1 00:00:00,000 --> 00:00:05,800 < Intro > 2 00:00:05,800 --> 00:00:07,280 – Welcome back to Count Me In. 3 00:00:07,280 --> 00:00:09,920 In today's episode, we're joined by John Mahoney, 4 00:00:09,920 --> 00:00:13,000 an ESG external reporting project manager, IBM. 5 00:00:13,000 --> 00:00:14,339 He shares his unique journey 6 00:00:14,339 --> 00:00:18,399 and insights into the company's approach to ESG integration. 7 00:00:18,399 --> 00:00:21,640 We discuss the importance of having the right company culture. 8 00:00:21,640 --> 00:00:25,200 Support from leadership, and cross-functional collaboration 9 00:00:25,200 --> 00:00:27,880 to make ESG initiatives successful. 10 00:00:27,880 --> 00:00:30,199 So sit back and relax and let's explore 11 00:00:30,199 --> 00:00:33,280 how IBM is uniting for a sustainable future. 12 00:00:33,280 --> 00:00:39,680 < Music > 13 00:00:39,680 --> 00:00:40,840 Now, John, I want to thank you so much 14 00:00:40,840 --> 00:00:42,320 for coming on the podcast today. 15 00:00:42,320 --> 00:00:45,680 We're really excited to talk about ESG, and ESG at IBM. 16 00:00:45,680 --> 00:00:48,480 And, so, many professionals, in this space, have been reluctant 17 00:00:48,480 --> 00:00:50,859 to engage with ESG for a number of different reasons. 18 00:00:50,859 --> 00:00:52,480 But maybe you can start with talking about 19 00:00:52,480 --> 00:00:53,930 what your journey is, was to get here. 20 00:00:53,930 --> 00:00:55,400 –Of course, and my thanks to you, Adam, 21 00:00:55,400 --> 00:00:56,649 and the IMA, for having me. 22 00:00:56,649 --> 00:01:00,240 I'm excited to be a part of the Count Me In series, it's really great. 23 00:01:00,240 --> 00:01:03,149 In terms of my story, I'd say I've had a relatively 24 00:01:03,149 --> 00:01:05,159 conventional accounting background, 25 00:01:05,159 --> 00:01:08,700 in that I spent the first chunk of my career in public accounting. 26 00:01:08,700 --> 00:01:12,090 Splitting my time between audit and advisory services. 27 00:01:12,090 --> 00:01:13,560 Where I was fortunate to have the chance 28 00:01:13,560 --> 00:01:15,430 to work with some really great clients, 29 00:01:15,430 --> 00:01:18,960 and help them navigate through complex and challenging topics. 30 00:01:18,960 --> 00:01:21,520 Spanning from the adoption of accounting standards, 31 00:01:21,520 --> 00:01:24,600 acquisitions, carve-outs, stocks implementation, 32 00:01:24,600 --> 00:01:26,920 as well as, some SEC reporting jobs. 33 00:01:26,920 --> 00:01:28,830 So I was really grateful to have seen 34 00:01:28,830 --> 00:01:32,380 so many different things, early on, in my career, in public, 35 00:01:32,380 --> 00:01:35,680 and I knew I wanted my next role to be dynamic as well. 36 00:01:35,680 --> 00:01:38,560 So I was very thankful to have landed at IBM. 37 00:01:38,560 --> 00:01:43,000 First joining the Accounting Practices and External Reporting Organization, 38 00:01:43,000 --> 00:01:44,960 which is really a consultative group 39 00:01:44,960 --> 00:01:48,040 focusing mostly on technical accounting consultations, 40 00:01:48,040 --> 00:01:52,340 as well as the preparation of IBM's periodic SEC filings. 41 00:01:52,340 --> 00:01:55,420 I had always enjoyed the reporting aspect of the job, 42 00:01:55,420 --> 00:01:57,170 and helping companies craft their stories 43 00:01:57,170 --> 00:01:59,060 and messaging to external parties. 44 00:01:59,060 --> 00:02:00,990 So I knew I wanted to stay close to that 45 00:02:00,990 --> 00:02:04,220 and I was grateful that the opportunity at IBM afforded me that. 46 00:02:04,220 --> 00:02:07,480 So, as you can tell, I don't have an ESG background, 47 00:02:07,480 --> 00:02:10,530 but I did know I wanted to continue to explore new topics. 48 00:02:10,530 --> 00:02:12,140 And with all of that being said, 49 00:02:12,140 --> 00:02:13,959 I had been keeping an eye on the energy 50 00:02:13,959 --> 00:02:16,530 in the ESG space, and I had expressed interest 51 00:02:16,530 --> 00:02:19,190 to stay involved wherever possible within the group. 52 00:02:19,190 --> 00:02:22,430 So when the opportunity arose to make it a full-time job, 53 00:02:22,430 --> 00:02:24,400 I jumped right in headfirst. 