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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 - 00:00:10:
Welcome to Open Source Sustainability. On this show, Alex Lassiter, CEO of GreenPlaces, 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, Alex is talking with Brian Matt, head of ESG at the New York Stock Exchange. Brian shares his journey commencing in the late 90s in investor relations and provides a comprehensive view of the evolving ESG landscape. With a backdrop of over 2,400 listed companies at NYSE, Brian objectively highlights the growing prominence of dedicated sustainability roles within these organizations. Join us as we delve into the nuances of ESG, exploring Brian's experiences, and gaining valuable insights into the multifaceted world of sustainable business practices. Thanks for joining us, Brian.
Alex - 00:01:22:
All right. Hi, Brian. Welcome to the Open Source Sustainability Podcast. We are so excited to have you here today.
Brian - 00:01:29:
Great to be here. Enjoy any chance I get to talk to other folks in the sustainability space.Obviously, we spent some time together. It was earlier this year, I think.
Alex - 00:01:38:
It was, yeah.
Brian - 00:01:38:
I realized that we were thinking a lot of the same things in the sustainability world. I think we come from the same background of working with how companies bring the sustainability story out to, in my case, the investment community. So I'm very much looking forward to this conversation with you.
Alex - 00:01:53:
And for those of us who are listening, Brian Matt, head of ESG for the New York Stock Exchange. Obviously, a lot going on there. But I'd really love to take a step back and talk about how did you get to this point? Where did your career start? And how did you find yourself in such a, I think, really fascinating place?
Brian - 00:02:13:
I'd agree with that characterization. So I go back, if you start off, I started my career in 1998 in the investor relations world. So I spent a lot of time through 1998 through the early 2000s into the early 2010s working with companies to help them craft an investment story. And also how to match up their investment story with what investment strategies look like at the time. So over time, you start to realize that, of course, intangibles become an increasingly important part of the value proposition that companies bring out. And oftentimes those intangibles are valued not necessarily by things that are on the financial statements, but things that are outside those.
Alex - 00:02:50:
Hmm.
Brian - 00:02:51:
And you really start to see in around teen was one of the kind of the turning points there. Around that time, you start to see it with the say on pay vote that became required from investors and from issuers at the time. You then start to see stewardship teams staff up at investors. And, of course, they need to make the right decisions for fiduciary duty on what a company's pay package should look like. But they also started as they staffed up to make a lot more voting decisions at the annual meeting on things that stretch well into the governance area, as well. As into environmental and social worlds. Also around that time, you start to see asset owners start to ask more questions and start to add ESG details into mandates. So I think we see around 2013 was the knuckle where we start to see the stewardship and engagement programs ramp up between companies and investors. 2015, I switched over to a more dedicated role working with helping companies match up their story in both investment and voting decisions. Then started doing more bespoke ESG work in 2018. Then joined the NYSE. In 2021 to work with the entire range of NYSE listed companies on sustainability.
Alex - 00:03:58:
It's amazing. What a journey to get to that point. And it's, you knew when I were talking about this on the floor, I guess it was probably three months ago with, with Yext. It's just remarkable about how fast this has become. Pretty common part of businesses at a senior level to be able to staff up resources, to be thinking about this. How many in the publicly traded world, like on the stock exchange, how common is it to have at least an ESG function or just thinking about it? Like how common is this?
Brian - 00:04:28:
I'll say just about everyone is thinking about it. And again, that comes back to the demand for both the investment and voting decision purposes. Everyone, honestly, at a board level needs to be thinking in these terms simply to be able to meet investor demands, meet other stakeholder demands. But right now, when we look across, we have 2,400 listed companies at NYSE. Of those, we've connected with dedicated sustainability professionals. So there's a title that has sustainability ESG, however you want to put it in the title, for about 1,000 of those 2,400 companies. Now, that's grown rapidly over the last certainly year, two years, as companies have added more of those dedicated ESG. But I'd say the other 1,400 companies, if they don't have someone with that dedicated ESG title, it's done part-time by many different areas of the business. Within the energy space, it's often environmental health and safety is doing that type of work. Within financials, sometimes it's the legal side of the business. It really depends. There's a lot of different ways where the structure comes in from a sustainability person doing the work kind of part-time, but as an increasingly important part of their day-to-day jobs. It can be from comms, it can be from marketing, it can be from the sales. So the front end of the business in companies that generate green revenue, so many different places where those disciplines have combined together. It also means everyone has different backgrounds. So every conversation with someone who's joined this field is very interesting. I'm sure you've had plenty of those too.
