ESG & Sustainability Trends in C-Suite: The Winners, Losers, and Future Outlook
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In recent years, consumers and investors have been wielding their power and demanding corporations take responsibility for their global impact. More than 1 in 4 dollars (or $12 trillion) of global AUM is now managed under an ESG investment strategy.
This focus on ESG includes corporations being held accountable for how they handle sensitive consumer data, specifically around their Data Privacy and Protection policies — a topic that is top of mind as the 2020 U.S. Presidential Election approaches.
Over the past 5 years, corporations’ commentary on Data Privacy has increased by 920%. Below, we’ve compiled executive commentary on Data Privacy & ESG — as well as commentary from companies that have suffered major data breaches and companies that are leaders in data security technology.
- Enterprises are considering data protection a strategic initiative and are investing in expanding their tech stack to stay competitive.
- Marriott is answering to a $125 million fine and over 100 class action lawsuits. Once corporations suffer a data breach, they become vulnerable to crippling government fines, lawsuits, board action, and their competition.
- COVID-19 has led to off-prem server adoption – security technology providers like Dell and SAP are doubling down on cloud security offerings and seeing results.
Source: AlphaSense | Company commentary on data privacy in transcripts and ESG reports has increased YoY
Company Commentary on Data Privacy in relation to ESG Initiatives
Qatar National Bank, ESG Report, September 2020
To build a better future we are highly focused on the well-being of the millions of customers who depend on us to help them achieve their goals and aspirations. We do this by embedding a culture of sustainability into our business that allows us to support our customers, not just in the present, but well into the future. This includes environmental aspects, such as climate change and resource scarcity. Social aspects, such as human rights, financial inclusion and data privacy. It also includes corporate governance aspects, such as board composition, anti-corruption and ethical business practices. Collectively, these ESG (Environmental, Social and Governance) factors shape and inform our approach and priorities.
Verizon Communications Inc, ESG Report, September 2020
We recognize that protecting data privacy is fundamental to maintaining the trust of our customers and growing our business. Our company is also impacted by current and emerging federal, state and international laws related to privacy and data protection. Privacy protection is therefore a strategic priority for Verizon, and we have established strong governance measures to protect the privacy and security of customer information and to ensure compliance with privacy legislation. Verizon has adopted corporate policies and operating procedures governing how we collect, use, retain and protect data.
Mastercard Inc, ESG Report, August 2020
The Audit Committee discusses ethics and compliance and receives regular reporting regarding business risks and opportunities, some of which addresses sustainability issues such as data privacy. The Nominating and Corporate Governance Committee considers sustainability matters more generally, including overseeing the development of a human rights framework, and overseeing the management of our social impact and our environmental stewardship programs.
Sun Life Financial Inc Annual Shareholders Meeting, May 2020
In 2019 we launched a new, more impactful sustainability plan targeting 3 areas specifically aligned to our strategy and purpose: improving financial security, fostering healthier lives and advancing sustainable investing.
We introduced new data privacy principles that describe what we will do with client data, how we protect it, and what we won’t do, including the commitment that Sun Life will not sell client data.
We’re supporting the transition to a low-carbon and more inclusive economy through our investment portfolio and other actions. For example, we were the first life insurance company globally to issue a sustainability bond, and the $750 million we raised in that bond will be invested in projects that bring positive environmental or social results. MFS significantly outscored the median and the UN’s PRI signatory assessment report at the end of 2019.
Now shifting to 2020. We just released our first quarter results. Underlying earnings grew to $770 million while reported earnings declined to $391 million, mostly due to the impact of equity market declines in the first quarter.
Verisk Analytics Inc, Earnings Call Transcript, Feb 2020
Within this area of strategic focus, we are advancing how we protect data, how we acquire new data assets and how we process data more efficiently. Our relentless focus on data stewardship continuously increases the usefulness of our data and analytics for our customers. To reach the next level, we recently added the role of chief data officer in each of our industry verticals. This role is responsible for driving our data agenda. Together, our 3 chief data officers are sharing best practices across verticals to amplify the value of our data.
More specifically, the chief data officers are identifying new and valuable data assets, making our assets more usable, improving and unifying data stewardship, modernizing our data processing pipelines and standardizing data governance across the enterprise. For example, they champion the standardization and adoption of data protection methods like tokenization for sensitive information across our broad portfolio of products.
