"Our board has always and continues to play an important role in driving us to become a leader in ESG. We believe a company, its employees, its leaders and its board should reflect our customers and communities."
Susan Story, the CEO of American Water and a board member for Raymond James and Dominion Energy, doesn't just give environmental, social and governance (ESG) issues lip service.
American Water, the largest publicly traded U.S. water and wastewater utility company, was named one of the "100 Most Sustainable Companies" by Barron's magazine this year with a 26% drop in greenhouse gas emissions. And under Story's stewardship, the company reached gender equity in the boardroom and relocated its headquarters to the waterfront of Camden, N.J., a city trying to revitalize.
An ESG focus, she stresses, is not only good for society but it's also good for the bottom line.
Encouraging corporations to consider the greater good is nothing new. It has had many iterations and names, i.e. corporate responsibility, socially responsible investing and "the triple bottom line." ESG is the latest salvo, broadening the concept to include everything from gender inequality to pay equity to climate change; and it's gaining momentum in Corporate America, partly because large investors are demanding it.
Social and environmental issues are becoming more important to the occupants in the boardroom, but there are still many directors who see it as inconsequential or don't think these issues should factor into strategy discussions, according to PwC's recently released Annual Corporate Director Survey. The survey found that directors think the focus on these topics is overdone with about one-third of board members saying shareholders pay too much attention to these issues.
At American Water, however, the board champions ESG. "I know each of us on the board are very supportive of the ESG efforts of American Water and all of its employees," says Veronica Hagen, a board member who serves as chair of the corporate governance and nominating committee. "Susan has done a tremendous job leading and highlighting the value and importance that environmental, social, governance issues have at American Water."
"The whole ESG thing," Story adds, "it's kind of who we are."
The following is a Q&A with Story on her mission to bolster ESG at the companies she serves and beyond.
Do you think ESG issues are becoming mainstream in corporate America? Why or why not?
Yes. Corporate social responsibility has increasingly become important for customers, communities and investors. Stakeholders expect corporations to not only be aware of, but to provide leadership on ESG issues.
How do you see the...