Alex - 00:05:50:
Oh, yeah, it's remarkable. It's one of my favorite things about this podcast is it's a way to learn what this stuff actually looks like in different types of businesses. And it is. It's very different. Neil, as we were talking to you at Yext, they think a lot about servers. They think a lot about their employees and where they're spread out and how they travel. But you talk to a company in the manufacturing space, it's a very different conversation. And it's always really interesting, I think, to learn more about how people do this. But I'm curious, and we've had a conversation about this, too. But for those that are listening, the drive for ESG from an investor point of view is not necessarily the same thing that we might think of. We've talked a little bit about this, and it's about access to information and investors want information. But I'm curious, from your perspective, have you seen this? What are the different reasons that investors think about this stuff? Is it just investors who are just they just care about the environment? Is it financial things? Is it business? Is it business health? How does the investor think about this type of information when they're making decisions? Why is that important?
Brian - 00:06:52:
Okay, so just the background here. So NYSE, of course, we sit as the equities division of ICE, parent company, Intercontinental Exchange. Intercontinental Exchange also has a data business that sells ESG data, climate data out into the investment community. So I do speak to a lot of investors that are consumers of that data from companies. We also list, I think we just said, our 2000th ETF. We have listed on the New York Stock Exchange here. So the asset managers that are building out those strategies to create an ETF product that, of course, produces liquidity benefits, etc. We speak to those folks as well. So from talking to the investment community, really, first and foremost is any asset manager has a fiduciary duty to operate on behalf of their asset owner customers. Now, if it's a mutual fund, that's the general public. If it's an institutional class fund, if you're working for a pension fund, endowment, trust, etc. Really, the drive and the demand that I've seen rising from ESG going back 10, 15, this might even be 20 years back, is a lot of those large pension funds are the largest customers of the asset managers. And of course, those asset managers need to compete for the business of those large pension fund customers or asset owners. Oftentimes, those were the organizations that had the first proper demands coming for, we want you to integrate ESG into your investment decision making process. That's what really opened up asset managers starting to compete with each other, having stronger ESG evaluation programs, coming up with different types of dedicated strategies. You can see all types of strategies that are even, up to this point, values based as well. But it really started with that part of the program. Now, what that meant is investors staffed up and added ESG research staff, data resources to be able to bring the data in to evaluate companies, in addition to the stewardship teams that have the back and forth with companies and will ask questions. About the details behind governance behind how they approach climate. But after that, now you're starting to see in certain sectors in particular, even just the line sector analysts that language as well in the utility space. Think of just about every utilities analyst speaks climate. They have important driving force behind the business models these days of energy, electric power producers, et cetera. Maybe a little bit less so in the health care space. If you're a biotech company, maybe climate's a little less.Material for you. Some of those analysts are still learning to speak that language, but I think it's worked its way through the asset management community, even at just line analyst level. And there's lots of good research and tools out there that are teaching the rest of the investment community. In the long run, I've always thought ESG investing just becomes investing. It's another set of tools that you use to make an investment decision. Just happens to not be structured the same way as an income statement or a cashflow statement.
Alex - 00:09:42:
I feel the same way. I think this reminds me, and I come from food service, so I think the way that menus have changed over the last 15 years, it was first, here's the calorie counts on the menus. Now it's... You go to a restaurant and what farm that chicken came from and people generally want to know that information. And I think it's just as consumers, we like to learn things and we make decisions based on information we have. And I like that statement that ESG investing is just investing. It's it is. It's just in my view as well. It's. These are just more things about a business. And if you're an investor, you're going to look at different things and make decisions based on who you're representing and what you think is going to beat the market, which I think makes it more fun.
Brian - 00:10:21:
Agree.
Alex - 00:10:22:
So I'm curious, as you're seeing this, obviously, there's a group of these companies that have employed somebody in this role. And obviously, there's a looks like 50 to 60% of people maybe don't. What does that mean for them? Is it are these folks responsible for reporting? Is it for being able to communicate with investor relations? What is it? What are they doing, as you see? And how does that kind of change based on the type of company?