Aristocrat Leisure Limited, Earnings Call Transcript, Nov 2019
Aristocrat’s strong balance sheet and expanding recurring revenue base continues to give us broad optionality to invest to sustain our growth momentum and create value for shareholders. We actively scan for nonorganic opportunities to accelerate our progress, in particular, bolt-on opportunities that will deliver strategic capabilities. As our business grows and evolves, we are investing more in core digital, data and transformational skill sets. We also are taking a strategic approach to building and leveraging connections across our global business to bring a broader range of value-added products, services and experiences to customers and players.
Going forward, Aristocrat will increasingly seek to take industry leadership positions on key environmental, social and governance issues, including responsible gameplay, consumer privacy and data governance, and to take a transparent best practice approach to risk management. These efforts are fully consistent with our commitment to deliver long-term performance, ensure a vibrant and sustainable industry and protect the interest of shareholders and all stakeholders. Finally, we’ll keep evolving our operating model to support scalability and the continued execution of our strategy as we grow.
Equifax, Third Quarter 2020 Investor Update, Sept. 2020
As we navigate through the COVID — challenge of COVID-19, we are also mitigating or navigating several very important social issues. At Equifax, we stand together focused on creating a culture of diversity and inclusion for our employees. We believe that a diverse work environment makes us a stronger company, enabling better outcomes for our customers, partners and consumers. As we move forward, you’ll hear me and us talk more about environmental, social and government issues like diversity, consumer education, energy usage, data privacy and security, to name a few.
At Equifax, we are committed to making the world a better place. We recently launched on our equifax.com website, a new ESG homepage under the About Equifax tab. I encourage you to visit the website to learn more about our progress on ESG.
How do companies that have suffered major data breaches address business impact?
After announcing major data breaches, these three industry leaders saw their lowest AlphaSense Sentiment scores in the quarters that followed.
Below, you’ll see how executives and in the case of Facebook, the board, addressed the impact on their business.
Marriott: Breach Nov. 2018 & March 2020 ; Barclays Gaming, Lodging, Leisure, Restaurant & Food Retail Conference, Dec. 2019
So from that standpoint, I would agree that the headwinds are gone. But I also think that when you think about the security — the data incidents, I think there, it’s important for all companies to be making sure that they’re doing every single thing they can every day relative to preserving their systems and their system’s security as well as the data for their consumers and associates. And obviously, we are spending a tremendous amount of investment and time on that effort.
If you think about kind of where we are in that process, while the review of the incident is over, we’ve obviously still got some lawsuits out there, about 100 class action lawsuits that are finding their way through the court system. They’ve all been consolidated, but they are finding their way through the court system. And then number two, as you remember, there was a fine, a notice of an intent to fine us roughly $125 million that we took a P&L hit for. We’ve responded strongly with our views of that fine, and we’ll have to see where that turns out. We don’t really have a time line for exactly when we’ll have that resolved.
Facebook: Breach Sept. 2018 ; Annual Shareholders Meeting May 2020
I am presenting resolution #4, a request that Facebook’s Board take all practicable steps to initiate and adopt a recapitalization plan for all outstanding stock to have 1 vote per share. The Securities and Exchange Commission tells all shareholders to vote in the annual elections of companies in which they are invested because shareholder voting rights give shareholders the power to elect directors in annual or special meetings and allows us to make our views known to company management and directors on significant issues that may affect the value of our shares. But at Facebook, shareholders of Class A common stock do not have an equal right to weigh in on significant matters of corporate policy. Without equal voting rights, we lose our ability to oversee management through Board elections, empowering the CEO and insiders to appoint a Board that only serves the CEO and management, not shareholders.
It is no secret that our company has struggled in recent years due to repeated scandals and data breaches. These controversies have affected not just shareholders’ bottom line, but also communities, individuals and even governments. As shareholders, we were quite concerned to read when Facebook stock, “plunged as much as 20% after a month of scandal and criticism that finally hit the company where it hurts: growth” as reported by Time in July 2018. We believe that these sorts of problems are due to the insulated nature of our management and Board. When Facebook went public, shareholders already lacked the opportunity to give substantive input on company policies. Facebook’s voting structure is heavily weighted to favor insiders. Company management tried to reduce these rights further at the 2016 annual meeting of shareholders when a Class C nonvoting stock was approved despite the fact that, according to our calculations, the vast majority of outside shareholders voted against the change, a change that was eventually halted by a shareholder lawsuit.
Equifax: Breach June 2017 ; Earnings Call Transcript September 2020
Question – Manav Shiv Patnaik: Well, mainly outside of EWS, just a competitive dynamic.
