Episode 6: Judy Slatyer - Creating safeguards for AI, lessons on avoiding greenwashing, and changing attitudes towards ESG
Judy Slatyer MAICD is the Chair of the NSW Net Zero Emissions and Clean Economy Board, plus Natural Carbon. She’s also a leader of the National AI Centre’s Responsible AI think tank, a Director with WWF Australia and a former CEO at the Australian Red Cross. We discuss: why artificial intelligence is an important issue for boards, advice for directors on avoiding greenwashing, and changing attitudes towards ESG issues.
Transcript
Welcome to boardroom conversations, a podcast from the Australian Institute of Company Directors. My name is Bennett Mason. Thanks so much for joining us. And each episode will have candid conversations with some of Australia's leading directors delving into their background journey to the boardroom and some of the challenges they face to with the way our guest this time is Judy Slatyer. She's the chair of the New South Wales Net zero Emissions and Clean Economy Board, plus natural carbon. Judy's also a leader of the National AI Centre’s Responsible AI think tank and a director with WWF Australia, GigaComm and Talents Beyond Boundaries. Previously, Judy was the CEO of Lonely Planet and the Australian Red Cross, plus the chief operating officer of the World Wildlife Fund. Judy, thanks so much for joining us.
JUDY SLATYER
It's great to be here.
BENNETT MASON
Judy, I want to talk about climate change and A.I. and all those great topics in a moment. But I'm really eager to speak a bit about your career first. We said earlier that you were a senior exec with Lonely Planet, the Red Cross, and the WWF. What did you learn about leadership when you were doing those roles?
JUDY SLATYER
So, I've had the great fortune of working across sectors: governments, private sector, not-for-profits and working internationally, as well as working in Australia. And the things that I've learnt the most are: how do I create a leadership style that really enables others and encourages curiosity, encourages external thinking, but also creates accountability and also makes sure that things are delivered. So stepping back, it was about 15 years ago where I sat down and said: “What type of leader do I want to be?” Obviously, leadership situational. How I led through the Black Summer fires is totally different to how you might lead to take on future trends. But I really thought hard about what leadership I wanted to have, what it meant for me as a person, my impact on others. So, the things I focussed on are things like how to use the future as a resource today. How do you get the whole organisation looking forward, thinking about how the forward shifts are going to change us, being curious and pulling the future back into today and how we shift. I thought about how and worked on how to enable those around it. In Red Cross and WWF, or even Lonely Planet, the travelling community. How do we enable the community to do great work? But at the same time, staff, and others. I also spent a lot of time on improving my capability to listen and to give space. To give space for people to experiment and to come up with their own solutions, etc. So that was a big part. And finally, having spent now many years in the not-for-profit sector, you also learn how to think about changing a whole system, which is so critical to the two areas I’m working on at the moment because there's no easy fixes, there's no silver bullets. And finally, I learnt that it's okay to be lonely. It's okay to feel really challenged and it's okay to go through really, really tough stuff. And it's about forgiving yourself as well in those journeys, while also holding a pretty high standard. So, I learnt probably mainly about myself.
BENNETT MASON
Always good to learn about yourself. Now in those executive roles you would have reported to boards all the time. What advice do you have for other execs or managers when they're reporting to boards themselves?
JUDY SLATYER
So obviously the chair relationship is crucial, as well as critical committees and those types of board roles, as well as the board itself. So, working closely with chairs or any committee, I try again to create a future focus. Not this time out, ten or 20 years. But how do we spend 75% of our time on what's out there, what's coming around the corner and 25% of our time on what's happened and what do we learn from it? Because it's very easy to spend most of the board meeting on what's happened, looking back at results versus how do we make sure we look forward and what's coming down the path. How do we use good lead indicators? How do we get a sense of what's working, what's not early so we can change it? I also focussed with the chair again on the rhythm of the board and the committees so that it gave the space for my executive teams to deliver really high-quality work. So how to make sure there's a rhythm of meetings and agenda-setting and an annual plan for agendas that the executives can work towards and really deliver high-quality work. The other place I'd spend my time on is in the papers. How to make them clear, succinct, really material. And that's a fantastic learning for any executive to be able to basically in a couple of pages, no matter how complex the issue is, to be able to give to the board what they need to know, what the issues are very objectively to help them have the conversations they need to have as a board recognising their different role. Finally, I worked to try to encourage good, inclusive debate, to hear all voices, but then most importantly, to reach agreed decisions at the end of those debates. And decisions that held in a sort of Cabinet-solidarity type of approach. Absolutely critical 75% looking forward using leading indicators, understanding what was around, creating a good rhythm for everybody so that they could deliver well, ensure good agendas, papers, etc, so the board can do its job as well as it can, and encouraging good debate and decisions.
