Ep. 8: Sustainability storytelling in the new era of ESG regulations, with Tim Mohin

The world of corporate sustainability storytelling is in flux after several recent regulations have been passed — from the Securities and Exchange Commission (SEC) and California climate rules in the United States to the Green Claims Directive and Corporate Sustainability Reporting Directive (CSRD) in Europe. Understanding how to effectively communicate in this new era is paramount to corporate sustainability success.

In this episode, Mike speaks with global ESG leader Tim Mohin of Boston Consulting Group — who formerly led the Global Reporting Initiative (GRI) — to tap into his decades of ESG experience to better understand how companies can make sense of this new glut of regulations and factor them into their sustainability communication strategies.  
Read the full transcript of the conversation below. You can also listen to this episode on Spotify, Apple Podcasts, Amazon Music and YouTube.

TRANSCRIPT

Mike Hower: Hey everybody. I'm here today with Tim Mohin, partner and director at Boston Consulting Group. Tim is an ESG expert with decades of experience working with some of the world's leading companies. He previously held senior roles at Persephone, GRI and Advanced Micro Devices, among others. Tim also runs one of my favorite newsletters for staying on top of ESG and climate news — which is actually called ESG and Climate News.

We'll include those links  in the show notes. So you should definitely follow that, which will pretty much give you a one-stop-shop for everything that you need to know about what's happening in ESG each week — which is, as we all know, constantly changing. Thanks for being here today, Tim.

Tim Mohin: It's my pleasure. I was looking forward to this all week because you know, Mike, decoding sustainability makes it accessible. And if you make it accessible, it makes it actionable. And that's what we're all here to do is change the world. So I think what you're doing is so important. I'm looking forward to the conversation.

Mike: Thanks. Yeah. We're just here to try to make sense of how do you translate complex sustainability challenges into effective communication and translate it in ways that people of all backgrounds can understand. One of the reasons I wanted to invite you on the show, Tim, was mainly because I've been noticing that you spend a lot of your time staying on top of all the crazy stuff that's happening in the regulatory environment around ESG and, you have some really good insights in your newsletter about this and on LinkedIn.

So, I'm curious if you could sum up everything that's been going on in the last few years — particularly this year — in the ESG regulatory environment. What word would you use to describe it? 

Tim: I would say it's “breakthrough.” It's a really great question to start off with. And if I could, maybe I'll answer the question by giving you the sense of how I've seen it over the years of my career. When I started working in this space, there was no “corporate responsibility.” That was an oxymoron, you know, companies were to be regulated, not to be trusted. And then it changed over time. But when I started, you know, I became a regulator. I was at EPA. I worked on regulations. I went to the U.S. Senate. I worked on legislation — some of the biggest stuff like Clean Air Acts, etcetera. But, over that time, companies started to see that acting responsibly in the interests of people on the planet actually was in their best interests. It attracted investors, employees, brand reputation — all of that great stuff.

So, that became the era of corporate responsibility, if you will. Sometimes we call it corporate social responsibility, sustainability. We have lots of different names for it. But now the sort of term of art, if you will, is ESG — environmental, social and governance. And what that really says is we've crossed over, we've broken through into the mainstream of global commerce and that's brought into effect a whole bunch of new changes.

Most importantly, we're seeing sustainability in financial statements because investors have seen this information as being a treasure trove of both opportunity for companies and risks — and they want to know that stuff. They want to know where to direct their money. And so, all of a sudden it's gone from being about regulation to, you know, a nice-to-do reputation into the mainstream of global commerce. That's where I see it today.  

Mike: Awesome. And I know the companies I've been working with the last few years — we saw this all coming, and this is no surprise. I think that was one of the pitching points a couple of years ago for companies to invest in sustainability was that the regulations were coming.

And now,  I've talked to many companies even since the SEC rule — and a lot of them that have already done the groundwork are glad that they did because they don't have to scramble while other companies now are scrambling and figuring out what to do next — which is one of the reasons I want to talk to you today are about the companies that are really not sure what to do now, what to do next. 

Which kind of goes into my next question, which you already kind of touched on: We've had lots of ESG-focused regulations passed in the last few years, and particularly this year — CSRD in Europe, the California climate rules, and then most recently, the new SEC climate rules. How are these rules influencing how companies approach their sustainability strategy and also how they report on it and communicate it?  

Tim: I think one thing, just to take a step back. When we were talking just a minute ago about regulation to reputation to now where we are — there's a big difference because back in the day, we actually regulated emissions. It was the “good old command and control.” You can only emit so much. And that's still going on to, to a large extent with the Clean Act, the Clean Water Act. Just last week, we saw a new regulation about car emissions that'll lead to 50 percent of cars being zero emission vehicles by 2030, which is fantastic.