Brian - 00:10:48:
So rule number one for any company, the right structure for any company in dealing with these issues is to know who your stakeholder groups are, then have the individuals that interface with each of those stakeholder groups, all talking to one another about the extra financial or non-financial issues that exist out there. So that ESG committee, or whatever you happen to call it, that operational group really has to be talking to one other. First step for any company is you really need someone to drive that process to quarterback that room when it comes to taking in feedback from customers, from investors that probably going to come through investor relations, from employees that might come in through human resources or other parts of your business, from regulators that might come in through government affairs. You'll need to have a single decision making process that takes place because anything that you do that affects what you say to regulators will also affect what you say to customers. That has to be organized. So the start of that program is for strategy purposes, who's the individual that can interface, control and drive the process that goes back to all of those stakeholders, take the stakeholder feedback in and use it to present a strategy to management that affects and hopefully generates value for the company in all of those spaces. Now, as you were saying, though, that to the skill set needed for that is very different depending on the type of business. And you will see folks, like I said, from environmental health and safety, sometimes that's the best fit is that individual inside an organization for an energy company might be the first best fit, knowing all the different parts and having had a lot of those stakeholder discussions. Sometimes that's the best fit, but you never know. You can have this come from a lot of different places. You can have it come from comms or legal or other parts of the organization. And then the day to day over time has become somewhat, I was thinking in terms of climate, there's a measurement process. How do I measure what's taking place inside my organization? How do I set targets against it? If I have a goal of improving diversity, if I have a goal of lowering lost time accidents, all of these things that fit out for goals, how do I measure each of those? Then how do I manage against those goals? And then how do I report out to stakeholders in whatever format those stakeholders need to receive that information to make those decisions? So that measure, target, manage, report structure works for climate, works for human capital, works for all the other issues that can come out. And you need an organization, a very organized individual that also can get buy-in from a lot of other parts of the organization to be able to create that type of value. Had someone who has to be multi-disciplinary but up talking and building relationship inside the company.
Alex - 00:13:30:
We had last week, we had JP Flaherty, who oversees sustainability for Tishman Speyer on the podcast. And one of the remarkable things that he said to me was, I know how to make a green building. He said, that technology exists. There's ways for us to solve a lot of these challenges. But he said that the part of my job that's the hardest, that takes the most strategy, is how do I work those into the business conversation? How do I take, I want this to happen. And I need to get the CFO to approve it. Or I need to do this because an investor wants this. And he said, it's a really interesting sort of game of strategy of how do I take these things that I want to be able to accomplish and relate them to the business goals and the outcomes? And that's how I can unlock capital for my job. And it seems very highly strategic.
Brian - 00:14:21:
It is. And I guess you think about there's the concept of the green premium from a revenue standpoint. Are there items that a customer is willing to pay more for because it benefits them from a scope three perspective from their carbon footprint? Or just simply there's greater demand because the product has more sustainable characteristics overall. Attacking that on the revenue line is fairly easy if you're listening to your customers, taking that feedback in. Attacking the cost line, producing products with a lowered energy input is also something that starts to generate value from that green premium within the lower sections of the industry. There's a lot of different ways to look at this, but it does tie back to the easiest ways to present that are to show if I make these type of changes have been made in other organizations, this is the value I generate within creating greater value from human capital or climate program, et cetera. Trying to get that to measurable values and presenting it to a CFO, a CEO that are interested first and foremost in what's the organization look like from a financial perspective. There's a lot of win-wins that exist out there, that companies just have to identify and attack.
Alex - 00:15:31:
It's interesting because the way that you're describing this makes it feel like this isn't as much of an additive onto a business. It's more of a new lens at which to look at efficiency. It's a new way to say. Are we optimized in the way that we should or could be? Are there better ways for us to produce more of what we have with less resources, be it cost resources, earth resources, water, whatever it might be? These are more ways that businesses can fine tune their operations to be more successful in the next 20 or 30 years.
Brian - 00:16:01:
Biggest change. I only talked to a few of these folks. As NYSE, we mostly talk to sustainability professionals, the investor relations function, corporate legal function, where you're going to see a lot of change coming in the next year, two years in particular, is in the procurement space. The procurement professional inside a company maybe was a little bit more back office sometime in the mid-2010s. At the outset of COVID, when it became very difficult to source materials to build your products, that individual became one of the most important roles inside any company. That individual is also bringing in a lot of new information to make decisions, particularly around climate, when it comes to what products you're going to be producing, what materials you're producing, and where you're sourcing them from. I find a lot of the progress on exactly what you're just talking about here has actually taken place inside the procurement space as companies are making buying decisions now based more than just the pure dollars and cents cost, but also what does it do for their scope three footprint, for example.