BENNETT MASON
I think there's great advice there for execs and for board members. Now, you had all these senior roles at organisations here and around the world. How did you decide it was time to move on from your executive career and begin board roles instead?
JUDY SLATYER
So, there’s a little nuance to that. I rather than choosing “I want to do board roles” – it was more of “How do I apply my efforts to what I think are the most critical issues coming down the path?” And we had just finished a horizon scanning process. Obviously, every board and executive do horizon scanning and the two standout areas that were potentially going to create future vulnerability for humanity were climate change and AI. And climate change was something that I'd been building on ever since I was a teenager. My family were very focussed on it. But also, AI was something that was really evident, when you look at what generates vulnerability: exclusion, inability to participate in society or economically, excluded from getting certain jobs, unable to take up services. All of these sorts of things, AI could, if not managed well, will have a really severe impact. And I think the example that did it for me around AI was in one country, you would imagine that using a public facility, a public bathroom would be a right that every person should be able to use without having their identity questioned. And in this particular country, in order to access the bathroom, they were starting to use AI recognition to allow access. And I just thought: “Wow, if this is not managed well, this will exclude billions of people from life and society.” So those two things are where I decided to focus my attention. And then I worked on how to build initiatives to maximise my ability to help others to accelerate good changes in those areas. So that's how I thought of it. And that includes some board roles and includes some advisory roles and also it includes some critical not-for-profit areas, such as talent Beyond boundaries. The forecast is there’s going to be 1.2 billion refugees as a result of climate by 2050. How are we as a world going to deal with that? So, the people aspects of climate change and adaptation.
BENNETT MASON
Judy, I don't think I'll ever think about public toilets quite the same way ever again. But I do want to talk more about A.I. in a moment. But just one final question on your career. Something we've asked a lot of people on this podcast about, is that transition from a senior executive role to a board position? Did you find that move challenge at all, and if so, how?
JUDY SLATYER
I didn't find it challenging at all. In fact, I relished the opportunity to be the role of a board director, versus an executive. And because I had spent so much time with boards and board committees, I had a very clear view in my mind what a good board director was. I had also had the good fortune to work with the boards on their own development while I was an executive and with the chair. As many boards do, they have good development pathways for their directors. So, I’d also benefited from that learning and development. And I really pride myself and work hard at being a good director, focusing on the strategy, making sure the organisation's set up to thrive and survive in whatever world comes to us, making sure that we're delivering the outcomes we promise, making sure that we're being open and transparent, and making sure that we're delivering on our commitments to society.
BENNETT MASON
So, let's talk about now some of the areas that you're involved in. We mentioned your bio at the top of the show, but you're also a director with the B Team Australia. This is an organisation founded by Richard Branson aimed at tackling global challenges. You're part of the Climate Leaders Coalition and the AI Coalition there, so we'll go through those topics. I think we'll start with AI, because so much has been written recently about the use of AI. It's obviously been a particular focus on ChatGPT recently. Some of our listeners might not be fully across AI. So, in simple terms, what is artificial intelligence and why is it such an important issue for boards?
