The S in ESG: 6S Goals

At a cocktail party this week in Davos, one executive told the New York Times DealBook something he — and most of the attendees at the World Economic Forum — would most likely never say in public: “I hope E.S.G. just goes away.”

As a board member, you have likely reviewed the corporate ESG goals. Since I’m on software company boards, the E portion (aka climate change) is of some interest, but certainly not the focus if you were on the board of a manufacturing, transportation, energy or oil & gas company.

Instead, what are the Societal goals (the S in ESG) the corporations should focus on? Rather than stay too high level, I became a student of the S goals of several corporations. This list of companies of somewhat random but it has helped me understand some of the landscape today. I think the role of the corporation is changing and the S in ESG is part of the change.

I categorized the S goals and investments into six major areas: DEI, Internal Education, Internal Healthcare, Community Engagement, Societal Education, and Societal Healthcare. Not all companies invested in all six areas. As reporting financial performance has always been about the numbers, we’ll also highlight the metrics some of them have reported.

First of the 6S goals: DEI

Johnson & Johnson (J&J), founded in 1886, is a Fortune 50 company that develops medical devices, pharmaceuticals, and consumer packaged goods. In JnJ’s 2021 ESG Summary Report one of the DEI metric they reported is the percentage of women in management positions has gone from 45.8% in 2019 to 48% in 2021. Illumina, based in San Diego, CA develops, manufactures, and markets integrated systems for the analysis of genetic variation and biological functions. They reported the percentage of Asian directors and above went from 13% in 2019 to 16% in 2021. For more detail check out their CSR Report and the ESG Appendix.

Second of the 6S goals: Internal Education

The second major category focuses internally on employee education, many times called out as talent development. As an example VMware reported 18, 049 of their employees attended a professional development program and 14, 644 attended R&D training.

Third of the 6S Goals: Internal Healthcare

The third category are internal healthcare goals. Intel’s corporate responsibility strategy to increase the scale of their work with others to create a more Responsible, Inclusive, and Sustainable (RISE) world. One of the three top-level goals is revolutionizing health and safety through technology. As an example in 2021 Intel reported they implemented global clinics that delivered vaccinations to more than 60,000 employees, contingent workers, and their household member.

Fourth of the 6S Goals: Community Engagement

The fourth major category of societal impact is community engagement. This takes the form of corporate foundation grants, employee matching funds and encouraging employee to volunteer. Again, nearly every company has made investments in this area. VMware Foundation made grants totaling $17.4 M to 14,122 causes. 26, 251 employees participated in charitable activities. In 2021 Illumina employee giving was $14.9M up from $1.2M in 2019. They supported 1,345 causes. It’s interesting to compare in these 2 cases there was an order magnitude difference in the number of causes with roughly the same dollar amount.

While nearly every company’s societal goals include internal facing goals there are two broad areas corporations contribute to the broader society. The last 2 categories are Societal Education & Societal Healthcare.

Fifth of the 6S Goals: Societal education

Truist Financial Corporation is a bank holding company headquartered in Charlotte, North Carolina, which was formed from a merger of BB&T and SunTrust Banks. Truist’s 2021 ESG and CSR Report Truist has invested in two programs not focused on educating employees but educating elementary and high school students. The Financial Foundations for High Schools program teaches financial literacy. Trusit cumulatively has reached 1,370,643 students, and more than 98,500 students in the 2020–2021 year. In 2021, Truist announced that all elementary students nationwide would have access to WORD Force Universe, a digital early literacy program that teaches children to read.

HCA Healthcare is an American for-profit healthcare provider founded in 1968, based in Nashville, Tennessee. HCA owns and operates 186 hospitals and approximately 2,000 sites of care, including surgery centers. Over the next three years, HCA has committed to invest $10M in historically Black colleges and universities and Hispanic-serving institutions. They made an initial investment of $1.5M to Florida A&M’s School of Allied Health Sciences.

Sixth of the 6S Goals: Societal healthcare

The sixth major area of focus for corporations is Societal Healthcare. JnJ’s Health for Humanity Report launched on June 8, 2022. The Report details the annual environmental, social and governance (ESG) performance and the Company’s first year of progress toward JnJ’s Health for Humanity 2025 Goals. The Health for Humanity 2025 Goals supports 11 of the 17 UN SDGs.

JnJ’s 2021 ESG Summary Report showed their progress some global healthcare goals:

· New commitments to combat tuberculosis (TB), in support of global efforts to find and deliver care to the millions of people living with TB who have not yet been diagnosed. Launched the J&J Centers for Global Health Discovery to advance early-stage science for developing innovations to address diseases that disproportionately impact the world’s most vulnerable people, including TB, flavivirus, and antimicrobial resistance (AMR).

· Completed the full vaccination of more than 200,000 Rwandans against Ebola. This vaccination program also represented the first large use case of the digital-enabled vaccination monitoring platform.

· Advanced several initiatives against a $100 million five-year U.S. commitment to help eradicate racial and social injustice as a public health threat by eliminating health inequities for people of color.

Genomics has been integrated into clinical practice at a faster rate than almost any innovation in the history of medicine, but inequities still exist. Implementation has been almost entirely restricted to more developed nations, and 70% of the genomes we have today are of Caucasian descent. The Illumina iHope™ program is designed to change the trajectory of genomic medicine worldwide, helping patients who may have otherwise been invisible. Families of children with undiagnosed genetic diseases often face an uncertain and unpredictable future.

In 2021, Illumina announced an expansion of the program with a $120 million commitment over the next five years to support the launch of the iHope™ Genetic Health program under the auspices of the nonprofit Genetic Alliance. In 2021 they supported 300 iHope patients for a total of 1150 since inception across 24 sites.

Societal Healthcare goals do not need to be limited to those in the healthcare industry. Intel has sponsored work in several major areas. Sankara Eye Foundation and Singapore-based Leben Care are deploying a comprehensive retina risk-assessment platform in India. Netra.AI, a cloud-based AI solution uses deep learning to remotely and quickly identify conditions such as diabetic retinopathy with the accuracy level of human doctors.

Summary

Of course, some work could be classified into more than one of the goals. In HCA’s case, consider how they are contributing to #3 Community Engagement, #5 Societal Education and #6 Societal Healthcare. In May 2021, the HCA Healthcare Foundation announced the Healthier Tomorrow Fund, a new $80 million community impact fund focused on addressing high-priority community needs and health equity. The fund provides grants to nonprofit organizations in 25 cities where HCA Healthcare has a presence, focusing on areas of community need where we can have the greatest impact.

Since its launch, $4.5 million in funding has already been allocated to advance initiatives with 13 different organizations, including the American Heart Association, Girl Scouts of the USA, Volunteers of America, Central Texas Allied Health Institute and Educate Texas. Together, March of Dimes and HCA Healthcare are using their clinical data, pioneering research and passionate history to deliver healthier tomorrows for mothers and babies. .

As you can see, many of these initiatives, programs and plans are new. In the coming months, I’m interested in going deeper and wider by asking the following three questions:

· Why do you invest in the S in ESG?

· How do you decide how much to invest in the S in ESG?

· How do you choose what to invest in?

Alex Gorsky, who just retired as Chairman and CEO of Johnson & Johnson, was a guest lecturer in my Stanford class last year. He commented that in an increasing fragemented world the role of the corporation is to be the glue. I think the role of the corporation is changing and the S in ESG is just a part of that. If you’re a board member, CEO or leader of the ESG program and would like to learn about the work subscribe to my Medium posts and of course feel free to reach out in LinkedIn.