Alex - 00:17:02:
And that's interesting. I've seen that as well. I think Amazon's procurement report, maybe it was earlier this year, said something like 65 or 67% of chief procurement officers said that adding sustainability to their procurement process or their RFPs is a top priority this year. And that's, so that's, what's really interesting to me as well, because this is something. And I'll tell you, it reminds me a lot of cybersecurity, but watching the public companies move and the largest businesses in the world move into this, it's easy to look at it and say, this isn't going to affect me. This isn't going to affect my business. But it's just that it's that procurement roll down. That gets it all the way down to the level that even my company, we have contracts with some of our vendors that say, you need to do this and this. And I said, look, our business is not even that big. We're nowhere near a publicly traded entity. And they said, look, if you want to work with us, you got to do these things. And it just feels like this is going to get down to. Main Street pretty quickly.
Brian - 00:18:02:
That's one of those. I always try to plug this whenever I can. One of our speakers at our March sustainability event was an organization called SME Climate Hub that's trying to take all the tools that might be available to large mega cap organizations with global footprints, shrink them down to the appropriate size for SME because as a procurement organization that wants to be able to procure from smaller organizations, we want that barrier to be as low as possible. So that's one group. They have a lot of free tools out there, but I've seen other organizations try to produce again, as much as possible to lower the barriers to smaller companies being able to measure their carbon footprint, measure their water usage, waste, et cetera, and be able to communicate that out as well, but not necessarily need to spend a seven or eight or nine figure spend to measure it across the organization because they're built to be a much smaller company.
Alex - 00:18:54:
Yeah, it's one of those things where it's becoming kind of part of that good housekeeping that you do. I remember in my last business, GDPR came out. And I think at the time, we actually made a decision to just... Avoid Europe for a while. We pulled some clients out. We said, look, we can't take this on at this stage. It's strategically not valuable enough for us to do that. And we said, let's pull out. But now I started GreenPlaces now probably two years ago. And we started the process of SOC 2 compliance immediately. And it was, you have to do this. It doesn't matter how big you are. If you aren't doing this, you aren't selling a deal.
Brian - 00:19:29:
Yeah. Of course, you're speaking with Europe. Expect over the long term, even if regulation doesn't formalize with US regulators, you may see European regulators pushing forward that will have a US incidence when it comes to both companies themselves or the supply chains of those companies. That CSDD, Corporate Sustainability Due Diligence Directive, is another one that will put a lot more pressure on those procurement teams, again, to be able to verify and make sure there's no issues in their supply chains. There's a lot more data that's going to need to flow. There's a lot more agreements that are going to need to be updated. So there's more transparency between buyer and seller of any type of product going forward. Some of that will be de facto driven by companies. Some eventually will be de jure.
Alex - 00:20:12:
We even see it in professional services. We've got law firms and asset managers and accounting companies that are saying, look, I've been working with these folks for 10 years and they said, I need to do this. So I need to start doing it. And it just, it feels like it's just pretty quickly rolling downhill into this thing of, look, you just got to get started. So you don't lose a deal. You don't lose a deal. You don't lose a hire. You don't lose something over it. It's just not worth it anymore.
Brian - 00:20:35:
Yeah, I've done, we use small round tables with a lot of sustainability officers. So over the last, I've probably talked to 250 total sustainability officers over the last nine months. We'll get them together in groups of 15, 20 or so in a room and just share successes, challenges, et cetera. But of those groups, one of the common questions we ask is where is your net new coming from? When you think about net new measurement, net new disclosure over this last year, the drive for that net new has come much more from customers. That has the year prior to that really coming from the investment community, say the voting platforms, the, the voting profiles for each investor and the, the changes that are made here to those, you actually saw very little change from the 23 voting policies of investors to a 22 voting policy that showed that they really didn't add as much this year in terms of net new asks of their company universe, but certainly the procurement teams out there, the customers. And that's really where we're hearing a lot more of the drive coming regulators at different times have come up, but this has really been the year of the procurement organization gathering more information.
