The acronym ESG can be found throughout news articles and investment circles these days. ESG, as in Environmental, Social, and Governance, is reshaping business. That definitely includes dairy. To gain a better understanding of this area, and how it relates to sustainability, John Dardis, the senior vice president of sustainability with Glanbia, shared his perspective with those attending the 96th Idaho Milk Processors Association meeting.
On the investor side, two things have changed:
- The speed in which you need to move
- The transparency
“If you read our annual report, you will see each year we are ramping up the level of disclosure,” he said of reporting on the sustainability issue at Glanbia. “Honestly that’s a challenge. However, we have to do it,” said the former First Secretary for Agriculture and Food with the Embassy of Ireland, who at the time headed up analysis of U.S. food and agricultural policy.
The investor piece has changed quickly in the past five years.
“When we talked about this five years ago, questions centered on subjects like, ‘Do you use antibiotics?’ Now we live in a world of data and a global imperative for action. We need a better understanding of what is happening inside our own business and in our value chain and demonstrate our progress,” said the Glanbia executive, who now lives in Illinois.
Consider a broader perspective
“I try to simplify this topic in my world by considering if I am an analyst sitting in an investment house and my firm wants to differentiate where we invest, we are looking for companies that can adapt,” Dardis shared. “This reflective approach is a good tool because sustainability is about integration. It’s not my job; it’s everybody's job. We can better articulate our industry’s functions when we work together.”
In going back, looking at this through an investor’s perspective, Dardis went on to share, “What these investors are doing is de-risking their business portfolio. If you are a retirement or pension fund, you need to think 2030 or even a longer horizon like 2050,” said Dardis, who holds a degree in plant breeding and worked in the trenches during the genetically modified organism (GMO) debate.
Dardis also suggested to those attending the Sun Valley, Idaho, meeting that everyone should try to take a longer-term view. “For those of us in the producer or processing world, we are thinking quarterly financial reporting or at best, three-year strategies. The challenge for us in ESG is breaking out of that a little bit and pushing to a 10-year horizon. Not only is that the climate language, but it also helps us chew off the elephant into smaller pieces on all sustainability matters,” he suggested.
“Remember, we don’t have to get everything done this year or next year. What each of us needs is a road map that goes out 10 years and beyond,” he said of the Net Zero and sustainability topic.