The intersection of ESG, Risk Management and Technology:
interview with NASDAQ’s Evan Harvey
Evan Harvey - Global Head of Sustainability
We recently caught up with Evan Harvey, Global Head of Sustainability at Nasdaq, to talk about the intersection of technology, risk management, and ESG - and how the current coronavirus pandemic is accelerating their dependencies.
Harvey highlighted the growing business reliance on technology to monitor the external risk landscape and capture reliable information to inform strategy planning, risk management and reporting. He reinforced how digital solutions help corporations and investors speak the same language about material issues, and the role that stock exchanges play as facilitators of information.
Driving ESG integration: the role of stock exchanges
Susanne Katus: What role do stock exchanges play in driving ESG integration in business, for both corporations and investors?
Evan Harvey: We have been working with our listed companies for a long time on ESG. This means helping them find best practices, helping to set standards, and making sure they get the credit they deserve from ratings agencies and investors.
We also have products and services that are targeted to other aspects of ESG in the marketplace - index creation, ETFs, the sustainable bond market. Our role is to try to facilitate the flow of capital in more sustainable directions.
And we’re also implementing these practices as a corporate entity ourselves, for instance, with our own materiality process. Given the pace and scale of change in the ESG landscape, we recognize the need for digital solutions like Datamaran to capture reliable information and get things done efficiently.
Katus: How has Nasdaq's thought leadership influenced the market?
Harvey: Mainly in relation to the value of transparency and data on ESG issues in the marketplace. We sit in-between listed companies and regulators, and we have led the way on looking at what companies can report on and what sorts of disclosures investors actually want to see. This has meant a move towards more data-driven based reporting and processes.
We put out the first ESG reporting standards guide two years ago, and it had a fair amount of uptake. Now, almost half of all exchanges have followed our lead and are working with listed companies and investors to come up with best practices. We launched a new guide last year, in May 2019.
"Given the pace and scale of change in the ESG landscape, we recognize the need for digital solutions like Datamaran to capture reliable information and get things done efficiently."
Evan Harvey - Global Head of Sustainability at Nasdaq
The value of external stakeholder voices: stakeholder capitalism
Katus: A defensible strategy, materiality and risk management process requires input from various reliable stakeholders. Which types of external stakeholders need to be incorporated, and how can you ensure that these are sufficient?
Harvey: We have always encouraged companies to expand their stakeholder set. In our materiality guide, we included both input and output stakeholders. We believe that well-run companies and well-integrated management teams look at all sorts of decision points, audiences, and voices when it comes to finding value.
Especially when it comes to ESG, broader stakeholder analysis and integration is key. There’s only so much you can do by hand. You need technology. You need a disciplined way to integrate stakeholder voices and data into your business process.
The role of technology: infrastructure for oversight
Susie: How do you see technology supporting ESG integration?
Evan: We have been talking about the role of technology for a while, but it has taken on a new urgency - the need to use technology to fill in expertise and communication gaps. Digital solutions like Datamaran help companies get a handle on key issues.
This is especially evident with stakeholder integration. Datamaran enables you to get voices outside of the company into your analysis in a credible way. When you do your materiality analysis, you can’t report on 40 or 50 different things, or follow every reporting standard. You need to isolate the inputs that are key to your business. You need a defensible, technology-driven process to back that up and to monitor the risk landscape as it evolves.
Susie: How has this influenced reporting in the last few years?
Evan: I think that simply adhering to standard reporting deadlines doesn’t cut it anymore. Companies need to know where they are on a continuous basis, and their stakeholders want that information as well. The era of materiality assessments taking place once every few years is long past. Datamaran helps in getting an up-to-date, data-driven baseline quickly and effectively. This is absolutely essential in today’s digital world.
Susie: How does data help with executive buy-in?
Evan: Getting executives and board members to look at ESG as an integrated business function is crucial. I will also say that so much ESG data is traditionally based on past performance, and not forward looking. The more real-time you can get with your data, the better able you are to forecast where your company needs to go. That’s the kind of information that stakeholders and decision-makers want to see. And you can’t be both timely and accurate in producing this information without the very latest technology.
"Datamaran helps in getting an up-to-date, data-driven baseline quickly and effectively. This is absolutely essential today. You can't be both timely and accurate in producing this information without the very latest technology."
Evan Harvey - Global Head of Sustainability at Nasdaq
How the COVID-19 crisis is impacting ESG
Susie: How has the current crisis impacted your ESG strategy?
Evan: If anything is going to drive home the value of ESG, especially the S-spectrum of concerns, it's this crisis. Questions like how to distribute health benefits, and how many people actually need to be on-site to run the business, have never been more critical.
My colleagues I have seen only an increase in focus on ESG. Especially in how better ESG practices could have not predicted this, but made companies more resilient.
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