Alex - 00:21:42:
Yep. That makes total sense. That makes total sense. It's becoming a reality for everybody. Now on the investor side of things, we talked to a lot of companies that are eyeing the public markets and they're thinking about taking that step. Maybe they've started the roadshow process. Maybe they're a couple of years back and they're getting their books in order. There's no obviously regulation in place in the, in the, from the SEC perspective today or anything like that. But, but, Is this something that you see as a norm, as part of that, the steps you take to go public today? How does it perceived in that process for any company that's looking to list?
Brian - 00:22:18:
So let's walk back into, for a company that's looking to list, you're coming from one of a few different ownership structures. It's possible you're bootstrapped, you're management owned. It's more likely you're PE owned or VC owned. So first and foremost, private equity firms have staffed up and added a lot of skills in this space. I'd say we talked to a lot of the private equity firms that, again, are our source of newly listed public companies. Just about all the large private equity firms have at least that ESG lead or sustainability lead across their organization, that can serve someone as an advisor to their portfolio companies, but also just to measure the entire portfolio and be able to report it back to LPs, to their unlimited partners. So if you come in PE owned, that means you've probably had at least some basic diligence done on you simply for the PE firm to acquire you or for the PE firm that's thinking about an exit. Those PE firms have a lot more capabilities these days and have seen it. There's a couple of weeks back, there was a comment published. I think about half of all M&A professionals that worked inside a PE firm had seen a deal fall through.
Alex - 00:23:23:
Wow.
Brian - 00:23:23:
Based on ESG concerns. That's something that no PE firm wants to take that type of risk. They need to know what those risks are if they intend to vote a company out in the public markets. I'll say it's coming there with VCs as well. Some of the, depending on your structure, some of your VC firms are also going to do some due diligence, even if it's a broader organization or broader set of investors. They'll still be looking for what are the, especially the risks inside a company. And potentially VC firms were really the drive behind all the new climate investments that were moving. That big rush in 18, 19, et cetera, maybe into 20 of new climate investments. A lot of VC firms are looking for ways to bring those to the public markets too. So we've seen a lot of those. Bootstrap companies, a lot of times a bit smaller, very heavy into tech or biotech. They're learning to speak that language. Sometimes some of the first questions they'll get will actually be out in testing the waters roadshow as they start thinking about the public markets out there. After that, the way we've seen things is that once you reach that T plus zero, so you've floated your shares, they're trading today, T plus zero. It's really after that is when you start to see the ramp of investors, the dedicated investors that have that specific ESG focus starting to enter those positions. You get added to agencies, the scoring or rating firms pick you up. So you will see a ramp once you're a public company of increased investor interest, even after you become a public company. So the point is. You want to have your story down as a public company, know who your stakeholders are, your material issues are. Make sure you know what that strategy is and be able to speak about it to investors. But there are a lot of firms that haven't done that full detailed evaluation of a carbon footprint or climate for those things at time zero. But they will be pushed to do so more later on by the investment community. Sometimes you see that just as an evolution of over time.
Alex - 00:25:16:
It's interesting. It seems to keep coming back to this view of, look, you got to be able to answer to it. So you got to have some amount of ability to understand what's going on internally. What does that mean for you and how do you communicate with people? Because people want to know information. If you can't speak climate, nobody can in your business, you're having a tougher position or it's a more difficult, it's more difficult phone calls that you're having to make, which you probably don't want to be dealing with.
Brian - 00:25:39:
That would start to stand out over time.
Alex - 00:25:42:
Coming back to the stock exchange, I'm just generally curious because I know y'all do a fair amount of sustainability and ESG internally to yourselves too. What's something that's surprising about ESG at the stock exchange? I know that you've gone through a lot of changes over the last five or 10 years. What does that look like internally and what are some things that y'all have been working on and thinking about as where you fit in this universe?
Brian - 00:26:03:
I'd say one of the things that folks with our relationship, again, NYSE as the equities division of my parent company, Intercontinental Exchange. If you Google up ICE, sometimes we're not the first thing that comes up on Google. It's not as household a name in some cases. However, if you're in the investment community, ICE is a very well-known name. ICE is one of the largest distributors of data for investment decisions. Out to investment community today. We've really just over the last couple of years entered both the ESG data business and the client data business. One of the things that a lot of folks don't know that we're in the space of collecting that as reported data. Part of what we offer our listed companies is a benchmarking tool that shows you what you look like as ESG data today that's used by investors compared to other companies in your space. What are some of the gaps there? We can do that just based on what we have right now. Beyond that, we've entered both the climate transition risk as well as physical risk space. We do physical risk analysis for anything that has a geospatial footprint as well as climate transition analysis. When you're looking at a portfolio of any type of security, what does that portfolio look like if you need to start meeting a 2030 or 2025 goal? We're doing that inside ICE. The other thing that people don't really connect with us, if you've ever seen a carbon price quoted anywhere in any publication, pretty good odds. It's quoted based on theICE Futures.
