Earlier this year, the Firm hosted our 12th Annual National Retail and Consumer Markets Summit – our annual client-focused event that canvasses a selection of the most timely and relevant developments facing the industry, which was held virtually this year. Themes that emerged from the Summit included personalization for customers, authenticity in showing customers a company's values and focusing on effective integration of technology into businesses.
The following is Part 2 of a series highlighting key takeaways from the Summit, which explores the continued rise of environment, social and governance ("ESG") and diversity and inclusion in the RCM sector.
ESG as a Governance and Stakeholder Imperative
In this session, Awi Sinha (McCarthy Tétrault, Co-Leader of Public Sector practice) and Jodi Butts (WATSON, senior governance consultant) discussed ESG as a governance and stakeholder imperative. This engaging discussion yielded many takeaways, including the following:
- We are seeing a pivot in companies' approach to ESG from a litigation-risk approach to an opportunity-seizing approach. In today's economy, ESG is becoming an aspect of the product that consumers consider and value. The 'marketizing' of consumers' opinions through social media and the flexibility of the digital marketplace play an important role in accelerating ESG awareness for businesses.
- The ideal starting point is to align the company's purpose with its ESG goals. Board members should be encouraged to bring ESG into their decision-making throughout every aspect of the board's agenda. Especially in Canada, there are high expectations on directors, and directors' fiduciary obligations require them to look beyond just shareholders and consider other stakeholders by evaluating material sustainability risks. These stakeholders such as investors, lenders and third party organizations are increasingly focused on board sustainability competencies.
- There is no one best practice in terms of how to structure your ESG approach. Some companies extend their audit committee's mandate to include ESG or have ESG in their governance committee mandate. Boards need to seriously consider the committee's competencies and skills in this context. For example, the audit committee could be appropriate to oversee ESG-related disclosure.
- Corporations see a symmetry between the goal of leaving the world a better place than they found it and the goal of surviving in the market. Some companies are waiting for regulations to take steps while others are proactively establishing initiatives. Consumers are looking for reasons to change brands, but they are also looking for reasons to remain loyal to any particular company. Focusing on ESG allows companies to enhance the loyalty and allyship between the company and the consumer.
Advancing the Equity, Diversity and Inclusion Conversation
The events surrounding George Floyd's death, the hatred generated against the Asian community throughout the COVID-19 pandemic and the discovery of remains on grounds of former residential school sights for Indigenous children in Canada have elevated the global need to address issues relating to equity, diversity and inclusion (EDI).
In the context of this shift, McCarthy Tétrault's Charlene Theodore (Chief Inclusion Officer) and Lara Nathans (Industry Strategy Leader Retail & Consumer Markets Group Leader) discussed the importance of EDI within organizations and how they can advance these issues in order to increase their corporate social responsibility. The presenters shared the following insights:
Brand Reputation and Diversity and Inclusion
As more and more consumers shift from retailers who do not affirm their position on EDI, many brands have shifted their way of doing business in manners that reflect the values of their clients. Market research from Google shows that 70% of Black Millennials are more likely to buy from brands that take a stance on race-related issues. A research by Deloitte reveals that 50% of customers have been influenced by an organization's support for equality when making a purchase decision in the past 12 months. In addition, 41% of shoppers have shifted at least 10% of their purchases away from retailers who do not reflect how central diversity and inclusion is for them.
Understanding customers' affinities and what moves sway them from certain brands is key for sales, and organizations must also consider the prevailing demographic values in their approach toward recruiting and retaining the best talent. Developing a solid EDI framework is important considering that in 2030, 75% of the workforce is expected to be millennials. Millennials and Gen Z are the most racial and gender diverse generation, whose members will be making up the majority of the businesses' teams in just a few years.
Research shows that 86% of women and 74% of men are strongly considering employers' policies on diversity and inclusion when deciding which company to work for. At McCarthy Tétrault, the Inclusion Now framework has become a way of doing business. A good EDI plan can impact the success and longevity of a brand.
Moving from Performative to Sustainable EDI Planning
Over the past few years, EDI planning best practices have moved from an event-based model to a framework in which EDI is integrated into the workflow all year round. While it remains important to celebrate and commemorate historical milestones, organizations are now looking for ways to integrate EDI into every aspect of their corporate structure. For instance, in its initiative to promote access to the legal field for Black and Indigenous students, McCarthy's launched the 1L Black and Indigenous Summer Program. Today, the firm is welcoming the largest cohort of Black and Indigenous students on Toronto's Bay Street.
To develop a good EDI framework, organizations must plan it as they think of other business ventures. To guide themselves, businesses can look at the areas in which they perform well and the resources they rely on in those areas. Common tools used for business ventures such as market research, third-party consulting or marketing strategies may be used for EDI planning as well. Ultimately, treating EDI as an aspect of the business will show authenticity, and the efforts of the organization will be noticed by the market and by employees.
EDI and the Public Face of the Business
When an EDI plan is put in place, clear communication to staff, customers and other stakeholders is key. The following points can help organizations integrate EDI into the public image of their business:
- In staff and customer facing materials that display information regarding the EDI plan, do so in a way that makes it easy to find the organization's position on diversity.
- Be transparent about their EDI goals and achievements. Communicating both wins and lessons on the EDI journey shows accountability. Customers are much more forgiving of missteps when a business communicates its setbacks transparently.
- Ensure consistency in EDI updates. The EDI plan should align with the human resources policies. A consistent approach will increase the authenticity of the public message, and reveal the organization's intentions.
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