54 00:02:24,400 --> 00:02:25,810 And really saw this as a great chance 55 00:02:25,810 --> 00:02:28,459 to apply the skills that I've been working on, thus far, 56 00:02:28,459 --> 00:02:30,520 in my career to a new area 57 00:02:30,520 --> 00:02:33,520 and one that was not only hyper-relevant, in the time, 58 00:02:33,520 --> 00:02:36,599 but also deeply purposeful in terms of subject matter. 59 00:02:36,599 --> 00:02:40,360 We spend a lot of time working on dollars and cents-related topics 60 00:02:40,360 --> 00:02:41,840 and working through financial statements, 61 00:02:41,860 --> 00:02:44,200 and this was just a really exciting opportunity 62 00:02:44,200 --> 00:02:46,860 to apply my skill set in a different forum. 63 00:02:46,860 --> 00:02:49,850 So, well, I can't speak to reluctance, personally, 64 00:02:49,850 --> 00:02:51,030 I'd even venture to say that 65 00:02:51,030 --> 00:02:53,010 we're probably passing the point of reluctance. 66 00:02:53,010 --> 00:02:56,440 But for those that are hesitant, I'd encourage everyone to engage 67 00:02:56,440 --> 00:02:59,240 and start exploring the topic and draft standards. 68 00:02:59,240 --> 00:03:01,379 While it is gaining more momentum as a topic, 69 00:03:01,379 --> 00:03:03,640 there's still only a small amount of accounting folks 70 00:03:03,640 --> 00:03:05,200 that are focused on it currently. 71 00:03:05,200 --> 00:03:06,959 And with the rules still being written, 72 00:03:06,959 --> 00:03:09,170 it's a great chance to get in on the ground floor 73 00:03:09,170 --> 00:03:11,379 and establish yourself as a go-to person, 74 00:03:11,379 --> 00:03:14,320 not only within your organization, but really the space at large. 75 00:03:14,340 --> 00:03:16,360 So really excited to be a part of the journey, 76 00:03:16,360 --> 00:03:19,240 and keen to see where it takes me and all of us at large. 77 00:03:19,240 --> 00:03:21,170 – And I'm really excited to hear about your journey, 78 00:03:21,170 --> 00:03:24,840 as we've heard other people's journeys when it comes to ESG 79 00:03:24,840 --> 00:03:27,480 I find that everybody's journey is different 80 00:03:27,480 --> 00:03:29,670 and I feel that that brings a real diversity 81 00:03:29,670 --> 00:03:31,320 of thought into the ESG space. 82 00:03:31,320 --> 00:03:33,349 Which is needed in something that's growing 83 00:03:33,349 --> 00:03:34,930 and something that's just starting out, 84 00:03:34,930 --> 00:03:37,200 you need to have many different perspectives. 85 00:03:37,200 --> 00:03:40,120 – I couldn't agree more, and everyone I've engaged with 86 00:03:40,120 --> 00:03:42,050 have been coming from a diverse background. 87 00:03:42,050 --> 00:03:46,099 And some folks have that key SEC reporting or accounting footing, 88 00:03:46,099 --> 00:03:47,819 and other folks, perhaps, have spent more time 89 00:03:47,819 --> 00:03:50,629 in true-blooded ESG functions, if you will. 90 00:03:50,629 --> 00:03:54,049 I think between the pending rule on SEC climate 91 00:03:54,049 --> 00:03:56,640 the Corporate Sustainability Reporting Directive in Europe, 92 00:03:56,640 --> 00:03:59,069 the ISSB standards, we just haven't seen anything 93 00:03:59,069 --> 00:04:01,080 of this magnitude all at once. 94 00:04:01,080 --> 00:04:03,670 So bringing together a diverse group 95 00:04:03,670 --> 00:04:07,400 to really tackle this watershed moment for the profession. 96 00:04:07,400 --> 00:04:09,640 It's going to have broad impacts on not only finance 97 00:04:09,640 --> 00:04:13,480 and accounting organizations, but organizations for years to come. 98 00:04:13,480 --> 00:04:15,930 – Yes, definitely, so when organizations 99 00:04:15,930 --> 00:04:18,560 bring on ESG into their organization. 100 00:04:18,560 --> 00:04:21,790 You have to start combining the ESG objectives 101 00:04:21,790 --> 00:04:24,360 with the overall objectives of the organization. 102 00:04:24,360 --> 00:04:27,480 How does IBM go about harmonizing those objectives? 103 00:04:27,480 --> 00:04:30,890 – Yes, so, no surprise, IBM is a large company. 104 00:04:30,890 --> 00:04:34,520 We've got more than 280,000 employees, globally, 105 00:04:34,520 --> 00:04:36,490 operating in more than 170 countries. 106 00:04:36,490 --> 00:04:39,800 So with that scale, and for the scale of most large companies, 107 00:04:39,820 --> 00:04:41,590 there are always countless initiatives 108 00:04:41,590 --> 00:04:44,449 and objectives that need to coexist, simultaneously. 109 00:04:44,449 --> 00:04:47,430 We are lucky in that IBM does have a great legacy 110 00:04:47,430 --> 00:04:50,410 with ESG just as it relates to climate. 