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Environmental, social and governance (ESG) programs are lightning rods for everyone from climate change deniers to those who rail against “woke” political correctness. However, though the value for ESG may be hard to grasp for some people, many others understand the value of these programs and why ESG continues to grow and become deeply established in commercial enterprises.
During a recent analyst briefing, Cassandra Garber, VP of Dell Technologies’ ESG organization and members of her team provided an overview of the company’s ESG strategies and programs. Dell’s sustainable approach to ESG offers a template for how other organizations can effectively consider and implement their own efforts.
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What is ESG?
So what is ESG and what subjects and areas do these programs address? In short, environmental, social and governance can be used to identify an organization’s material risks and growth opportunities. If ESG issues are weak or absent, investors can use their analyses to encourage companies to act more responsibly.
Considering ESG issues individually:
- Environmental – can cover a wide variety of points, including a company’s energy use, waste disposal and pollution, use and conservation of natural resources and climate. Additionally, these issues can help organizations analyze, understand and prepare for potential risks, such as how extreme weather events might affect their facilities, workforces and supply chains.
- Social – generally addresses how a company deals with and is responsible to its stakeholders, including employees, partners, shareholders and customers. In a sense, these points reflect an organization’s “character.” Are facilities safe and healthy environments? Are employees treated equally and respectfully? How does the organization interact with and support local communities? Does it donate profits or encourage employees to perform volunteer work? Does it treat customers ethically? Does it hold partners and suppliers to its own ESG standards?
- Governance – generally relates to the careful use of transparent and accurate accounting methods. However, it can also include the methods a business uses to select its leadership and how accountable it is to shareholders. It also includes risk issues, such as avoiding conflicts of interest when choosing senior executives and board members, and avoiding questionable, shady and illegal conduct.
ESG is often used by socially conscious investors and their advisors to evaluate businesses, and is also a subject in sustainable investing, responsible investing, impact investing, and socially responsible investing (SRI) discussions. However, ESG policies can also reflect deeper points concerning how a company conducts itself internally and externally.
As Dell’s Cassandra Garber said during her presentation, “When you dive in and look at how companies manage ESG, it is a proxy for a well-run business. Investors love talking about (ESG) because it shows you know your risks, short- and long-term. You know your supply chain, the people in it, the materials you use to make your products.
“When you have all of those topics mapped out, and you have strategies and plans to address them, you are a business that understands your risk and your opportunities. You are also running things well beyond the considerations and factors in traditional business planning.”
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Dell and the Value of ESG
Why are ESG programs so important to Dell? At the beginning of Garber’s presentation, she noted that, “Sometimes the term is used with sustainability, even interchangeably. Sometimes corporate citizenship comes up. Importantly ESG is not a ‘nice to have.’ It is essential to Dell’s business and to society right now. Quite frankly, that is a bit of a shift from how some of these issues were looked at in the past. But we want to make it abundantly clear that ESG is imperative to Dell’s business and is a business imperative for us.”
How is Dell focusing on and delivering on its ESG vision? According to Garber, “ESG defines our purpose as a company and is at the very top of who we are. Michael Dell says that our purpose is ‘to create technologies that drive human progress.’ Our ESG strategy ladders up to that, and in many cases, we think it perfectly articulates how we are driving human progress.”
Garber noted that there are two main “buckets” that define Dell’s ESG efforts. The first includes four “goal pillars” – advancing sustainability, cultivating inclusion, transforming lives and upholding ethics and privacy. Garber said, “These are big areas, a lot of different topics, different activities, different work that fits within them. We need a way to frame and organize those topics. The Pillars give us the flexibility to think about them, where they sit in our company, how we manage them, how we process them and how we make progress when it is relevant to do so.”
What the pillars don’t do is prioritize those efforts. Given the size of the ESG subject matter, Garber and her colleagues focused on four key priorities: climate action, the circular economy, driving digital inclusion for under-resourced communities and creating an inclusive workforce at Dell Technologies.
Advancing Sustainability
Garber then focused on the two priorities aligned to the company’s work to advance sustainability:
- Taking action on climate change – involves programs and processes that Dell is instituting in its own organization and the help it is providing customers to support the transition to net zero carbon emissions and climate resilience.
- Accelerating the circular economy – encompasses eliminating the concept of waste and keeping materials in use longer – Dell’s work to redesign, reuse and recycle its way to a better future.
Dell is also percolating sustainability concepts and practices throughout its solutions and services. For example, it is emphasizing energy efficiency and power management in its data center solutions, including Dell PowerEdge servers. Dell APEX – the company’s as-a-Service (aaS) subscription solutions – can reduce e-waste and energy consumption by helping customers reduce over-provisioning.
Dell also offers a variety of lifecycle management services that minimize customers’ e-waste production and time obligations. Finally, APEX customers can take advantage of colocation facilities provided by Dell partner Equinix. Powered by up to 95 percent renewable energy, those facilities can reduce customers’ carbon footprints and contribute to sustainability goals.
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Final Analysis
Dell VP Cassandra Garber said that in a recent Earth Day discussion for all team members, Dell’s vice chairman and Co-COO Jeff Clarke wore a t-shirt emblazoned with the phrase, “Don’t Be Trashy.” As Garber noted, “That’s a great phrase to think about for accelerating the circular economy. Our goal is to not be trashy but to reuse what could be considered trash. It’s a great way to rethink business models, to rethink innovation, to rethink sustainable material use.”
That down-to-earth approach typifies the ways that Dell considers sustainability and the means to effectively achieve its environmental, social and governance goals.