THE PURPOSE DEBATE Western Union’s First ESG Report
By Eve Tahmincioglu

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.”

 

THE PURPOSE DEBATE Introduction

Where corporate America has been, and where it needs to go.

By Robert Rock

Back to the ‘80s: Business Roundtable’s “Purpose” Statement Redux

The group’s 1981 statement called for corporations to be “a positive force in society.” What’s different this time?

By Kristin Bresnahan

Three Problems With the Stakeholder Theory

Business Roundtable’s misguided decision to put shareholders last. An unpleasant déjà vu.

By Charles Elson

Social Good Uprooted

How America’s corporations lost their public purpose.

By David Ciepley

Former Vanguard CEO Weighs in on ‘Purpose’ & ESG

Bill McNabb says a focus on the greater good leads to long-term value

By Bill McNabb

Western Union’s First ESG Report

CEO Hikmet Ersek rides the “purpose” train, supported by the board.

By Eve Tahmincioglu

 

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.”

Highlights from Western Union’s ESG Report:

Connecting people to the global economy: The combination of our retail and digital businesses enables Western Union to be the bridge between offline and online money movement, creating a truly inclusive platform that leaves no one behind. In addition, we stand in support of migrants, refugees and other displaced people, who are important parts of our customer base, our workforce and our communities.

•          25%+ of our customers have sent money for education, based on customer surveys.

•          1,800+ NGOs have used Western Union’s NGO GlobalPay to send nearly $6.5 billion, since 2012.

Moving money with integrity: We work closely with authorities to help thwart and prosecute fraud, human trafficking, money laundering, drug trafficking, illegal wildlife trade and other criminal activity.

•          Participated in more than 1,400 investigations to combat human trafficking since 2013, resulting in hundreds of arrests and the rescue of hundreds of victims

•          Invested almost $1 billion into compliance efforts over the past five years

Supporting education and humanitarian relief: In 2018, the Western Union Foundation — sustained by Western Union, its employees, agents and its business partners — helped underserved populations connect to the global economy through the power of education and humanitarian relief efforts. The Western Union Foundation has given nearly $120 million to fund projects to advance education and support humanitarian relief in 137 countries since 2001.

•          In 2018, the Western Union Foundation, together with Western Union, was at the forefront of 13 major natural disaster relief efforts, including hurricanes in the United States and flooding in Kerala, India.

•          In 2018, 84% of our employees contributed financially to the Western Union Foundation, well above the median rate of employee giving, which is 31%.

Fostering a culture of ethics and inclusion: We are continually striving to improve diversity and inclusion at Western Union, and these two fundamental principles provide the foundation for our corporate values: globally minded, purpose-driven, trustworthy and respectful. The executive team alone is comprised of leaders born in eight different countries.

•          About half our global workforce are women, and 34% of our director-level-and-above positions are held by women and we continue to raise this number.

•          In 2018, our 11-member board included three ethnically diverse directors and three women.

•          50% of our board’s committees are chaired by women.

 


Issue: 
2019 Third Quarter

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