CEO Hikmet Ersek rides the “purpose” train, supported by the board.
At Western Union, we believe we can be more successful as a company when we operate according to the highest ethical standards, address unmet social needs and promote the well-being of our consumers, their communities and the environment.
Those are the opening words of Western Union’s inaugural environmental, social and governance (ESG) report released this past summer, a report that was spearheaded by the CEO and supported by the board of directors.
Hikmet Ersek, CEO and a director at Western Union explains: “Investors have been asking ‘what is your purpose and how are you implementing that?’ I was thinking about ESG and I went to the board. They were supportive,” of creating the report that details what the company has been doing, and plans to do, globally, he says.
The board, he continues, “sees that ESG is more than a report. It’s about positioning the company on what we’re standing for.” Western Union is a “purpose driven company,” he says, adding that the board really wanted to promote that mission and the report “so we can be used as an example for other companies.”
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Also creating an example was Ersek’s decision to be one of the CEO signatories on the Business Roundtable’s recent “purpose” statement.
“Since the beginning, driving shareholder value has undoubtedly been table stakes for any publicly traded company,” Ersek maintains. “The difference is that today, shareholder value must be met with a wider societal purpose. Western Union is a purpose-driven company, committed to moving money for better. We listen to our customers across the world, who reside in more than 200 countries and territories where we operate. Listening and understanding their needs fuels our innovation and the issues that I stand up for.”
“Listening to our customers,” adds Elizabeth Roscoe, executive director of the Western Union Foundation and head of corporate brand & purpose for Western Union, “we know many of them, like Mr. Ersek, are migrants and that sending money for education is important to them. The work of the Western Union Foundation focuses on these things — one of the ways we serve a wider societal purpose. Another example would be in the area of compliance.”
Ersek acknowledges the process has had its challenges, especially in the compliance arena. The company has faced fines related to money laundering and human trafficking, and despite doing better than many corporations on the diversity in leadership front, gender parity has yet to be achieved.
To deal with compliance issues, Ersek decided to invest heavily in new programs to deal with money laundering and human trafficking issues, a decision supported wholeheartedly by the board.
At Western Union, explains Frances Fragos Townsend, a Western Union director and chair of the compliance committee and a member of the corporate governance and public policy committee, “compliance is a way of doing business and we believe it’s the essence of being a responsible company. The pure scale and scope of Western Union’s global operations underscores a commitment to moving money with integrity.
“Western Union has increased overall compliance funding significantly, investing nearly $1 billion in the last 5 years. As a core capability of doing business, Western Union’s intricate compliance measures help to protect customers, vulnerable groups and the global financial system.”
It was a huge investment, but it took a huge commitment by the board and management to change the culture. “We knew culture was important,” Ersek explains, so every employee was training in anti-money laundering and compliance. “You can’t just train one department and create a culture. You can’t say, ‘legal is responsible.’ If you want to live it, you have to do it across the company.”
Western Union’s board of directors plays a key role in prioritizing ESG topics, including ethics, compliance, privacy, and diversity and inclusion.
On the diversity front, the company is making inroads.
Western Union’s 10-person board now includes three women, some of who meet with the diversity group before every board meeting.
In 2015, Ersek created an all-female senior advisory group to come up with a plan to promote women at the company into the leadership ranks. The group, under the Women@WU name, set a target of increasing female leaders to 40% by 2020, and the company is now at 34%. “We’ll see where we are at the end of 2020,” he says.
The company’s ESG report includes information on how they are making changes in everything from diversity:
In 2017 and 2018, we conducted unconscious bias training with approximately 150 of our leaders. We also piloted an unconscious bias workshop about working mothers to more than 40 leaders; nearly 85% of participants reported greater understanding of how unconscious or implicit bias impacts women and mothers.
To pay equity:
Western Union is committed to the principle of equal pay for equal work. The company consistently reviews and updates salary ranges and performs internal pay equity reviews. This ensures impartial and competitive pay practices, while aligning salary to local market conditions and cost-of-labor changes. We also offer employees multiple channels to raise pay equity concerns, such as the employee’s manager, our human resources team, our ethics helpline or the legal department. Whenever we uncover pay disparities, we take responsive actions to address the situation.
While Ersek is proud of the report, he sees it as just a part of the ESG process.
“Once you go to the public, promise it, you have to execute it,” he says. At board meetings and on board agendas, he adds, the issues will remain an integral part of all discussions. “We have to keep up our values, measure it, and present it to the board,” he says, adding that, in the next six months that’s just what management will be doing.
On the question of whether boards should balance both profits and social purpose, he says, “They have to do that, and they’re doing it. I’m fortunate.”