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We interview sustainability leaders across industries to learn what they are working on and how they are steering their companies toward a climate-friendly world.
Voiceover - 00:00:09:
Welcome to Open Source Sustainability. On this show, Alex Lassiter CEO of Green Places, talks with sustainability leaders to learn how companies are adapting their business models to be in line with sustainability goals. We believe sustainability has to be open source to be successful, and these leaders have offered us a glimpse inside their strategies and the hopes that we can all move forward together. We are fascinated by some of the unique challenges these sustainability leaders face and are excited to dive deeper. In this episode, we delve into the critical intersection of sustainability and business operations, focusing on the evolving landscape of ESG considerations with Christine Uri, a seasoned consultant with a legal background and extensive experience in guiding companies through the integration of ESG practices. Together, Christine and Alex explore the growing significance of ESG, its impact on businesses, and the strategic advantages for those who proactively embrace sustainable practices. Stay tuned for an insightful conversation on how sustainability is reshaping the business landscape from regulatory compliance to investment dynamics.
Alex Lassiter - 00:01:20:
Welcome to Open Source Sustainability. Christine, thank you for joining us today.
Christine Uri - 00:01:25:
It's my pleasure. I appreciate the invitation, Alex.
Alex Lassiter - 00:01:28:
Absolutely. So I guess to kind of get started, tell us a little bit about yourself, what you're doing today, some of your background and kind of what gets you into sustainability.
Christine Uri - 00:01:36:
So I am a lawyer by background and I have spent a lot of time in private practice, about 10 years and then 10 years in-house practice where I was the chief legal officer and a chief sustainability officer in a company, ENGIE Impact, that worked with Fortune 500 to reduce their climate footprint. And today I work with general counsel. I'm a consultant. I help general counsel with ESG programs. I do training for executives and boards and then help build strategy and roadmaps for implementation.
Alex Lassiter - 00:02:13:
So for those of us wondering how the legal profession overlaps with ESG, kind of curious, why is the general counsel thinking about ESG? Why is this a legal or compliance issue?
Christine Uri - 00:02:26:
Yeah. I mean, for my personal journey, I just started because I was in a company dedicated to climate and I found it very interesting. So I managed to throw my hat in very early on into sustainability becoming top of mind for companies. Most general counsel's journey and in-house team's journey is very different. Most have not been very involved in sustainability or ESG over the last few years, but it has become a real top of mind issue. If you look at polls of top five risks from general counsel, ESG is on those top five risks. And it's because you have several market changes. You have new regulations coming into effect that are going to require disclosures from a set of companies. Those are usually European or larger business enterprises. And those regulations require that they collect information from their supply chain. So it's indirectly rolling through the different company sizes. And a lot of times those requests end up on general counsel desk because people don't know where else to send them. And we have to figure out as a company how to get the information. Investors are making demands for information. It's really common. And then I was just reading yesterday. That's. The amount of ESG litigation, primarily greenwashing, grew five X in the last year. Well, that definitely puts it on general counsel's plate. So they're kind of new to the table. And that's why I really focus on helping them.
Alex Lassiter - 00:04:04:
So you mentioned a couple drivers there, but I think for a lot of folks, they think of ESG reporting regulation as a European concern or a global company or even a Fortune 500 concern. But the way you're describing it is more of this indirect where Microsoft is a global company, has operations everywhere, they've got big sustainability commitments. Are you seeing that next level being the suppliers and service providers of those larger companies? Is that who is dealing with this today?