Alex - 00:27:26:
Wow.
Brian - 00:27:27:
European carbon price is quoted from EU ETS, UK ETS. The best, most liquid market, when you think of your valuation hierarchy, the best market to trade on to be able to evaluate a price of something is one that has a lot of buyers and a lot of sellers trading. And that's what we have in the future space. So we can give you a good idea of what a ton of carbon in Europe, in the UK, or out even in the voluntary markets is worth based on a quoted liquid trading market with transparency on both. So, we also do the same thing in the renewable energy space. We trade futures on REC markets.
Alex - 00:28:01:
Yeah.
Brian - 00:28:01:
So we can give you a good idea of what renewable energy will cost you in each of the different markets across the US over the next one, two, three years, et cetera. We're already using the price discovery capabilities that we have in exchange to really be an input out to companies to help them think about what should the right price of carbon that we're using to make decisions be to help US from a corporate finance perspective. So that's, we're not always connected with NYC and ICE being that chip, but there's a lot we're doing that of course, then our listed companies can benefit from too.
Alex - 00:28:32:
Well, that's just really great because I think obviously that's come so far, even in the last conversation we had, that's even further than the last time we chatted on it. And that's just going to help people understand the challenge I always find with sustainability is this stuff is complicated. Just frankly, it is. And I think like I was one of the first things I was telling folks is a carbon footprint is not really a amount of carbon. It's carbon equivalent. It's an index. It's an index of all the greenhouse gases and everything that you do. And it's, it's as much of an index as anything else. So just general health, that's a good index because a lot of people use it. But when you simplify things into something that's a little bit clear and a metric that they can look at, it just helps people weigh decisions better. It can help executives make better choices. It can help them as a CEO. You're constantly looking at so much data. It's helpful to pull things into something as simple as a price on carbon, because you can think about it. You can say, this is how I'm going to deploy resources better. And I think it just seems to be a big help for folks.
Brian - 00:29:35:
Yeah, we published that there's a global ICE Global Carbon Index, takes the carbon compliance markets, so the California credit market, as well as the European credit markets. It combines up the prices of each of those and shows the progress of pricing across essentially all compliance markets over time. That can give you a delta as to where global carbon markets are going. There's that famous, there's that World Bank chart that shows the price of carbon across probably 80 different types of programs out there. Eventually, that should all start to converge, hopefully with Article 6, with some of the things that are going on at COP that will be able to make carbon more fungible. But one of the best ways to look at it is just we can get you to a single number of with those carbon compliance allowance markets. What's the price trend across that over time? That can help you think about what your decision making should be for the future. When you can see the trend line.
Alex - 00:30:25:
That's fascinating. So a question I always get a lot of times, is this something that, is this going to be a reality for businesses in five years, 10 years, 30 years, 50 years? Based on the amount of infrastructure you've just described that's out there, it seems like it would be hard to shut that back in a box. But what do you foresee in the future? What are people going to be thinking about?
Brian - 00:30:44:
So I think what will happen when I look at companies today, so much of the disclosure that the NYSE listed company market is providing is de facto disclosure. It's simply my stakeholders need this information to make decisions, so I'm going to report on it. I think over time, we are going to see regulators catch up. It's going to be from all different formats. You've seen the European regulators, of course. Very soon, we're going to have additional state regulations. New York Department of Financial Services, there's another bill in California that would require climate disclosures. So you'll see state regulators, local regulators may be more involved. I think you'll also start to, ideally, one of the things companies always tell us is I think you will see more harmonization over time. GHG Protocol has been around for 20 years. We now have a pretty good idea of how to measure, as you mentioned, the constituent gases and the aggregate index of CO2 equivalent once we've had this in the market for 20 years. It will take some time, but I think we are starting to harmonize on the definition of what can be measured. And I think in general, we talk to a lot of regulators through our relationships with the NYSE. Obviously, we're a regulated entity ourselves, so we talk to CFTC, SEC, etc. Those regulators are all talking to one another through IOSCO and through other international regulatory organizations. They're aware of the benefits of harmonization, of coming up with hopefully a single standard, a single set of definitions that will prevent companies from the... Allow them to write once, read many. I think it was always the tech phrase as opposed to write many, read many over time.