JUDY SLATYER
So, there are a gazillion definitions of artificial intelligence, so I thought I would try to focus on why it's different from other technologies. So unlike traditional technologies, they are programmed to follow specific instructions. It's more predictable. Sometimes it doesn't work, but it's more predictable where it's going to go. Whereas AI systems can learn, reason, and make decisions based on what they've been taught, patterns that they've learnt, data that they have, and in doing that also be making predictions. So, whether you call it intelligence or not is sort of a moot point to me. It's actually the machine is now - most often with humans - reasoning, learning itself, making decisions around the base data patterns that they've been given and taught on. So therein lies the opportunity risk of AI. So, one example is with robots and AI in farms, the use of pesticides can be dropped by 95% by the precision from what the machine has learnt and all that it's using and making those decisions. Fantastic outcome, fantastic for the environment, fantastic for the farmer because it's cheaper, all sorts of benefits to that. On the other hand though, if the machine is not trained on a sufficiently diverse set of data with appropriate guardrails around that, it could create havoc in that field. So, the difference with AI as a board director is understanding that dynamic of learning and making decisions. And understanding therefore, how do we need to think about how we govern it and how we manage it, given that
BENNETT MASON
I guess then the follow up is, how do we manage the risks around AI? What sort of guardrails or safeguards should boards be putting in place around the safe use of AI at their organisation?
JUDY SLATYER
So that is such a massive question. I'm going to start with a couple of things. So, there was a recent survey by the University of Queensland and KPMG across seven countries about the level of trustworthiness, how citizens do or don't trust AI. And 69% were wary or ambivalent. So to me, the very first thing for a board understanding AI, is to be thinking how could we use this to enhance what we do for our clients and for our customers to increase the speed, to increase the accuracy, to bring different services, different capabilities. And how also can we use that internally? But therein, as I've just mentioned, also creates the risk. So, if we know that, for example, AI starting to do a great job in detecting breast cancers faster and more accurately. But if it's not closely monitored and watched and overseen and incidents aren't explored, so that we really understand root causes and things, then it can obviously have pretty significant negative consequences. So, I think for the risks question, it is firstly around: how is my company using AI? What is our AI footprint, if you like, how is it using it? How are my suppliers using it, how are my customers are starting to engage differently in the world with it? How are am I investors starting to think about risk, etc.? So, the first is to be very curious around it, but then the second is around: Okay, how do we make sure we are genuinely exploring the potential of AI to transform the organisation and to transform what we do for our customers and clients and our staff? How do we think of the workforce changes that will be happening? How do we make sure that this combination of person and machine in decision making is optimised? How do we make sure we're training and building capability in the workforce? How do we make sure we have understood what's in our supply chain? Very similar to carbon emissions or modern slavery or health and safety for that matter. How do we know what's going on in the supply chain in relation to the use of AI and where is there opportunity there for efficiencies or improvement or change, but also where is there risk? And then once a good, good understanding of those sorts of questions, I really think it's now up for board directors to say: well, what is our role as board directors in leading this transition to an AI enabled world? What are our red lines? What are the absolute no-go areas, whether we call it risk appetite or not? It's what are those red lines for us as directors. And how do we make sure that we are thinking through every system that we have, whether it's incident reporting, crisis management, risk management to embed an AI DNA in it, given the nature of AI and how it changes and adapts. I think that the real opportunity for companies is in rethinking the customer relationship, the client relationship, the supplier relationship, and really looking at how to rethink their business models and their opportunities. But in that, going in with very open eyes about how to manage it, given its differences.
BENNETT MASON
Every organisation will be different. But you mentioned “red lines” a moment ago. Do you have a view on what those red lines should be for the safe and responsible use of AI?