111 00:04:50,410 --> 00:04:54,430 We incorporated our first environmental policy in 1971, 112 00:04:54,430 --> 00:04:58,150 and began reporting on CO2 emissions as early as 1994. 113 00:04:58,150 --> 00:05:01,560 But truly have a deep history in all three pillars of ESG. 114 00:05:01,560 --> 00:05:05,560 So that legacy is great, in that it not only gives us a head start 115 00:05:05,580 --> 00:05:08,560 in navigating the landscape and proposed rules. 116 00:05:08,560 --> 00:05:10,130 But it also has helped establish 117 00:05:10,130 --> 00:05:12,320 responsibilities within the organization, 118 00:05:12,320 --> 00:05:15,389 as well as avenues for communication between groups. 119 00:05:15,389 --> 00:05:17,680 So really fortunate to have that legacy. 120 00:05:17,680 --> 00:05:19,530 But even with that head start, 121 00:05:19,530 --> 00:05:22,560 recent activity in the ESG space comes with even more 122 00:05:22,560 --> 00:05:26,000 and it adds incremental objectives that we all need to navigate. 123 00:05:26,000 --> 00:05:28,180 Including pending regulations that I've mentioned. 124 00:05:28,180 --> 00:05:31,080 Rating agency requests, shareholder needs, 125 00:05:31,080 --> 00:05:35,040 analyst inquiries, and countless other internal and external factors. 126 00:05:35,040 --> 00:05:37,070 So really important to emphasize 127 00:05:37,070 --> 00:05:39,640 how important that open lines of communication 128 00:05:39,640 --> 00:05:42,480 and regular touchpoints with different functions are. 129 00:05:42,480 --> 00:05:44,919 And, also, the importance of educational sessions 130 00:05:44,919 --> 00:05:46,880 to bring awareness of what other functions 131 00:05:46,880 --> 00:05:48,760 are managing and striving towards. 132 00:05:48,760 --> 00:05:50,660 Leading with that transparency 133 00:05:50,660 --> 00:05:53,040 not only helps to avoid duplication of efforts, 134 00:05:53,040 --> 00:05:55,100 but it also unlocks efficiencies 135 00:05:55,100 --> 00:05:57,060 and helps us understand one another 136 00:05:57,060 --> 00:05:58,810 and how we're going to strategize. 137 00:05:58,810 --> 00:06:01,009 So each function can achieve its mandate 138 00:06:01,009 --> 00:06:04,800 and targeted objectives, while still being mindful of the larger picture. 139 00:06:04,929 --> 00:06:08,480 – Yes, so I hear you talking a lot about how ESG affects 140 00:06:08,480 --> 00:06:10,410 different functions within the organization. 141 00:06:10,410 --> 00:06:11,750 Which requires those functions 142 00:06:11,750 --> 00:06:13,840 to talk to each other or work together. 143 00:06:13,840 --> 00:06:17,680 How has IBM, what has been their approach when it comes 144 00:06:17,680 --> 00:06:20,440 to cross-functionality and making sure that 145 00:06:20,440 --> 00:06:22,840 everybody's talking together and not staying in their silos? 146 00:06:22,860 --> 00:06:25,320 Which happens so many times within corporate structures. 147 00:06:25,320 --> 00:06:29,310 – Sure, yes, so I'll first speak to our external reporting project 148 00:06:29,310 --> 00:06:33,200 and our current ownership, within the financial and accounting organization, 149 00:06:33,200 --> 00:06:35,080 and I've only been in my role for a few months. 150 00:06:35,080 --> 00:06:36,360 So there is countless work 151 00:06:36,360 --> 00:06:39,000 that have been done prior to me arriving in this seat. 152 00:06:39,000 --> 00:06:41,259 But we've been very busy kicking off our project 153 00:06:41,259 --> 00:06:43,680 and establishing a task force, as you put it. 154 00:06:43,680 --> 00:06:46,680 Given the magnitude of proposals and the potential impact, 155 00:06:46,690 --> 00:06:48,720 not only at a consolidated reporting level, 156 00:06:48,720 --> 00:06:51,480 but perhaps also even at a group or a subsidiary level, 157 00:06:51,480 --> 00:06:54,720 depending on what the international rules finalize as. 158 00:06:54,720 --> 00:06:56,960 We did know that we had to get started right away. 159 00:06:56,960 --> 00:06:59,840 And, so, we kicked off a few key work streams. 160 00:06:59,840 --> 00:07:01,070 Starting first and foremost 161 00:07:01,070 --> 00:07:03,880 with stakeholder identification and outreach. 162 00:07:03,880 --> 00:07:05,920 We, effectively, held a roadshow 163 00:07:05,920 --> 00:07:08,889 where we connected with various functions, within IBM, 164 00:07:08,889 --> 00:07:11,530 to not only alert them of the pending regulation. 