Christine Uri - 00:04:40:
Yeah, absolutely. Your enterprise level companies are directly hit by these regulations, and most of them have set net zero targets. That means they have commitments that are publicly made that they need to meet anyway. The middle market companies are being impacted, and a lot of times they don't quite know why yet. The urgency and the number of requests is increasing. A lot of that comes from European regulations and climate reporting, Scope 3, which is a carbon category that applies to your supply chain. Companies that are required to report on Scope 3 emissions, either because of a regulatory requirement or because they've met a net zero goal, have to collect that information from their supply chain somehow. One of the ways they're doing this is in these requests. You might not be impacted directly by the regulations, but you're getting this client pressure. The other piece that you're seeing is investors. Investors are worried about managing their risk across their portfolio for a Private Equity environment. They're worried about how an inability to provide this data might impact exit valuations. Even if you're not directly subject to the regulations, the regulatory frameworks that are being put in place are creating expectations for that middle market.
Alex Lassiter - 00:06:06:
This reminds me a lot of general vendor risk assessments. You've got diversity risk. You've got... Human animal welfare, you've got modern slavery, you've got cybersecurity. There's all of these things that, you know, as your business grows and you sell into the enterprise that middle market companies have to have to commit to. Is that how is that where this is coming? Is it a continuation of that? Or is this something I'm sure a lot of people think about the election cycle? Is this a moment in time or is this a continuation of a longer trend that you've seen?
Christine Uri - 00:06:37:
It's a continuation. You're absolutely right that we've seen a lot of these different regulations come into effect. I always compare it to GDPR and how GDPR came into effect. And then all of a sudden companies had to adopt, even if they weren't in Europe, weren't subject to it, or didn't think they were subject to it, although one can debate that if you have data transmissions, they had to adopt these practices. And then you had RFPs asking if you had the practices, then you had contract provisions that were requiring it. So it is a continuation. What companies are really getting hung up on now is the environmental aspects, because for a lot of companies, the environmental requirements, it's a new language. They haven't put together the data that they need to respond to these kinds of requirements. And it's a new learning curve, just like privacy was five, eight years ago, depending on your geographic location.
Alex Lassiter - 00:07:33:
So that... That does feel very legal. It feels like one of these things where whether it's a supplier code of conduct or anything like that, that it's just part of the things that you have to do today to be able to compete. Are you seeing any sectors where this is predominantly prevalent? Is it a financial services thing in the middle market? Are you seeing general business? I mean, law firms, who's getting hit? Where's it coming from, I guess, in the midst? Are you seeing any sort of trends there? I'm curious.
Christine Uri - 00:08:04:
Well, it's definitely B2B businesses are where you're getting asked these questions. In a B2C, a business-to-consumer business, you have a different range of issues related to your consumer expectations and ensuring. That your sustainability communications are clear and don't hit any kind of advertising regulation or greenwashing issues. In a B2B context, companies are taking different approaches. Some large companies, and Salesforce is really well known for this, are just putting out these requirements and requests across the board. It does not matter your size. It does not matter what you're doing. It's more about trying to create a cultural change where everybody's paying attention to this. But where I think it's the most impactful is if you are in some kind of manufacturing business, some kind of business that sells a hard product. Because you're more likely to have a higher environmental impact. The other piece where you do see it is if you're a company that is a significant cost. Because what somebody will do if they're collecting this data is they'll go through a list of their vendors. And they'll start by doing it with vendor spend. So they'll look at the vendors that they're spending a lot of money with and start there. And a law firm might hit that threshold depending on how much work you do with a client. So if you're providing very significant services to a client to where they're getting a bill that's going to come up where they're pulling the top 80% of their vendors, you are probably going to be asked about this.
Alex Lassiter - 00:09:41:
That makes a ton of sense. So we've seen it in staffing as well as another one where people sort of. It's bubbled up to the point where we get asked a lot, will this be a differentiator for me? So that was a question I've heard from some clients of, hey, if we do this stuff, and we do it really well, we don't just participate. Is this something that is where... Building more relationships with customers and acquiring new ones. Is it something that we can tout? Like, should we be investing or accelerating our efforts here? Or do we just meet the expectation? How do you sort of think about that?