JUDY SLATYER
I'm going to give you a couple of examples. So, I was recently listening to the CEO of one of the world's largest insurance companies, and he had chosen two what I call “red lines.” So, the first red line was he wants to be able to ask anyone of his management group to explain the decision the machine has made. Now, that sounds a really simple thing to do, but with AI, knowing how the machine made the decision it made is really very difficult. And that simple question leads then the organisation to thinking differently about how it's designed. How do they ensure in an insurance context that the design of their use of AI is inclusive, it's got diverse perspectives? How do they make sure that it's got a level of robustness, how to make sure that it's a fair set of outcomes? How do they make sure that by the time it gets to a decision, it's already pretty bootstrapped towards good outcomes? But then equally to be able to say to my CEO: “These are the things we have done to put in place these guardrails, in order to lead to the right decisions” is a very powerful thing. Now, what does it mean for red lines? It means already we know there are issues of bias. We know there are issues of harm being generated. We know there are issues of lack of transparency, of inability to have fair outcomes. But there's also issues of does it work? Does the AI system work? Does it actually deliver what it's meant to deliver and give a return to the organisation? So, in terms of red lines, I tend to go to the Australian AI Ethics Principles which were developed by CSIRO with the Government, which have very clear eight steps of what are the questions to be asking and how do we put red lines around those. But it is very, very specific to the sector. If you're looking at breast cancer screens, you will have a different set of red lines to fertiliser use with in farms. So, I think this is where directors play a critical role in a deep understanding of how the AI is being applied and the impact it is having on community stakeholders, suppliers and then stepping back to say: “Okay, what are our red lines around this?”
BENNETT MASON
Many directors will just be starting to come to grips with this very complex topic, and many won't be experts. Where's a good place for them to start to learn about?
JUDY SLATYER
Great question. If we think back to when the Internet was first created or electricity or combustion engine, we know now the massive impact on society, economies, jobs, people, those things had. In thinking AI, I think it's important for a director to start from the get-go saying: “I need an open mindset as to what this can be, what an AI enabled world would look like, what it means for my sector, what it means for my competitors, what it means for our customers, our stakeholders.” So, a good old-fashioned scan of how might AI change the environment in which our company is operating. And that can be done through curiosity. Any number of organisations can help with that, any opportunity to talk to kids about it or play with generative AI or look at how other sectors or even explore how the sector is changing or how competitors are changing. So, bringing a real open mindset and curiosity is key. Then I think the second thing is pretty quickly asking that simple question of your CEO: “How is our company and its suppliers using AI today?” Very simple question and then from that will flow the conversations around, well, how are we managing that? How are we mitigating issues, how we dealing with incidents? Are we having an impact on the communities and clients that we serve that we want to have, or are we not having that impact? But I think that first question of how will it change the environment in which the company is working? And the second question of how is the company and its suppliers using AI are the first starting points.
BENNETT MASON
One final question on AI and let's try to look into the future a little bit. Could artificial intelligence one day replace directors? Or will we always need to have humans in the boardroom?
JUDY SLATYER
AI will be very good at replacing repetitive tasks, at seeing patterns that board directors might not see or executives might not see at predicting where things might go and what differences might appear. So, I feel the best thing for board director today is to work out how to use AI sitting alongside you as a director in what you do. What are your jobs and how do you do them and how could you be using AI to help you do your job better? Whether or not replaces it directors, I doubt it. I think it's more about how to use it. And I always remember that book “Who Moved My Cheese?” That classic change management book. And often when I talk to others and my peers as directors, I think we are actually in that moment for AI. And there'll be a few who want to keep coming back to where the cheese was, but there’ll be, hopefully most of them, that get curious now and explore and understand it for themselves, for their company and for their clients.
BENNETT MASON
Good to know that probably there's still a place for human directors going forward. Judy, We could talk for hours and hours and hours on AI, but I want to jump from that massive topic to another one, climate change. We mentioned earlier that you're the chair of the New South Wales Net Zero Emissions and Clean Economy Board. What does that board do and how do you chair that board?