165 00:07:11,530 --> 00:07:14,099 But also to learn about their current areas of ownership 166 00:07:14,099 --> 00:07:15,970 and processes within the company. 167 00:07:15,970 --> 00:07:18,449 Which was a great first step for us, 168 00:07:18,449 --> 00:07:21,629 it really helped emphasize how cross-functional 169 00:07:21,629 --> 00:07:24,030 this effort will truly need to be. 170 00:07:24,030 --> 00:07:27,259 We spoke to probably more than 20 functions in the process, 171 00:07:27,259 --> 00:07:29,760 and they all will need to be involved in some capacity. 172 00:07:29,760 --> 00:07:32,169 And, so, as we continue down this path, 173 00:07:32,169 --> 00:07:34,230 I'm certain that that number will continue to grow 174 00:07:34,230 --> 00:07:36,380 and more folks will be pulled in. 175 00:07:36,380 --> 00:07:38,759 I do think that that's also very telling 176 00:07:38,759 --> 00:07:42,440 and that this effort is going to span the entirety of organizations, 177 00:07:42,440 --> 00:07:43,830 and you're going to need the full breadth 178 00:07:43,830 --> 00:07:45,780 and strength of the groups within, 179 00:07:45,780 --> 00:07:48,669 and that ownership will ultimately need to be shared. 180 00:07:48,669 --> 00:07:53,169 So providing those educational sessions, speaking to awareness, 181 00:07:53,169 --> 00:07:55,810 and just trying to elevate everybody, internally, at once. 182 00:07:55,810 --> 00:07:59,490 While keeping them all aware of where we're marching towards is vital. 183 00:07:59,490 --> 00:08:00,810 – I mean, that's amazing to be able 184 00:08:00,810 --> 00:08:04,120 to have that cross-functionality to work and to be successful. 185 00:08:04,120 --> 00:08:06,530 That's not an easy task for any organization, 186 00:08:06,530 --> 00:08:07,879 so I really commend you. 187 00:08:07,879 --> 00:08:09,319 It sounds like it has been something 188 00:08:09,319 --> 00:08:11,240 that is working toward a successful thing. 189 00:08:11,240 --> 00:08:13,700 – Yes, for sure, and there's even more work streams 190 00:08:13,700 --> 00:08:15,400 that I could probably speak to for hours. 191 00:08:15,400 --> 00:08:19,260 But, I think, all of this was an upfront investment that we, 192 00:08:19,260 --> 00:08:22,560 very much see as necessary in terms of driving the project. 193 00:08:22,560 --> 00:08:25,110 So those conversations not only helped us understand 194 00:08:25,110 --> 00:08:26,729 what's out there, but it also helped us 195 00:08:26,729 --> 00:08:28,560 establish project governance. 196 00:08:28,560 --> 00:08:31,300 And we've established that task force, that subcommittee, 197 00:08:31,300 --> 00:08:33,720 and we hold regular touchpoints now with the group. 198 00:08:33,720 --> 00:08:36,700 And we were able to identify one to two representatives, 199 00:08:36,700 --> 00:08:37,720 during those discussions, 200 00:08:37,720 --> 00:08:40,490 that all, now, join us for these regular touchpoints 201 00:08:40,490 --> 00:08:42,110 where we keep them apprised of 202 00:08:42,110 --> 00:08:44,120 the regulatory landscape developments 203 00:08:44,120 --> 00:08:47,200 and we also kick off, initiate, monitor, 204 00:08:47,200 --> 00:08:48,390 and advance our work stream. 205 00:08:48,390 --> 00:08:50,720 So it's really been a great joint effort thus far. 206 00:08:50,720 --> 00:08:52,000 – Yes, that's great. 207 00:08:52,000 --> 00:08:55,680 So we've talked a lot about the people doing the work, 208 00:08:55,680 --> 00:08:56,560 and then there are people 209 00:08:56,560 --> 00:08:59,320 who're overseeing everything within organization. 210 00:08:59,320 --> 00:09:01,560 The senior leadership reports to the Board of Directors 211 00:09:01,560 --> 00:09:03,680 and the Board of Directors, ultimately, 212 00:09:03,680 --> 00:09:04,840 answers to the shareholders. 213 00:09:04,840 --> 00:09:06,750 But what extent are the Board of Directors 214 00:09:06,750 --> 00:09:09,240 involved into this process? 215 00:09:09,240 --> 00:09:12,520 – Yes, so it all does, ultimately, start with the oversight of the board, 216 00:09:12,520 --> 00:09:14,660 and I'd say that ESG is very much 217 00:09:14,660 --> 00:09:16,750 embedded within the organization. 