Answer – Mark W. Begor: Yes. I think you know well that USIS is the selling arm for EWS in the FI space here in the United States. So they have the ability to go-to-market with the very unique TWN data, which is a competitive positive for them in the marketplace. And you also know, you think back the last couple of years of USIS 2018, they were — that business was obviously struggling following the data security breach, was in the penalty box with some customers during 2018 that came out in 2019, particularly in the second half. So we’re starting to see some real momentum from the NPIs and commercial activity by USIS with their customers, and as I mentioned, competitive wins or share gains, we’ve seen a handful of those, which is encouraging. And you’ve seen their improvement kind of pre-COVID was going in the right direction sequentially. It’s harder to see now because of the economic impact of the COVID recession. But when we look at their pipelines and their win rates, we view that as quite positive on how they’re operating commercially and competitively in the marketplace.
How are technology companies selling data security products addressing data protection?
COVID-19 and the adoption of remote work has accelerated off-premise server adoption – and security technology providers are doubling down on cloud security offerings and seeing results.
Below, we’ve compiled commentary from companies who are leaders in data security technology and how this trend has impacted their bottom line.
SAP SE at Citi Global Technology Conference, Sept. 2020
The other area, as I mentioned before, is e-commerce, where we have, with Hybris, a very strong cloud asset that is growing in the high double digits. That is in huge demand these days, in particular, with the challenges introduced by COVID, one of the core investment priorities for many companies around the globe.
And then also areas like customer data cloud, for example, where we also have a leading solution that can help customers manage the GDPR intricacies of digital sales motions in a way that is conducive to consumer preferences. So in those areas, we absolutely continue to invest, and we see great growth opportunities.
Q2 2021 Dell Technologies Inc Earnings Call, Aug. 2020
And we saw many institutional customers who have historically been in the public sector, a desktop-based or a PC asset moving to a notebook-based asset, buying more notebooks throughout the quarter. And then lastly, we saw demand on the ISG side for our data protection products, our high-end storage products and our VxRail products. Data Protection and VxRail grew double digit in the quarter on an orders basis, and we had good demand for our high-end storage in the single digits.
Q2 2021 VMware Inc Earnings Call
Question – Jason Noah Ader: I want to ask Keith’s question somewhat differently, Pat. Do you think COVID is actually growing the structural headwinds to on-prem? And if so, what are the puts and takes on your business from that?
Answer – Patrick P. Gelsinger: Well, I do think, as we’ve indicated that COVID has been a bit of a headwind for on-premise growth, and that affected us in Q2, and we clearly saw that, particularly in the Americas. Also in some segments uniquely. As you said, travel, entertainment, health care, SMB have been more affected. That said, right, as we saw — as we indicated, in APJ and EMEA, where we did see a bit more strength. Clearly, we’re seeing the pipeline building for on-premises projects and why we’re indicating the guidance that we’re giving in those areas. But when you get down to it, a multi-cloud, hybrid cloud solution set simply has compelling economics. And we’ve seen that from a number of customers now at scale and economics always matter. And the on-premise environment clearly also has some governance benefits associated with it for data management and data privacy. Also, there are certain highly sensitive security-related segments of the market. So overall, clearly, it has been a headwind, and we expect that it will be somewhat as we continue to work through the swoosh, as we’ve called it, of recovery. And there as you’ve seen in our numbers and others, there’s a lot of excitement around some of the subscription and SaaS offerings. And clearly, that’s becoming a bigger benefit for our business as well.
Q3 2020 Hewlett Packard Enterprise Co Earnings Call
We launched our next-generation of HPE GreenLake cloud services. These new cloud services span machine learning operations, container management, virtualization, Infrastructure-as-a-Service, data protection and Connectivity-as-a-Service. Now our customers can access all of our HPE GreenLake cloud services via a self-service point-and-click catalog on our HPE GreenLake Central cloud portal.
Q1 2021 Liveramp Holdings Inc Earnings Call
A final win, I’ll mention was a new logo deal with GSK, a multinational pharmaceutical company to help power and future prove their first-party data strategy. GSK is leveraging safe haven technology as core infrastructure inside its internal data environment to support the understanding and segmentation of its first-party data for activation and measurement use cases. We are helping GSK activate audience segments across a wide variety of digital and social platforms, and then perform cross-channel measurement on the back end. The global nature of our business and our ongoing commitment to data privacy and security were key reasons GSK chose to partner with LiveRamp, and it is really nice to see our continued traction in the health care vertical.