JUDY SLATYER
So, it's a board whose job is to oversee the implements of the government's net zero plan, net zero and clean economy plan. There's a clear set of projects and initiatives underway. So, our job is to oversee the implementation, to guide it and to guide the government, not from a dollars spent point of view, but from an advisory point of view to government. The New South Wales Government soon be legislating the targets and also setting up a commission to do this work. But basically, the plan supports initiatives targeting the electricity and energy transition, electric vehicles, hydrogen, primary industries, different technologies, built environment, carbon financing, waste, all of these sorts of elements that are involved in shifting to a low carbon economy successfully in a way that New South Wales prospers. And that's what we advise the Government on, in terms of how it's going, it's implementation. How do I chair it? There is tremendous expertise and knowledge around that board and of course tremendous expertise and knowledge within the secretariat that supports the board. So, I really do focus on drawing out as many thoughts and perspectives as possible, making sure we have wide-ranging conversations about the issues that we're focusing on. And then that we make clear decisions around the guidance and positioning that we think should be taken. I also work very closely with the Secretary on the agenda to make sure we're getting diverse voices into the room, but also make sure that we are targeting on the biggest issues that need to be ramped and solved. The shift to a net zero economy in a way where New South Wales thrives is massive. What we’re trying to do in 30 years, what collectively the country is trying to do in 30 years, is replace a system that's been around for 100, 200 years. So, it's really massive. And the barriers are things like, there now aren't enough barges in the world to carry the wind farms. Maybe the roads aren't equipped for really heavy EV trucks. So, there really are genuine barriers. It's not about lack of will. It's actually how do we tackle this and do.
BENNETT MASON
This astonishing change that we're going through, this transition towards being a net zero economy. We read and hear a lot about it, of course, but what do you see as some of the key challenges and opportunities?
JUDY SLATYER
So, the key challenge is what I've just highlighted. It is a significant shift impacting every part of the economy and society. Every single person will be on a change journey. And one of the other things I do, as you mentioned, is part of the Climate Leaders Coalition. And we talked earlier this year that this year is actually the year where reality is biting. So, everybody's trying to make the progress. Many companies are doing a terrific job, but we're coming up against significant barriers, whether it's supply chain blockages, whether it's investors needing more certainty in order to invest, whether it's changes going on in the US Inflation Reduction Act that are pulling investment, etc. And so, it's really about how do we best take opportunity wherever we see it. Is there an opportunity to work with different countries on different aspects, etcetera? And I'm not saying that's the boards’ jobs, I’m saying that's Australia's job. But I also think the opportunity for on a circular economy, really getting serious on a circular economy. Looking at how new initiatives around critical minerals can really replace our exports, and replace things that we have, give us a great competitive advantage as a nation. Even things like hydrogen, reinforcing really strong relationships with countries like Japan through critical minerals and other areas. But also at the community level, I think there's tremendous potential. Every Australian can become a power generator. They can, once we get two-way charging EVs and things, and once we roll out community-based initiatives, there is real potential for communities. One community that I'm always blown away by is Collie in WA. I think it's the country's oldest coal mines and they are really working together in a place-based way to recreate what Collie is into the future. The other area, of course, is upskilling Australia. Just like in AI, we need a massive upskilling of capability and skills in order to thrive in a low carbon economy and society. But I also know that the challenges around building new transmission, the challenges around supply chains and the challenges of Australians facing uncertainty are really significant. So, I was very pleased to see the recent Government announcement about the National Task Force on Transition because I think we really need it.
BENNETT MASON
Many organisations are still coming to grips with climate change and they're possibly just starting to incorporate it into their governance structures. Where's a good place for those organisations to start?
JUDY SLATYER
So last week the International Sustainability Standards Board, which is part of IFRS released after about two years consultation, their first two standards. Which are about embedding climate risk in reporting. And they are coming down the path to Australia from as early as next year. As a board director, these are probably the two biggest changes in reporting that we've seen for many, many years. By adapting and following those processes, it will enable board directors to start the journey of how do we understand climate risk, how do we understand climate opportunity for us as an organisation, and how do we start to shift and change what we do to be ready for a low carbon future? Now you mentioned a few companies. The vast majority of companies I'm involved with and talk to are well and truly on the path. Some fantastic examples of leadership. What they're running into is that reality bites piece where they had a strategy, it was very clear. But equally they're running into major supply chain issues or skills gaps and things. So, boards being able to be adaptive and responsive to those genuine barriers is also pretty critical.