Alex - 00:32:15:
Yeah, that makes total sense. And I think that'll help to obviously create a lot more efficiencies in the market around people responding to 20 different surveys from different types of people to be able to at least have one central way to view this stuff. But that's really interesting. So what I'm hearing is obviously amongst traded companies, high proportion of folks are already thinking about this, but this is the age of procurement. I like to hear it like that. So there's a, the next phase of this is driving down that supply chain. If you're a vendor, a supplier, service company of a big company. Is this something that you, should start thinking about? Is it something that. If you haven't started thinking about, maybe you're behind, like where, if you're here in this and you're a company and you say, look, I work with a lot of these companies, but I'm not really sure when this is my time to begin. Am I behind the curve or am I ahead of the curve or what do I need to be?
Brian - 00:33:07:
Your sales organizations for every company are starting to learn to speak some of these languages because they're talking to the procurement teams that they'll need to get passed in order to close the next deal. I'd say there's always going to be an education process. You mentioned that there's so many new terms, so many new definitions for each industry. There's a little piece that may be very important to anyone who faces an outside customer or stakeholder outside the firm. Staying close to your customers, no matter what, in any business, having a lot of those conversations with your customers and hearing the things that they'll be looking for. It works the same way in the asset management world as well. Asset managers should have a lot of conversations with their asset owner or investor customers to find out what they're looking for. Just that back and forth becomes the relationships you have. Become a competitive advantage when it comes to something that you might need to be able to, you might have to measure and report on as an organization, make that business decision that you're going to report on it. But you might have to do that fairly quickly in order to get to that next contract, get to that next deal or to meet that next investor's demand. It's being far ahead of that process so that when that particular request from a stakeholder comes in, having the process to decide, should we measure this? Should we disclose this? Should we disclose this publicly? Should we target what we're going to do on this going forward? Each of those decisions, you want to have gone through a few times so they're not necessarily something that moves slowly that prevents you from meeting a particular time stakeholder demand.
Alex - 00:34:39:
Meaning you don't want to start the process of doing this as the RFP has begun.
Brian - 00:34:44:
Exactly, yes. That's a much shorter way of putting something that I added a lot of business lingo to, but exactly that. I've heard plenty of stories from companies. Again, as we talk to sustainability leaders, plenty of stories from companies that have started to speed up that process and be able to have that ESG committee, again, all making decisions together because what affects one affects all the others.
Alex - 00:35:07:
Yep. Yep. Makes sense. Sounds like it's part of good housekeeping at this point and at least getting yourself a baseline so that you're ready to go and going into Q3 and Q4, make sure that you're prepared. Brian, this has been great. Are there any questions that I didn't ask? Are there things that I didn't go into that I ought to?
Brian - 00:35:23:
Boy, this is one of these conversations that could go on for hours if we wanted it to. I'm sure our audience will probably start to nod off if we went that far, but glad to do this again sometime. Again, we take a lot of feedback in from both the investment community and issuer community. And of course, it's always helpful to share that with others that are helping to make decisions. Just in general, for the companies you're talking to, there's a lot of folks, depending on your audience here, even folks outside of the sustainability world, there's a lot of interest in getting involved in sustainability inside companies. And that's one thing that I think the best companies do a good job of, taking that interest in sustainability and climate and human capital and others from even all rank and file employees all the way up through management. And harnessing that to be able to create more value inside the business, create more connections, and also improve the communications with suppliers, with customers, with every other stakeholder outside the organization too. There's a lot that you can do to get involved both inside your company and outside your company, no matter where you sit inside a company today.
Alex - 00:36:26:
That makes sense. Good advice from a smart person. Thank you so much for the opportunity to be able to chat with you. I really enjoyed this as always. So thanks for joining us today.
Brian - 00:36:36:
Great talking to you today.
Voiceover - 00:36:37:
Thank you, Brian, for joining us. And thank you so much 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. We'll talk with you next time on Open Source Sustainability.