Transcript

Scott:
Hello, I am Scott Snyder and I’m delighted to be joined by Chelsi Tryon, ESG director at Toppan Merrill for what is certain to be a very interesting on the dot episode as we discuss the current and evolving state of ESG and climate reporting. Chelsi, thank you for joining me.

Chelsi:
Yeah, happy to, Scott.

Scott:
Chelsi, for listeners who may not be familiar with you, could you share a few highlights of your own journey in the ESG/CSR and sustainability reporting space?

Chelsi:
So, I’ve been in the space for over a decade. Started out with getting my master’s degree in sustainable solutions from the first school of sustainability here at Arizona State University. Then from there, I went on to work in multiple industries from leading sustainability initiatives in hospitality certifying facilities as zero waste, transitioning into the consulting side, working with healthcare, retail, manufacturing. And then I went into specific ESG work for a medium-sized public company leading initiatives at the organization, and now today, happy to be here at Toppan Merrill, supporting our clients on their reporting journey, whether that’s through advising on content design services for reporting and managing regulatory compliance in the climate disclosure space.

Scott:
Terrific, and we’re absolutely delighted that you joined us, Chelsi. Let’s talk through that evolution of ESG because it hasn’t always been what we know it is today. Can you talk about that journey that the world has been on in ESG reporting and maybe where it finds us in today’s environment?

Chelsi:
Definitely a great place to start is how did we get here? So, during my education and kind of where I step in, we were really focused on the triple bottom line was what we called it at the time. Not sure if you’ve heard of that today or not, but it’s finding the synergy between people, planet profit, think about putting three different circles together, and then that small circle, triangle shape in the middle. That was sustainability and that’s what really represented what we were working towards. In the beginning of my career, I spent a lot of time focusing on building and crafting the business case for sustainability. So back then it was more of how can you prove the benefits around these initiatives knowing that it’s going to benefit the environment, but how is it also going to benefit the company and the people that it’s affecting or that are doing those operations. Communication is still key. Back then, it might’ve been more focused on the financial benefits of these initiatives and not wrapped in such a nice standardized report as we see today. But we’re still working towards all of those same initiatives as we were back then.

Scott:
Chelsi, I’m curious if from your perspective, was there a tipping point where ESG moved sort of out of academia, out of a thought or an idea, maybe talked about from a scholarly level and maybe an aspirational level and into the corporate world?

Chelsi:
So, I would say this happened maybe around the early two thousands. We started to see CSR becoming the new nomenclature corporate social responsibility in 2019. ESG became the more mainstream terminology, and that really stemmed from an adaptation in the financial and corporate world where asset managers like BlackRock started incorporating ESG into their investment strategies and even certain government entities started introducing mandatory sustainability disclosures. And now today we’re starting to see ESG continue to evolve as things like cybersecurity and AI are also getting wrapped into ESG disclosures.

Scott:
So, you’ve been in lots of conversations with clients at Toppan. Merrill, done a lot of work consulting with them on their ESG reporting. Would you say there are certain things that they’re expressing to you as we think about where ESG and sustainability reporting is today? What are they asking and how are you advising them?

Chelsi:
I think anybody who’s been reporting in the sustainability space is probably thankful for some of the standardizations that are happening in the reporting landscape. We’re seeing more people reporting in the realm of SASB, GRI, TCFD disclosure frameworks. So, I know we’re all appreciative of those standardizations happening, but there are also clients that we work with that have never reported before, and their primary focus might be regulatory driven and complying with those regulations. So when you think about what California has mandated and those other states that are following suit like New Jersey, Illinois, Colorado, Washington, New York, they’re all coming out with their own requirements around certain sustainability initiatives such as greenhouse gas emissions compliance with TCFD levels of assurance on this data. So when it comes to those who are reporting today, that’s definitely some of the hot topics that we’re discussing is regulations, assurance and all of those different standardized frameworks that are out there that are best suited for them.

Scott:
As you have those conversations though, the companies are obviously trying to figure out, well, what should we do first, right? Or how should we report? Are there two or three things that you advise them on as they’re beginning to think about that first ESG report or maybe evolving their ESG reporting that they’ve done for the last few years with the current political?

Chelsi:
Yeah, absolutely. So, from a communication standpoint, I really think it’s critical that those reporting understand their audience and who their primary audience is for that report. Is it their investors that are asking for this information? Is it their customers? Is it a report that’s being written that they want primarily for prospective employees to be reading? So really that’s one of the first questions we ask is who is your primary audience for this report? When it comes to a design standpoint for these reports, things we often recommend is you want this to be an easy, readable format that you can navigate very easily. So we often suggest having navigation features within your report, things at the top that people can click on and work through, interactive features, links to blogs, links to data, because the report is typically released on an annual basis, and it’s nice to have the ability for readers to go somewhere to access evergreen information, whether that’s a link back to your website areas where you can make those updates. And then the last thing I’d point out is building it into your processes. So, getting everyone at your organization on a cadence of reporting annually helps with this data collection consolidation effort as you’re working through this reporting cycle.