BENNETT MASON
I wanted to ask you about greenwashing. It's something that many directors are concerned about, and we know that regulators are taking a really strong look at it. How can boards avoid greenwashing? And what sort of due diligence should directors be doing over statements reporting and disclosure?
JUDY SLATYER
So, I get to this question for those who are really trying to get it right, because as a whole, there may be a group who don't really care. But there's many, the majority, who really care. And I can absolutely get the dilemma. So as a CEO, you want to be part of a team that's leading an organisation to set high ambition, to be future focussed, to understand what's coming down the path, to make sure you're riding the waves that exist, and to set the inspiration for staff and suppliers. And I remember visiting the Ferrari Museum and, every year they set a single goal and this particular goal was to build the lightest petrol engine. No one knew how to get there. No one knew what their role would be in it. But boy, did it galvanise. So really understand the strategic need to galvanise through ambitious board outcomes and strategy. And the power that brings in unlocking ideas and bringing employees along and helping organisations shift and change. But I also get that this is a transition, as I said before, in 30-years it's replacing 200-years. So, it's really tricky. How do you balance having very clear goals and outcomes with a really solid path to get there, when you're going to have to adapt and shift and change as the system shifts and changes around you? So, I think the key to me around greenwashing is that you have very strong, reasonable grounds to believe A, this is the essential strategic shift for the organisation. B, that you have set reasonable, achievable outcomes. C, that you have a pretty good idea how you're going to get there, what's needed in your workforce, what's needed in your supply chain, what's needed in technology shifts. All of the elements needed to make the trade the shift and you've got good evidence around those. But that diligence also needs to be married with the importance of inspiration. And come on, we can do this together and unlocking the ideas that will be needed to get us there. So, it's really tricky, the whole greenwashing piece. But I know those who are absolutely on a path to set their companies up for the future of a low carbon world. And it is about that “reasonable grounds” piece. It is do you as a director, really believe this is the right way to go and for a low carbon world and it's achievable? And being able to prove that. But I'm sure every company director is getting very good legal advice on their reporting, and I would encourage them to be doing that.
BENNETT MASON
That's very good advice. But Let's shift now to that broader SJ space. But it's of course linked into climate change. You've been any ESG advisor for many years. How have you seen boards attitudes towards ESG change over time?
JUDY SLATYER
So, I first saw this when I was working overseas for eight years in Switzerland and around the world with my role at WWF. And I saw a very rapid shift in global companies from simply thinking of it as Corporate Social Responsibility, a bit of brand enhancement, supporting good causes, etcetera. Through to: “Oh, we're going to have risk in our supply chain. Or: “If we don't get health and safety right, we really run significant risks in terms of the harm to our workforce. If we don't understand modern slavery in our supply chain, we really run the risk of customers completely losing faith in us if we don't understand where our Scope Three emissions, we really run the risk of losing a resilient and good supply?” So, I saw it shift to supply chains. And at WWF we worked with around 300 of the world's biggest global companies on their supply chains, whether it was about wood or cotton or certain types of fish or palm oil. And then I saw before I left Europe, I saw most of the frontrunners shifting it to the innovation opportunity space. So, organisations like IKEA, even McDonald's and others or Coke, really thinking through actually: “How do we focus on the opportunity of being a player who takes these issues seriously and solves for them?” So that was about four years ago. At the same time, in 2020, the Global Edelman Trust barometer came out and it was pretty clear then that their global survey saying unless society and consumers and clients trust business, they will not be able to achieve their objectives. So, these sort of dynamics. When I came back to Australia, I felt we were still back in the CSR area, in the main. But in the last five years, I’ve seen a rapid shift probably mainly to risk and risk mitigation. But then a few good leaders really pushing on how do we actually change and improve our organisation as a result of that ESG work? What I see in those, is those companies are building a great muscle. Like if you just look at health and safety, everything that's needed to create a healthy environment with those who come to work for the company can go home to their families. It's been a massive change in culture, massive change in what's the accountability organisation, versus the employee. It's been a change in processes, it's been a massive change in what gets reported and those muscles that have been built. And now the same muscles that companies are using to get serious about carbon emissions or to, I believe, to start looking at AI and how they think about. Or to build their relationships with suppliers. And so, there's some very good examples in cases whereby building your ESG muscles and taking these issues seriously, you build greater trust with your clients or customers. You build a strong DNA and mindset in the organisation that it cares about these issues and takes them seriously, and that creates a great employee brand. We see actually improvements in processes and not lost time or efficiency from crises, etcetera. But also, we see a healthier organisation as a more holistic organisation overall.