You know, so that still goes on. The kind of thing we're talking about today with California, with the SEC, with the European regulation, it's all about disclosure. And the theory of change with disclosure is that if we just put that information out there and make it visible to investors and stakeholders of all kinds, then companies will do better. They'll improve their performance towards people on the planet. So, there's a bit of a difference between telling companies, “no, you can't do something” to forcing companies to disclose information about their operations. That's where we are today. And I will say — the jury's out on whether or not that's going to lead to a lot of improvement.

We know that investors really want this information. We know that sometimes it gets very contentious and litigious. But nonetheless, it is just disclosure. It's not requiring companies to do anything more than just report.  

Mike: Right. And I know I've been actually hearing complaints from some of my sustainability friends that the focus is so much on the disclosure now that there's less emphasis on actually doing the impact work. And I'm curious if you have any thoughts on that — if companies are putting all their resources into reporting and disclosure, what's left over for actual programmatic change? 

Tim: Yeah, I do. In fact, um, you know, having been in the regulatory field for a long, long time before I went over to the private sector. There are several ways that you can approach regulation. And two of them we've talked about, which is just, command-and-control, stop doing stuff,, disclosure, tell us what you're doing. But the third one I think is actually really worth spending a minute on, which is kind of incentive-based regulation.

And we saw that with the Inflation Reduction Act, which came out, gosh, almost two years ago now. And, and really kind of was the largest climate bill that we've ever seen in the United States and perhaps even globally pegged at, almost 300 billion in terms of investment. into clean technologies.

And when I worked in the senate a way long time ago, this was an idea maybe ahead of its time. But the notion was back then as it is now That we can have our cake and eat it too. We can actually create jobs, we can bolster the economy and have a better environment through clean technology. And that's really what the Inflation Reduction Act is all about. So, it's tax credits, it's grants, it's other kinds of incentives that really tell companies not what they should be doing, but perhaps give them an incentive to do the right thing.  

Mike: I like that. It's a good reminder that the IRA is still there. I think it made headlines when it first came out, but a lot of, at least the big corporates that I talk to a lot — they're not really thinking of the IRA as much. That's more of the climate tech folks I know are really excited about it, but it's a good reminder that  there are some positive, not just, just disclosure-based regulations. Actually, there's a lot of carrots out there right now to act. 

Tim: Exactly.

Mike: Right. So, in a recent white paper that you worked with a few other partners on how to make sense of the SEC rule in particular — and you came up with five, “No Regret Moves” for companies to respond to the SEC rules. I love that framing because I think a lot of companies right now are really afraid that they're going to do something they regret. I think it's nice to kind of narrow it down to “these are things that you will not regret.” Can you tell us a little bit about these? We don't need to go into super big detail, maybe top level. What are the five regret moves? And, also maybe, if we could tag onto this — we are focused on communications on this podcast — are there any “No Regret Moves” from a comms and storytelling perspective that you would also recommend? 

Tim: When we think about what's coming in terms of all the disclosure requirements we talked about in California and Europe, we talked about the SEC rule, which is really the center of the target right now. 

There are a lot of things that companies can be doing because, let's face it, there's so much uncertainty about whether the SEC rule is ever going to be implemented. Obviously it's been litigated. There's a lot of political confrontation about this rule. So, we really thought about that. And we said, you know, there's a lot of multinationals that are, basically clients. And they're looking at even China now has a policy for ESG disclosure. We're seeing one come out of India. What should they be doing to prepare even as the dust settles on all these different requirements?

And we came up with five of them. And one is just to do a health check, you know, companies, a lot of companies, as I mentioned, have been reporting on sustainability for a long time. In fact, we had a statistic that 98 percent of the S&P 500 actually issues sustainability reports now. So we've kind of hit peak sustainability reporting.

So, you can take a look at what you're doing now as a company, all the systems and processes and hold it up against these various requirements that we know are coming at different phases, different timelines, and just say, where do we have gaps? Where do we have gaps in our systems?

The other thing is cross departmental coordination. When you start thinking about disclosing environmental social governance information in your financials that all of a sudden brings in the finance department who's been doing financial reporting for a long time, and you have to say, “Well, how do we work with them?”

How do we bring in all the controls and processes and systems and that brings in tools? For example, carbon is kind of at the top of everybody's list in terms of disclosure. What's your greenhouse gas emissions? Carbon's a data problem. A lot of companies have been figuring out their greenhouse gas footprint on spreadsheets.

