnegie Mellon University.