Christine Uri - 00:10:14:
Yeah. Well, you need to look at who your client base is. Certainly, if your client base are companies that have set public targets and are really trying to be leaders in the space, they're going to be more interested in working with companies that have a similar profile and are aligned with their values. So in that way, being able to go in right now and say that you're ahead of the curve, you have this data, you're aligned with the values, you believe in this, can have a positive differentiation. The other piece though, is it's going to be a very short period of time. I would say 12 months before this becomes a drag and companies start losing business if they are not able to meet the requirements. So 2024 is a critical year, especially for your area, carbon reporting. You don't come up with a carbon report overnight. It can take a few months, even if you have great services. In place to collect the data, to vet it, if you need to get it assured. So right now, companies, there is still an open window to be best in class and to have that be a differentiator, but you really need to know that it's very quickly going to become a drag on your sales if you don't take action.
Alex Lassiter - 00:11:32:
It really does, the more you describe it, remind me of GDPR. In my last company, when GDPR came out, it was very much like... What's your exposure to Europe? What are your international plans? And you can kind of mitigate against it. You can hide from it. But then as it moved into California's version, it suddenly became even in this company, we were. We began SOC 2 compliance within two weeks of founding. And I think almost every one of our clients has asked for it. And had we not done it, we wouldn't be able to compete at all. I mean, we couldn't even participate in RFPs. Are you seeing a similar trajectory here? Do you think it will become the GDPR of 2024-25?
Christine Uri - 00:12:12:
I do. I've already heard from industries where they're putting out these ESG requests and RFPs. And honestly, if somebody can't provide it, they're just taking it off the table.
Alex Lassiter - 00:12:24:
Wow.
Christine Uri - 00:12:24:
They're just, they're in it industry by industry. This was a US industry association that I was speaking with, but that's how industries are starting to pop over. Now, is that every industry, every purchaser? No, it's not there. But I do think it'll become table stakes for doing business as these regulations take effect. And keep in mind, there's already a California climate reporting regulation that has passed that impacts public and private sector. And really, you don't have to be very large. It's a billion a year in revenues, which might sound like a ton, but there are so many companies in this country that meet that, then once you have, let's say, your billion plus companies meet that regulation and you're competing against them, and you're a $300 million company, then at what point does this become something where you're not going to be able to take on your larger competitors? I'm guessing that's what happened with your company in SOC 2. It's you had to be able to compete with larger companies.
Alex Lassiter - 00:13:33:
We just weren't going to win the deals. I mean, with what you described of going into an RFP, it wasn't like. Are you SOC 2 compliant? It was, well, of course you're SOC 2 compliant, right? And if we had said no, it would say, I'm sorry, this isn't going to work. Like we can't even involve you in the process. This is a matter of you even being able to participate. And on that California legislation, I think about that same sort of indirect, because all of those billion dollar companies, their suppliers are. $50 million companies and $100 million companies. And suddenly it just gets to the point where you just really can't hide from it.
Christine Uri - 00:14:08:
I think the other piece, we're kind of going down the dark path here, but a bigger, more positive piece, if you are a smaller company, it's much easier to implement things like a climate reporting or a carbon reporting than if you're a massive enterprise with companies spread all over the globe and different kinds of operations. And if you, if the things with a massive enterprise, because I've done this, you have so many different systems and so many different people pulling that together is, it can take a year. Like it's a lot, but if you're a smaller company and you build the systems right from the beginning, the process is going to be much more simpler. It's just going to be ingrained in what you do. People will think about it as part of their jobs. So it's one of those things where you have an opportunity to do it right from the beginning at a lower cost than. Your larger competitors.
Alex Lassiter - 00:15:02:
That makes a ton of sense. It's like doing your housekeeping early, whether it's your accounting books or anything like that. The reporting is a lot easier when you go into it early than it is to have to turn a ship around. And I imagine it would be a recommendation for a lot of folks as they kind of start businesses and think about where they are from here.
Christine Uri - 00:15:19:
I have a question for you, Alex.
Alex Lassiter - 00:15:21:
Okay.