So, what's the best data system to develop their greenhouse gas footprint in a way that Passes muster with financial reports and then finally, you know, getting a kind of a good scan of what's going on in the world. So, you understand all of these different requirements, how they impact your company and what you should be doing. So it's changing rapidly. As we mentioned before, it's super dynamic — companies need to keep an eye on that and understand one policy for the entire footprint of the entire company. 

And then the last thing I'll say, and I know I've been windy here, is that this is not just about handing in more reports to the government. It's not just about checking a box that we're in compliance. It's about value. And a lot of companies are because this is all so new and it's coming so quickly. They're very concerned about compliance. I get it. But  continue to think compliance is a milestone. The objective here is to find value, and it should be shared value. Value for the company, as well as value for the stakeholders of the company.

And that's what we all have to keep in mind, from the board level all the way down to the working level. So those are the five no regrets moves.  

Mike: So, looking across the pond, the EU adopted some new rules against greenwashing, The Green Claims Directive. I'm curious if you have any thoughts on how companies can approach that. In my own work, I've started seeing more lawyers involved with the sustainability communications projects that we're working on because they're more worried now that they can get sued or fined if they say the wrong thing. What are you seeing on that trend? Is that a positive trend that that's now some regulatory kind of mandate? What do you see in the future of greenwashing and regulation? 

Tim: I guess the way I would handle this question is looking at it from a broader lens. As we've been discussing throughout today's podcast, there's a lot of pressure for additional disclosure. And so, companies are now required to say more than perhaps they've ever said before, in terms of their environmental, social and governance performance.

Okay. So, we have that kind of movement on the other side. There's never been more scrutiny about what they say. And that manifests in all sorts of things. There's policy, anti-greenwashing we talked about, but there's also, you know, the political dynamic and that's translating into geopolitics. And so, those are two opposing forces. One is telling us more and two is, wow, if you tell us anything, we're really going to look at it. We're going to be digging through everything you say. So, I think companies are caught in that squeeze.

And I do think that puts a lot of pressure on backing up every statement. There was a period of time, not that long ago when — I'll use an example of net-zero goals. A lot of companies went forward with many, many net-zero goals. And some of them didn't pass muster in terms of actually having a plan behind the aspiration.

It's really great to have that aspiration, but now I think more and more companies are saying — we really have to have facts and data detailed plans, at least the line of sight to get to that aspirational goal that we've set. So I think that's what's happening right now.

Yes, it has produced some pullback in terms of the, uh, I saw a study in the Wall Street Journal not too long ago about the use of the term ESG in earnings calls and that quarter over quarter, we've seen this giant drop off. You've seen the same thing in terms of funds with the label ESG. There's been a drop off in that too. And I think that's all because of this kind of scrutiny that I mentioned before. 

Mike: All these new regulations can be overwhelming, even for experienced corporate sustainability professionals. What advice do you give folks? I know you've somehow managed to find everything that's happening in the week to go in your newsletter. How are people supposed to stay on top of this? Especially, with a lot of stability teams are either one person shows, or they don't have a ton of people helping them. How does a sustainability professional stay on top of all these changes?  Maybe they don't have the budget to hire consultants, or maybe they have to stay on top of this for their company. What advice would you give people, for how to stay on top of all  these big changes?  

Tim: Read my newsletter. I mean, no, it can be difficult obviously. And there's a ton of different kinds of newsletters and blogs and your podcast, for example, that help people stay on top of this. I would just say, don't let the perfect be the enemy of the good. There is so much information out there and it has to be tailored to your particular circumstance and your company's situation. And so, try to filter that out because you can get lost in several different rapid holes.

I mean, even if we think about the term environmental, social and governance, what does that mean? When I ran GRI, we had 34 standards under the E and the S and the G combined, and it can range from things like, where does the company pay its taxes to diversity, equity, and inclusion to nature based solutions to climate change, to water, you name it, it's all under there. And so, perhaps we've bitten off more than we can chew because this is so broad that we have to be kind of specific to what are the key issues. And I often say — and I have a book, it's quite old by now, called Changing Business from the Inside Out — and in that book, I give some advice in terms of how to filter through the really high volume of issues and, you know, all of the kind of emerging regulations and policies and standards.

And it's to look at them from two angles. That is the severity and likelihood. So, if this issue were to happen, how severe would that be for your particular institution? And then what is the likelihood of that issue happening? And if you have that kind of two by two matrix and you just start plotting issues, it's more art than science. You can filter through a lot of what's happening in the world today.   