Scott:
Chelsi, would you say that companies are leaning more towards a standalone report or are they looking to integrate ESG sustainability information in places like the proxy statement or their annual report or maybe in a 10-K? What trend would you say is happening out there today?

Chelsi:
Yeah, so that’s a really great point to bring up. One of the things that we’re seeing is having a standalone report can be really beneficial for those who are requesting specific types of information. So, some companies may be getting requests from their suppliers who have to fill out their own information related to sustainability, or their emissions might impact their suppliers emissions. And so, what you’re providing to them also should be the same thing that you might be providing to an investor who has inquiries about future goals and progress towards those goals. So, we are seeing that companies are primarily voluntarily today releasing these standalone reports, but they do have multiple uses to the company versus them having to one off respond to these different types of questions, whether it’s coming from suppliers, customers or investors.

Scott:
Chelsi, the actual design of the report itself, those standalone reports, are you seeing or making recommendations specifically for not only readability but maybe consumability by an individual shareholder or maybe an investor?

Chelsi:
A couple of things that we’ve noticed as we’ve been working on these reports over the last several years is we’re definitely seeing standardization amongst the way the report is designed. So, for example, most of the reports we’re working on today are going to be in horizontal format versus vertical format like you would see in a proxy or a 10-K. That’s most likely because these reports are not designed to be printed, they’re more to be viewed online. Another area is clients are typically reducing the length of these reports, so they’re looking to identify more precise and prescriptive information so that these reports are kind of getting rid of some of that fluff and leveraging that critical data and tables that you would likely see in these reports, which on the point of the tables, those are often now more found in the appendix of the reports that we’ve been working on. One of the things I’d just like to call out for anyone listening is if you haven’t seen our 2026 style guide that we recently released, that’s going to really highlight all of these trends and hot topics that we’ve been seeing in the reporting space as some might consider this space the wild west of reporting, because there is no specific standardized process to follow. While we do see trends, and we do think it is important to point those out.

Scott:
Terrific. I want to touch on one last thing as we close today, and it’s something that’s in the news a lot, which is DEI. Certainly, there’s an intersection between DEI and ESG, but DEI is getting all the news it seems in the world today. Can you talk for just a moment about that intersection? Where does it play nicely together? Where is really DEI separate topic that needs to be addressed by companies?

Chelsi:
For us, we really like to point out that DEI is a portion of what falls under the S section of ESG, so they’re not synonymous. So, anyone who reads headlines or sees anything related to DEI initiatives, that is just a small piece of ESG I want to highlight. And with that, DEI has become somewhat of a politically charged topic as of late, and we have seen some of our reporters taking initiatives to make shifts in their reporting, but I want to highlight that that is primarily focused on the terminology that is used. We’re not seeing much of a shift when it comes to any targets or goals around DEI, any initiatives. So, for us, we may see some reports moving away from the three letters, DEI, and shifting towards inclusion and diversity or reframing to be about belonging or about our people. But the content and the depth of all the work happening behind the scenes at those companies is still taking place.

Scott:
Great insight. Thanks very much for clarifying that for everybody. Chelsi, as we wrap up, we’ve discussed the evolution of ESG pieces of the regulatory landscape and trends in reporting not only trends in reporting, but the reports themselves, the design. Is there anything else you feel our listeners should be aware of as they look to future ESG reporting?

Chelsi:
Yeah, A couple things I think might be worth considering. One is just ensure you have a method of staying up to date with those regulations and whether you will or will not be impacted by them is also a good thing to understand as you think about your reporting today and your reporting in the future. So, reach out if you have questions about those regulations. There’s also talks today about finding the balance between greenwashing and green hushing. So where do you strike that balance between not overstating some of the work that you might be doing, but also not hiding behind anything in fear? Because a lot of work that those companies might be doing are great best practices that can be shared amongst their peers. And then lastly, I would just add, let the data tell the story. If you have the information to back it up and highlight all of the great work that’s happening, find those ways to let the data visually and within the narrative tell the story. And if you need help with that, we’re here to help. We love supporting our clients in this effort.

Scott:
Great. Chelsi, thanks for joining me today, and we’d love to have you back for future updates as the shareholder demands and regulatory requirements around ESG and sustainability reporting evolve. Thanks again.

Chelsi:
Thanks, Scott.