Christine Uri - 00:15:22:
You said that you've started SOC2 earlier. I'm sure you have investors in your business. Are you seeing investors really require the climate data yet? Is that something that you're helping people with?
Alex Lassiter - 00:15:37:
So it is something that we help people with. So particularly on private equity, I would say two years ago, the trend was who gets to enforce. So a lot of majority buyout funds, I felt like were the earlier movers. So we had folks that were on the majority buyout. They viewed they were the owner of the company and therefore they had operational control and had to do it. The trend we're seeing today is moving much more down market. So we're seeing VCs who take a much smaller investment into a larger business. Have it as part of their annual reporting, have it as part of their expectation as they hit the road to go raise funds. I imagine almost everybody raising money in the next 12 months is going to have to answer to this.
Christine Uri - 00:16:18:
Yeah. Yeah, I've definitely heard that because a lot of companies are doing raises right now, that it comes up in that context. And when you go out and you need more capital and new investors, that's catching a lot of companies.
Alex Lassiter - 00:16:31:
Yeah, I think for the funds, a lot of it coincides with when they raise. So we just started working with a company who is going out to raise their... They're a company that builds storage units and other types of real estate assets, and they're going out to raise a fund. And they said, when we do this, we really want to make sure that we've got everything where it needs to. And if we're going to go ask people for money, we need to make sure that we're buttoned up and we're ready to compete so that we don't miss out on an opportunity that we could have had. But I've seen the same thing from VCs and private equity funds saying, we're hitting the road and we want to go. We want to go raise our next fund. You don't want something like this to be the reason that you weren't able to get the LPs that you need. It's a small price to pay to be able to make sure. But you know what I haven't seen a ton of is VCs making it a criteria to get the investment in the first place. So I haven't seen as much around that. But, you know, I think like a lot of stuff, it'll just become, it becomes part of what you want to know about a business.
Christine Uri - 00:17:33:
Um, Here's how I think about it with the exit prices and how I would think about it. I used to buy companies when I was part of a large organization. I was part of that M&A process. And if I were buying a company as a large company, I would not expect them to be necessarily platinum. They wouldn't necessarily have to have everything. But if they had nothing and their executive team did not know what their long-term risks were and could not talk about it in this area, it would raise a lot of questions. First, it raises a question of like, okay, what's the environmental risk and what risk do these companies have? But beyond that, is this a management team that's competent to manage long-term risks of the company? And if they don't have this button down, what else don't they have buttoned down? So I do think having that board awareness that executive awareness. Knowing what your basic data is. Being able to talk about it and how you're managing risks is a sign of maturity that as you're approaching an exit event will be expected.
Alex Lassiter - 00:18:41:
Yeah, I totally agree. I was talking to a company CFO who was just about to go through an acquisition and their bank advised them to get an ESG package, basically to get themselves ready for this next stage. And he said, I didn't think that this would be something that we would have to do. And he said, well, if you think about... The company is looking to acquire somebody of your stage, they've got a lot of things that they look at to assess, as you said, management risk, maturity, business risk, vendor risk, all of these different types of things that you haven't had to do, but in this next stage you will. And so we highly recommend you do it just to, just for anything else to make sure if it's looking at you versus somebody else, you want to be the company that that's ready for that next level. And I think you're right. I mean, I think as a part of this whole, a part of all of this type of stuff, as you think about business value, so much goes into being move-in ready and being ready to kind of take that next step. Where everybody that we talk to asks about the election cycle and politics, and I certainly have my opinions of whether that matters or not, but I'm curious from your side, do you get questions around that? And I'm curious how people are thinking about positioning this or how it's affecting how they do things over the course of the next 12 to 18 months.