BENNETT MASON
Some critics would say that boards and their organisations have perhaps focussed too much on ESG issues and now in a time of difficult economic conditions, boards should be diverting their energies elsewhere. Do you think that's a fair criticism at all?
JUDY SLATYER
I think the first question would be: who are their shareholders? And I bet you in their shareholders, their shareholders are saying these issues are just as important to us as financial outcomes. And in fact, if you look at the ISSB standards for climate, it is for the first time saying it's not just about financial reporting in these areas. I’m obviously a bit biased, but if you just look at the crises that go on, when companies stumble ethically and the damage they do. Even if you were just looking at it from a “let's avoid crises” point of view, whether it's a footwear company in modern slavery. Or whether it's a massive health and safety impact or whether it's an oil spill. All of these things do massive damage to the organisation and it's not just reputational damage. So, if I'm wondering should companies be distracted by ESG in today's environment, to me it's about what do they get distracted to? So being distracted by ESG means working on what’s important to your clients, making sure your customers are getting the services they need. They get the access they need. Building markets through offering more diverse products, more different opportunities, avoiding crises, these sorts of things. So, I think the business case for ESG, if that’s how companies want to think about it, is very clear.
BENNETT MASON
What advice do you have for boards on setting targets for ESG? How can directors have metrics on these issues.
JUDY SLATYER
So again, there is quite a lot of good information out there. In fact, the World Business Council on Sustainability, or the Sustainable Business Council, have great examples of different metrics around the different ESG. It is quite company specific, so some of them are general. Being able to measure your carbon emissions, Scope One or Two and Three, and being able to demonstrate how they are reducing or shifting to a low carbon economy, is pretty easy. Being able to measure your health and safety record and benchmark yourself in your sector. Being able to measure diversity, very easy. Some of the harder pieces, for example, modern slavery. I would argue the metric there isn't about testing whether or not there is modern slavery in your supply chain, it is actually about what do you do when you find it? How do you respond when you find it? Because you can have very significant unintended consequences. The same might go for fraud or other issues, that actually it's not about finding it, it's what you do afterwards to change and improve as a result. Human rights would be a similar one. I think some of them have very, very easy metrics. The others have metrics which are quite specific to the E or the S or the G, but also specific to the company. But having those external impact measures that are meaningful to your stakeholders is the test to use.
BENNETT MASON
Just on that issue of stakeholders that you raised, stakeholder management is an important part of any director's job now. But that's often or maybe always very complex. We know that stakeholder groups aren't homogenous, and often the views of one stakeholder group will clash with another. How can boards help to balance out the views of these different stakeholders they have?
JUDY SLATYER
There are many good techniques for bringing different stakeholder perspectives together and facilitating discussions that allow the group to jointly solve the problem that actually is the problem. Versus just bringing positions. Again, though, I see many companies and many of my director peers who are part of organisations that excel in really listening and really understanding and really getting to what the underlying problem is, so that they can then start to solve it from the underlying problem. Versus the loudest voices or versus those who are best suited to put their voice forward. But they're very critical techniques around engaging stakeholders. So that it's fair, it's inclusive. Even things like holding sessions at the time of day that parents can make it, or single parents can make it. Or making sure that you are really listening to those voices and really helping to get to the kernel of what the issue is and then solving it from there.
BENNETT MASON
Judy, you've been very generous with your time. We might leave things there. So, thank you for speaking to us on boardroom conversations.
JUDY SLATYER
Thank you very much. It's a delight to be here.
Latest news
Already a member?
Login to view this content