218 00:09:16,750 --> 00:09:19,690 In part due to that legacy but also, in part, 219 00:09:19,690 --> 00:09:22,000 just due to the excitement and potential of what's to come 220 00:09:22,000 --> 00:09:23,400 in the decades ahead. 221 00:09:23,400 --> 00:09:25,450 And that can be seen and is relevant through 222 00:09:25,450 --> 00:09:27,570 some of our go-to-market offerings. 223 00:09:27,570 --> 00:09:30,610 Our use of technology, research and development efforts, 224 00:09:30,610 --> 00:09:32,060 as well as other internal initiatives 225 00:09:32,060 --> 00:09:35,880 and just overall remarks from our chairman and other senior leaders. 226 00:09:35,880 --> 00:09:38,040 So, ultimately, the Board of Directors, 227 00:09:38,040 --> 00:09:42,040 and its committees, do have oversight responsibility for these areas. 228 00:09:42,040 --> 00:09:44,160 And under their guidance and supervision, 229 00:09:44,160 --> 00:09:47,360 IBM's senior management is then responsible for the company's 230 00:09:47,360 --> 00:09:49,440 environmental and social performance. 231 00:09:49,440 --> 00:09:52,640 And they're able to do so via two groups, in particular, 232 00:09:52,640 --> 00:09:55,410 which help integrate CSR across the business. 233 00:09:55,410 --> 00:09:59,360 And those are our Executive Steering committee and the ESG working group. 234 00:09:59,370 --> 00:10:02,300 So both of those groups meet monthly, 235 00:10:02,300 --> 00:10:04,080 and they include representatives 236 00:10:04,080 --> 00:10:06,400 from functional areas spanning all of IBM. 237 00:10:06,400 --> 00:10:10,760 Including the atypical ESG groups as well as HR, 238 00:10:10,760 --> 00:10:12,360 accounting, legal, procurement, 239 00:10:12,360 --> 00:10:15,520 really great representation spanning the organization. 240 00:10:15,520 --> 00:10:17,860 And it's between those two groups that leadership 241 00:10:17,860 --> 00:10:19,730 is able to provide the direction 242 00:10:19,730 --> 00:10:22,640 on key corporate responsibility issues, 243 00:10:22,640 --> 00:10:25,880 and also stay apprised of work related to ESG matters. 244 00:10:25,880 --> 00:10:28,420 So while that's the day-to-day operation 245 00:10:28,420 --> 00:10:31,080 and actioning of ESG-related activities. 246 00:10:31,080 --> 00:10:34,120 We then do report, the Chief Sustainability Officer 247 00:10:34,120 --> 00:10:37,080 provides periodic updates to the Board of Directors 248 00:10:37,080 --> 00:10:39,350 and we're now, also, providing regular updates 249 00:10:39,350 --> 00:10:41,760 to the Audit Committee as it relates to work underway 250 00:10:41,760 --> 00:10:43,760 and the regulatory landscape. 251 00:10:43,760 --> 00:10:45,950 So it's great to have these channels in place, 252 00:10:45,950 --> 00:10:48,510 and I'd say senior leaders are absolutely seeing ESG 253 00:10:48,510 --> 00:10:50,800 as an area of focus within the company. 254 00:10:50,800 --> 00:10:53,400 – And that's wonderful to hear, when you set the tone at the top, 255 00:10:53,420 --> 00:10:56,560 it really sets the stage so that all the cross-functionality, 256 00:10:56,560 --> 00:10:58,640 the things that we've been talking about, 257 00:10:58,640 --> 00:11:01,840 are recognizing, "Hey, I have the support of my leaders 258 00:11:01,840 --> 00:11:04,560 that I can do this and we can do it well." 259 00:11:04,560 --> 00:11:08,600 – Yes, absolutely, I think, having that support from the top is crucial. 260 00:11:08,600 --> 00:11:11,080 I'm sure that's true for all organizations, 261 00:11:11,080 --> 00:11:14,480 but it's only through that support, and direction of leadership, 262 00:11:14,480 --> 00:11:17,740 that all organizations are able to operate in harmony. 263 00:11:17,740 --> 00:11:19,710 So, absolutely, a crucial step in the process 264 00:11:19,710 --> 00:11:21,360 to make sure that you are on 265 00:11:21,360 --> 00:11:24,400 the appropriate people's agenda and radar, 266 00:11:24,400 --> 00:11:25,830 and that they're aware of what 267 00:11:25,830 --> 00:11:27,610 we're marching towards and the [indistinct]. 268 00:11:27,610 --> 00:11:30,760 – Yes, so when it comes to any new initiative, 269 00:11:30,760 --> 00:11:32,480 there can be challenges with buy-in, 270 00:11:32,480 --> 00:11:36,040 and with ESG you can get into so many different elements 271 00:11:36,070 --> 00:11:37,480 of why somebody wouldn't want to buy-in. 272 00:11:37,480 --> 00:11:39,480 But the biggest thing that, probably, 273 00:11:39,480 --> 00:11:41,100 comes to my mind with what you've been describing 274 00:11:41,100 --> 00:11:44,080 is it's, probably, adding extra workload onto people. 