Christine Uri - 00:19:56:
Yeah. U.S. Election cycle is always impactful. You can count on this, even in a potentially less eventful year. The big discussion, and I'm sure this is all around the anti-ESG movement and how that impacts things. My take on it is the anti-ESG movement is a lot of really loud noise driven by politicians in red states, and it appeals to their base. Is it putting pressure on companies in terms of the language they use? Yes. And you're seeing some unfortunate results. I saw something coming out in an article suggesting that we don't, let's not use ESG, let's use responsible business. I'm sorry, that's ridiculous. You can't, you have to use terms where people know what you're talking about. I'm fine with using sustainability. That just went out of fashion a while ago. So we switched to ESG. I would like to stop switching, but choose a term, but choose something that people can identify where you're talking about would be my two cents. But there is definitely companies that are trying to bury it. I do bury that the terminology make it harder to discern what it is they're talking about. So it's harder to attack what they're doing. What I'm not seeing is Companies pulling back on actually taking action in terms of DEI or in terms of climate or their top priorities in this area. And that's simple. Companies and boards of directors, executives have figured out there's a financial link here, and they actually need to implement these changes to remain financially competitive. Politicians don't necessarily have that concern or that understanding, and so you get all this hype around it. Now, how does that play into the U.S. Election? There's a couple of things. I mean, there's a lot of speculation on this SEC regulation that is now supposed to come out in April. I have no particular inside information on that, but my bet is either it gets kicked down the line again, or it comes out without scope three and relatively non-impactful. You can come back and tell me, Christine, you're wrong, but that's my particular prediction just because of the election year it is, and it probably isn't going to be a winner in a general election to really push that point. It gives a lot of ammunition for the right to make that change, and it would be, from a political position perspective, easier to do, let's call it, in a year if there's a Democrat in office to push that forward. So my particular prediction. My other prediction is that you're going to just continue to see a lot of noise around this because it's a little political heyday for different special interests. So you can count on it being noisy. I always try, when I'm talking to international audiences, to really peel that back because if you think about the papers that you read, if you're in the UK or Europe, all you see is these headlines that seem, it just seems insane. And it's really hard to understand that there's a whole layer of business that's just continuing to move forward on the actions, regardless of the noise.
Alex Lassiter - 00:23:02:
Yeah, it's funny. I was talking to a very prominent law firm, kind of head of ESG sustainability. And I had asked the same question and she said, Call it what you want, but nobody walks into a supermarket and says, I really want to buy a product that was made with child labor. No one does that. No one wants that. And she said, that's what this is. It's we live in a world today where there's more information available. And one of our advisors is the chief sustainability officer at Nike. And one of the things that he tells me a lot is his risk is his vendor's risk. If there's a supplier and... Vietnam or somebody else doing something unsavory and somebody finds out, it's not the supplier that's going to show up on the front page of the New York Times. It's Nike. And so he said, look, like we live in a world where anybody can take a picture of anything. You can fly a satellite over with infrared scanners looking for methane leaks. You can do anything. Any information is not if it's available. It's just when people will find out. And he said, I just sort of view this as you got to get a better handle on risk and what people are doing so you can make better decisions. And it was a new way of thinking about it for me because it really, like you said, it has. It's more of a continuation of we just are peeling back more about what we know about businesses so we can make better decisions, whether those are investors or employees or anything to that extent.
Christine Uri - 00:24:28:
I think it's a really good point on the supply chain. And this is, I believe, going to be one of the most challenging issues. Nike is a great example. They learned some tough lessons in the 2000s with respect to labor practices that they, I'm familiar with Nike. I lived in Portland for years. Everybody in Portland knows Nike's corporate stuff. But they took really to heart. And they, I think, have learned from that and embraced it and used it to roll forward with these other sustainability issues. But you're absolutely right. There's more information out there. It's much easier to disseminate due diligence. That supplier that doesn't have great practices. And all of a sudden, you're in an issue as a global company. The other thing that I think is really important to note, though, is that larger corporations have to work with their suppliers. So it can't be a situation where just, it's not possible that everybody just drops suppliers that might not have a perfect record because there aren't enough suppliers out there that are perfect. And frankly, if you just drop a supplier, especially if you're a supplier in a foreign country, that can have significant impacts on human rights and labor conditions. And you think about the employees that you're impacting at that factory. So you're going to have companies that really have to partner. So you're going to have to partner with your suppliers to improve their practices, to reduce their carbon footprint, to make sure that they're implementing things that protect the biodiversity in the area, looking at circular practices. And so these things are, we all have to kind of lift the boat up together instead of trying to just run for land.