Mike: So Tim, this podcast is called “The Sustainability Communicator” — so I definitely want to ask a little bit more about your insights into how we communicate these difficult issues. ESG and sustainability is difficult, even for those of us who spent all day thinking about this, but what advice would you give professionals that are trying to communicate this to different stakeholder groups — whether it's internally for employees, externally towards investors, consumers, or whatnot. What would be your top level advice for companies that are trying to translate these complicated topics to the stakeholder groups? 

Tim: Yeah, it's such an important question, Mike. I mean, getting — as we said in the beginning of the podcast — getting the communications right unlocks the power of the idea and yet somehow we have invented so much jargon, so much abbreviations and acronyms. And, by the way, they're different, that we just confuse everybody, right?

So, we were throwing them around — the CSRD and all of that stuff earlier. Yeah. And you're like, hmm, what does that really mean? And everybody's always afraid to ask. It's like, oh, if I ask the question, I'll sound stupid or something, but it's so important to stay away from jargon, to take a step back and say, why are we doing this?

As the discussion went earlier, I was mentioning how all of these regulations we're talking about now are really disclosure regulations. So, step back, really look at the theory of change by putting information out there. Something will get better. Is that tested? Do we know that's going to happen? You know, just having the ability to step back and look at the big picture and describe why we're doing something gives people the context rather than just diving in and then throwing around a bunch of jargon.

So, that is something I try to do with my writing and my speaking and podcasting. Because I think it not only helps people understand, but then it helps bring them in. I used to work in the private sector, as I mentioned, and I got into some executive roles and I studied leadership. And one of the things about leadership is clear communications. 

And the story that I'll tell is about Colin Powell. Colin Powell was Chairman of the Joint Chiefs of Staff, Secretary of State. He was in battle and wars and stuff. And he said, what is the definition of a leader? A leader is someone that others will follow. How do you get people to follow when potentially their lives are on the line? You have to inspire them and to inspire them, you have to speak clearly. What's the objective? Why should you be involved? And I think while that's a very extreme example, It may not be as extreme as we think.

We're talking about sustainability. We're talking about the health of the planet. We're talking about our future, our children, our grandchildren. And when you put it in terms like that, then the jargon kind of fades away. And we remember why we are here, why we are doing what we are doing. And that's the power of clear communication and storytelling. It brings others into the cause so they can help us lead to a better future. 

Mike: I'm currently reading Katharine Hayhoe's book, Saving Us. I don't know if you've checked that out yet, but she talks a lot about how we can make stories out of these complex topics. And also by   appealing to these more humanistic angles, we can overcome the jargon, which often becomes politically charged. And we can avoid that and actually connect with people where they are, which is why I even made this my career focus and the focus of this podcast. So thank you for those insights, Tim. 

Tim: Yeah, I think what you're doing is so very important and I really am so glad to be here and maybe help a little bit in terms of the journey that you're on. 

Mike: I always like to ask my guests: how did you make it in your own sustainability career journey? And I know  you've had a pretty long journey so far — done a lot of interesting stuff, but what advice would you give somebody, maybe just trying to break in, just trying to start out or a little further along?

Tim: Work for your passion. I mean, as much as you can try to contribute to something that produces results. And one of the things that — at the sort of ripe old age of whatever I am now — I think a lot about is, I think it's super inspiring to see a legion of young people coming from all sorts of different fields that want to contribute to sustainability.

And since I mentioned the book in the last class discussion. One of the comments I made in the book is that you can lead from wherever you stand. And what that means is that you may have a degree in marketing or finance or something that's kind of far from sustainability. But it turns out that almost any corporate function can contribute to a better outcome.

And so, keeping that in mind, you know, there's lots of different ways to approach it by looking at what if we did it a different way? How could I approach this within the culture and the systems of my company? And I think that's a very empowering thought. I always was one of the weirdos that just had this in mind from the very beginning.

I started in sustainability. I've had many jobs, but I've had one profession. And I'm very lucky that that profession is my passion. And so, I get up every day and I'm super excited to go to work. And I've been working so long. My wife's like, “when are you going to stop?” I'm never going to stop. I love what I do.

And if you love what you do, it's not work. And so that would be my one advice is to try to focus on things that give you professional satisfaction in the workplace. 

Mike: Love that. And that definitely resonates with me and how I've approached my career so far as well. Thank you, Tim. This was a super helpful conversation.

Again, Tim Mohin, he's a partner at Boston Consulting Group, and he also runs this wonderful newsletter that we keep plugging here. I promise I'm not getting any kickbacks. I just really like it. And, we'll definitely include a link to that in the show notes so you can subscribe and you can also connect with him on LinkedIn and we'll include that link as well.

Thanks again, Tim, for all your insights today. 

Tim: Thank you, Mike. I enjoyed our conversation.