275 00:11:44,080 --> 00:11:46,500 And, so, have there been challenges to buy-in within IBM, 276 00:11:46,500 --> 00:11:50,500 as people are having added elements and uncertainties 277 00:11:50,500 --> 00:11:53,510 with the coming regulations and things like that? 278 00:11:53,510 --> 00:11:55,310 – Sure, yes, it can be hard because people 279 00:11:55,310 --> 00:11:57,260 do have full-time, day jobs, 280 00:11:57,260 --> 00:12:00,380 and they've got a full plate of duties as it currently exists, 281 00:12:00,380 --> 00:12:03,720 and now we're asking them to focus on an additional area. 282 00:12:03,720 --> 00:12:07,380 But I would say that the response within IBM, internally, 283 00:12:07,380 --> 00:12:09,160 has been very positive overall 284 00:12:09,160 --> 00:12:11,760 and folks are both willing and eager to help. 285 00:12:11,760 --> 00:12:14,519 And, I think, some of that is probably due to our culture 286 00:12:14,519 --> 00:12:16,050 and the fact that people have tended 287 00:12:16,050 --> 00:12:18,080 to work in multiple roles within the company. 288 00:12:18,080 --> 00:12:19,829 So they perhaps have an understanding 289 00:12:19,829 --> 00:12:22,380 or a perspective as to where we're coming from, 290 00:12:22,380 --> 00:12:23,440 as finance and accounting, 291 00:12:23,440 --> 00:12:26,400 and that always makes conversations easier to have. 292 00:12:26,400 --> 00:12:30,000 But I do think it's important to approach those conversations 293 00:12:30,029 --> 00:12:32,060 and ask for buy-in with an open mind 294 00:12:32,060 --> 00:12:33,660 and a sense of understanding. 295 00:12:33,660 --> 00:12:36,300 ESG is not, historically, a core competency 296 00:12:36,300 --> 00:12:37,790 for accounting professionals 297 00:12:37,790 --> 00:12:41,040 and we realized, very quickly, that this was a new frontier for us. 298 00:12:41,040 --> 00:12:44,019 So, in that regard, we didn't want to be the team that showed up 299 00:12:44,019 --> 00:12:45,361 and forced ourselves in, 300 00:12:45,361 --> 00:12:47,360 and forced our way of thinking on groups. 301 00:12:47,360 --> 00:12:49,960 We wanted to pause and listen, gain an appreciation 302 00:12:49,960 --> 00:12:51,709 for the great work that had been happening 303 00:12:51,709 --> 00:12:53,630 before accounting entered the room, 304 00:12:53,630 --> 00:12:55,320 and that helped build trust, I think. 305 00:12:55,320 --> 00:12:58,160 But also leading with the fact that we're here to help. 306 00:12:58,160 --> 00:13:00,480 We're not taking over ESG reporting. 307 00:13:00,480 --> 00:13:03,040 We don't know everything we want to learn in team, 308 00:13:03,040 --> 00:13:05,320 and we're all working towards a common goal of 309 00:13:05,320 --> 00:13:09,880 providing investor grade financial, and now non-financial reporting 310 00:13:09,880 --> 00:13:12,560 has been helpful in having those conversations. 311 00:13:12,560 --> 00:13:14,880 I would say that while there's not, necessarily, 312 00:13:14,880 --> 00:13:16,920 challenges with people buying-in. 313 00:13:16,920 --> 00:13:18,760 I do think there can be challenges, at times, 314 00:13:18,760 --> 00:13:20,720 with planning and embracing the plan. 315 00:13:20,720 --> 00:13:22,560 Just due to the overall, uncertainty, 316 00:13:22,560 --> 00:13:24,760 surrounding what the final rules might look like. 317 00:13:24,760 --> 00:13:28,640 It can be hard to convince folks that they need to jump in, full force, 318 00:13:28,640 --> 00:13:31,840 with so much uncertainty and such frequent developments 319 00:13:31,840 --> 00:13:33,720 on the standard-setter front and in the space. 320 00:13:33,720 --> 00:13:35,660 So, I think, as the rules finalize 321 00:13:35,660 --> 00:13:37,520 and effective dates become more clear, 322 00:13:37,520 --> 00:13:40,200 it'll be easier to have those conversations, 323 00:13:40,200 --> 00:13:42,440 and the path forward will just reveal itself 324 00:13:42,440 --> 00:13:45,040 and we'll know exactly what we need from everyone then. 325 00:13:45,070 --> 00:13:47,470 – Yes, well, and having the right company culture 326 00:13:47,470 --> 00:13:50,050 is a key element, and people being willing 327 00:13:50,050 --> 00:13:51,500 to just being open-minded 328 00:13:51,500 --> 00:13:54,960 as they go into conversations and new responsibilities. 