Alex Lassiter - 00:26:13:
Yeah, it's going to take everybody. I mean, it's one of these things where this is just where the world is moving. And I think everyone's got to be. If we're all honest about doing this, then we all have to kind of do our part. And I think the very basics of that is just actually looking at information that exists. So this has been great. I would love to learn a little bit about what do you, would you sit down with somebody? What are you doing for them? Like, what is the first, what is the first couple of weeks of working together look like?
Christine Uri - 00:26:40:
Yeah. So when I sit down with someone, first I try to just get a temperature on what their company is already doing. So I've already done research on what's online. But I do have an analysis I run through of what policies do they have in place, what commitments have they made, what data are they getting in, what regions are they operating in to just do a gap assessment around what their current status is. And then once we have that, usually we make a plan. There has to be some kind of changes in the organization. That's why they've engaged me. It'll start with leadership interaction, doing some training for a cross-functional leadership team, an executive team, the board, to create a common understanding of the language, the state of the company, the market drivers, and where they need to go next. Once you have that common understanding, you set up a cross-functional working group, or you might modify the group that you have and work with that group to set what are the strategy, what's the priorities. And really, because I came from this corporate world where I was in charge of operationalizing, you name it, ethics, human rights, the arts. There are carbon strategy, water, operationalizing everything was critical. So I actually don't, although I'm a lawyer, I don't do super deep dives on the regulations. I take the top ideas, figure out what do we need to do in 2024, prioritize those, start on those things now and improve over time. So really helping them take a status check, create the internal understanding, create the strategy and roadmap, but lets them know how to prioritize and take action now. And just a little plug for you, one of the things that I always tell people is start working on your carbon footprint now. Because folks are going to expect that 2023 carbon footprint and it will take a while.
Alex Lassiter - 00:28:31:
Well, thank you. Yeah, I agree. I think just getting your books in order helps everybody help you. If you've got the data centralized, then you can begin.
Christine Uri - 00:28:39:
And looking at it, even if you have one to see, okay, is this, unfortunately there are some folks that have footprints that might not be the best. And so maybe you need to up-level that if you're going to be making a publicly available. So it's really solid.
Alex Lassiter - 00:28:52:
Absolutely. Well, for companies that are listening and see this, what's the best way to get in touch with you?
Christine Uri - 00:28:58:
Oh, you can go to my website, which is christineuri.com. So nice and simple and reach out that way. I'm also on LinkedIn all the time. I share a ton of free resources on LinkedIn. What I try to do is provide practical advice to companies. So what is the step that you actually have to take? So today, now I published a video on what do you have to do to update your supplier contracts for ESG? Those kinds of tips that teach you how to operationalize on the ground in a quick two minute bite. So you can look at me, Christine Uri, URI on LinkedIn. You can send me a direct message or just read some of the resources I put out there and see if you can benefit from them.
Alex Lassiter - 00:29:41:
Awesome. Well, Christine, thank you so much for joining us today. Sincerely appreciate the conversation. I certainly learned a lot. Sounds like this is something that a lot of folks are dealing with and sincerely appreciate all the work you do to help them get there.
Christine Uri - 00:29:53:
Fantastic. It's my pleasure. We will all make progress together.
Alex Lassiter - 00:29:57:
That's right.
Voiceover - 00:29:59:
Thank you to Christine for joining us and thank you for listening. If you like this show, be sure to leave a review and follow this podcast wherever you like to listen so you don't miss an episode. This podcast is powered by Green Places. If you are looking to reduce your company's environmental impact and reach your sustainability goals, visit greenplaces.com to learn more.