The head of the largest U.S. water utility, and Raymond James’ lead director, is focused on environmental, social and governance issues.
Susan Story, the CEO of American Water and a board member for Raymond James and Dominion Energy, doesn’t just give environmental, social and governance (ESG) issues lip service.
American Water, the largest publicly traded U.S. water and wastewater utility company, was named one of the “100 Most Sustainable Companies” by Barron’s magazine this year with a 26% drop in greenhouse gas emissions. And under Story’s leadership, the company reached gender equity in the boardroom and relocated its headquarters to the waterfront of Camden, N.J., a city trying to revitalize.
An ESG focus, she stresses, is not only good for society but it’s also good for the bottom-line.
"It's the best thing long term for our company and for our investors," she epxlains. "Corporations can have a heart."
Encouraging corporations to consider the greater good is nothing new. It has had many iterations and names, i.e. corporate responsibility, socially responsible investing and “the triple bottom line.” ESG is the latest salvo, broadening the concept to include everything from gender inequality to bribery to climate change; and it’s gaining momentum in Corporate America, partly because large investors are demanding it.
Directors & Boards recently sat down with Story at the company’s new headquarters to find out more about her ESG mission. The full interview will appear in the fourth quarter issue of the magazine.
Here’s an excerpt from the Q&A:
Do you think environmental, social and governance issues are becoming mainstream in corporate America? Why or why not?
Yes. Corporate social responsibility has increasingly become important for customers, communities and investors. Stakeholders expect corporations to not only be aware of, but to provide leadership on, ESG issues.
How do you see the current ESG movement differing from past CSR and sustainability efforts in business?
The current ESG movement is much broader today. It includes environmental leadership and sustainability; employee engagement, safety and equity; active community outreach; civic and charitable involvement; and increasing demands for transparency and good governance. Stakeholders want to see more than just words, they want to see defined and measured actions and results that are reflective of a company’s commitment to ESG.
Under ESG, people seem to have similar parameters for governance, but environmental and social categories seem to be more nebulous. Does “social” include employees or the community at large? Does it include involvement in social justice or just a living wage, etc.? And what about “environmental”? Does that mean the immediate company or does it extend to any partners? Does it impact partnerships?
The definition of ESG is evolving and there is quite a divergence of what is measured and tracked by different ESG entities. This can be a challenge for companies like American Water when we are trying to structure our reporting to give our stakeholders a comprehensive view of our culture and initiatives which are very supportive of ESG principles. I believe “social” is a view of a company’s impact on everyone it touches — employees, customers, communities, investors, regulators, vendors, etc. It is by definition, our “culture,” or how we do our business. American Water is a values-driven company, and our employees represent the communities we are privileged to serve. Every day, our people take pride in delivering the critical services of water, sanitation and fire protection to more than 14 million Americans. Our 7,100 employees serve over 1,600 communities across the country, and we aspire to make every community better because we are there.
Do you see the ESG conversations happening more in the boardrooms you’re in? What should the board’s role be? What has been your role on the boards you sit on outside of American Water?
In addition to what I previously shared about how our American Water board leads our ESG efforts, I am seeing a strong focus on ESG on the two other company boards on which I serve.
For example, Dominion Energy’s board of directors recently established a sustainability and corporate responsibility committee which oversees the company’s performance as a sustainable organization and responsible corporate citizen, including oversight of strategies, activities and policies regarding environmental sustainability, corporate social responsibility and public issues of significance. It is chaired by Helen Dragas, one of the board’s three female directors.
My other public board is Raymond James, on which I serve as independent lead director and am one of three women who sit on that board. Raymond James has made significant investments focused on growing diversity within its financial adviser and capital markets ranks as well as within its management team. They also have developed a comprehensive suite of sustainable investing options available for clients and make giving back to their communities a core operating principle in each of their 2000+ locations.
The full interview with Susan Story will be in the upcoming fourth quarter issue of Directors & Boards magazine and online in December. To subscribe to Directors & Boards, click here.