329 00:13:54,960 --> 00:13:57,589 So it sounds like there is a great company culture there 330 00:13:57,589 --> 00:13:59,660 and that's really exciting to hear. 331 00:13:59,660 --> 00:14:02,680 – Yes, it's fantastic and, I think, between our points 332 00:14:02,680 --> 00:14:06,040 on support from leadership and support from the groups, 333 00:14:06,040 --> 00:14:07,760 I think, that's going to prove to be crucial. 334 00:14:07,760 --> 00:14:09,360 There's just so much happening, 335 00:14:09,360 --> 00:14:12,400 and given the breadth of the international proposals, 336 00:14:12,400 --> 00:14:15,430 that it's becoming clear that we'll likely need more resources 337 00:14:15,430 --> 00:14:18,160 and not all those will live within accounting and finance, 338 00:14:18,160 --> 00:14:21,120 and they'll likely be homed in other functions. 339 00:14:21,120 --> 00:14:23,790 So having that support, having that understanding 340 00:14:23,790 --> 00:14:26,120 and cross-functional awareness 341 00:14:26,120 --> 00:14:27,720 is just going to help avoid surprises 342 00:14:27,720 --> 00:14:30,920 or last-minute scrambles when the rules, ultimately, are finalized. 343 00:14:30,920 --> 00:14:34,680 – So, shifting gears a little bit, when it comes to reporting, 344 00:14:34,700 --> 00:14:35,700 there are some key concerns 345 00:14:35,700 --> 00:14:37,560 that we've heard from other organizations, 346 00:14:37,560 --> 00:14:40,360 that there's a need to rely on third-party data. 347 00:14:40,360 --> 00:14:43,300 What is IBM doing to address those types of concerns? 348 00:14:43,300 --> 00:14:46,080 – Yes, there's been a lot of talk of that topic. 349 00:14:46,080 --> 00:14:49,680 And I know there's a lot of comments on it, and there, certainly, are 350 00:14:49,680 --> 00:14:52,600 inherent challenges that come with data aggregation. 351 00:14:52,600 --> 00:14:54,810 There is, especially, the requirements 352 00:14:54,810 --> 00:14:57,320 that involve data from the value chain. 353 00:14:57,320 --> 00:15:00,509 It's always challenging to aggregate, create data, 354 00:15:00,509 --> 00:15:02,880 that's coming from outside your organizational walls. 355 00:15:02,880 --> 00:15:05,920 And an easy example of that is greenhouse gas emissions, 356 00:15:05,920 --> 00:15:10,120 where entities will need to rely on third-party data in several capacities. 357 00:15:10,120 --> 00:15:13,880 It's going to take collection of invoices from utility providers. 358 00:15:13,880 --> 00:15:16,440 Use of emissions factors from various sources. 359 00:15:16,440 --> 00:15:19,480 As well as data from upstream and downstream activities, 360 00:15:19,480 --> 00:15:21,899 potentially, your customers and suppliers. 361 00:15:21,899 --> 00:15:24,949 So while there's a lot to gather and to think about, 362 00:15:24,949 --> 00:15:27,529 I do think that accounting and finance professionals 363 00:15:27,529 --> 00:15:30,440 can help bring some discipline around the difficulties 364 00:15:30,440 --> 00:15:34,400 dealing with estimates, and help provide guidance to other functions. 365 00:15:34,400 --> 00:15:39,280 Surrounding the need for adequate, relevant, sufficient, and reliable data. 366 00:15:39,280 --> 00:15:42,199 All that is the basis for estimating the estimate 367 00:15:42,199 --> 00:15:44,720 and to mitigate the risk of material misstatement. 368 00:15:44,720 --> 00:15:46,630 So while accountants might be less familiar 369 00:15:46,630 --> 00:15:48,220 with the subject matter itself, 370 00:15:48,220 --> 00:15:50,399 we do understand the need to formalize processes 371 00:15:50,399 --> 00:15:53,170 and put rigorous and robust controls in place, 372 00:15:53,170 --> 00:15:55,760 for areas of significant estimates and assumptions. 373 00:15:55,760 --> 00:15:57,760 – John, we could talk about ESG for hours. 374 00:15:57,760 --> 00:16:01,240 There is reports, constantly, being written about this studies 375 00:16:01,240 --> 00:16:03,889 being done on it and there are many professionals 376 00:16:03,889 --> 00:16:05,040 who are curious about it. 377 00:16:05,040 --> 00:16:08,880 And if you're a professional who's thinking about getting into ESG 378 00:16:08,880 --> 00:16:10,440 or you're looking at your organization, 379 00:16:10,440 --> 00:16:13,640 and you're recognizing "We're not doing anything about this." 380 00:16:13,640 --> 00:16:15,480 What advice would you give to that professional, 381 00:16:15,480 --> 00:16:16,800 as they're looking to get into it? 382 00:16:16,800 --> 00:16:20,320 – Yes, it's a great point, and it's in everyone's best interest 383 00:16:20,320 --> 00:16:23,320 to get engaged as soon as possible. 384 00:16:23,320 --> 00:16:25,440 There's so much momentum in the space, 385 00:16:25,440 --> 00:16:27,430 and there's going to be such a widespread impact 386 00:16:27,430 --> 00:16:29,730 to accounting and finance professionals. 387 00:16:29,730 --> 00:16:32,200 That it's really great to get started early 388 00:16:32,200 --> 00:16:36,160 and learn what is facing us as a profession and potential rules. 389 00:16:36,160 --> 00:16:37,839 I do think it's also a great chance 390 00:16:37,839 --> 00:16:40,380 that we can all elevate and upskill one another. 391 00:16:40,380 --> 00:16:43,720 We're all embarking on this journey, simultaneously, 392 00:16:43,720 --> 00:16:46,149 and I've, personally, enjoyed having outreach 393 00:16:46,149 --> 00:16:48,430 with peers in the space, and trying to leverage, 394 00:16:48,430 --> 00:16:50,400 and join working groups where they exist, 395 00:16:50,400 --> 00:16:52,360 and learn about best practices, 396 00:16:52,360 --> 00:16:54,000 and other happenings at other companies. 397 00:16:54,000 --> 00:16:58,690 So joining the effort, probably, an inevitability 398 00:16:58,690 --> 00:17:01,170 in terms that rules are coming. 399 00:17:01,170 --> 00:17:03,370 In terms of timeline and effective dates, 400 00:17:03,370 --> 00:17:04,680 maybe, that's less certain. 401 00:17:04,680 --> 00:17:07,520 But there's a lot to do, and joining now 402 00:17:07,520 --> 00:17:10,200 will just set yourself up for future success. 403 00:17:10,200 --> 00:17:12,069 Well, for what really is a turning point, 404 00:17:12,069 --> 00:17:13,641 in the profession, and something that 405 00:17:13,641 --> 00:17:16,750 we'll be focusing on for years and decades to come. 406 00:17:16,750 --> 00:17:18,320 – And, sometimes, getting in the ground floor, 407 00:17:18,320 --> 00:17:21,039 you get to see the evolvement real-time, 408 00:17:21,039 --> 00:17:23,430 as it happens, which can be really exciting. 409 00:17:23,430 --> 00:17:27,720 – Yes, for sure, and that's really front of mind, today. 410 00:17:27,720 --> 00:17:29,110 It seems like not a day goes by, 411 00:17:29,110 --> 00:17:30,920 and I've only been in this role for a few months, 412 00:17:30,920 --> 00:17:33,720 but there's no shortage of news cycles in the space, 413 00:17:33,720 --> 00:17:36,800 and seeing stuff evolve, and what may or may not be required, 414 00:17:36,800 --> 00:17:38,400 it's changing quite often. 415 00:17:38,400 --> 00:17:41,530 And watching that evolution, well, it can be a bit daunting, 416 00:17:41,530 --> 00:17:44,500 in terms, of what it means for implementation and next steps, 417 00:17:44,500 --> 00:17:47,160 I think, it's very exciting to watch it play out real-time. 418 00:17:47,160 --> 00:17:49,440 And really feel involved in what is coming, 419 00:17:49,440 --> 00:17:51,480 and how do we react to that, and pivot, 420 00:17:51,480 --> 00:17:54,560 and really important to stay nimble and on your toes. 421 00:17:54,560 --> 00:17:55,919 – Well, John, I just want to thank you so much 422 00:17:55,919 --> 00:17:57,040 for coming on the podcast. 423 00:17:57,040 --> 00:17:58,360 It was really exciting to have you on 424 00:17:58,360 --> 00:18:00,840 and everything you shared with our audience today. 425 00:18:00,840 --> 00:18:02,880 – Of course, and thanks again for having me, Adam. 426 00:18:02,880 --> 00:18:05,240 It's an exciting space and I'm excited 427 00:18:05,240 --> 00:18:07,320 to be a part of the journey, so thanks again. 428 00:18:07,320 --> 00:18:09,360 < Outro > 429 00:18:09,360 --> 00:18:12,080 – This has been Count Me In, IMA's podcast, 430 00:18:12,080 --> 00:18:14,289 providing you with the latest perspectives 431 00:18:14,289 --> 00:18:17,040 of thought leaders from the accounting and finance profession. 432 00:18:17,040 --> 00:18:19,680 If you like what you heard and you'd like to be counted in, 433 00:18:19,680 --> 00:18:22,000 for more relevant accounting and finance education, 434 00:18:22,000 --> 00:18:28,800 visit IMA's website at www.imanet.org.