Chrissa Pagitsas will be a keynote speaker at our event ESG&FRIENDS Transformation in Action on May 22 in Sofia. She is strategic advisor to senior executives and boards on the growth opportunities at the intersection of environmental, social, governance (ESG) and global business. Chrissa is the author of the book Chief Sustainability Officers at Work (Apress, 2022) which explores the leadership strategies of Chief Sustainability Officers and Heads of ESG at Fortune 500 companies including BlackRock, Coca- Cola, Duke Energy, and Procter & Gamble.
Recognized as a “Green Bond Champion” by the Climate Bonds Initiative and a recipient of the US Green Building Council Leadership Award, Chrissa is responsible for market-transforming innovations including the first Green Commercial MBS in the US, a standardized energy audit for the commercial real estate market, and the US EPA ENERGY STAR 1 to 100 Score for Existing Multifamily.
At Fannie Mae, Chrissa launched and led the Green Financing Business which issued over $51 billion in Green Bonds through 2018 and made Fannie Mae the largest issuer of Green Bonds globally.
Her prior experience includes developing sustainability strategies for large real estate investors and delivered financial management software solutions for utility companies in the U.S. and Europe. Chrissa holds an MBA from the Darden School of Business, University of Virginia and a BA from Johns Hopkins University.
Mrs Pagitsas what is the biggest challenge for companies to be sustainable?
The biggest challenge for companies is focus. Given the scope and long-term nature of environmental and social issues, a company’s leadership may be overwhelmed with where to start to solve the issues. This is where conducting a Materiality Assessment becomes critical. The assessment identifies what are the environmental, social and governance issues that are most aligned to the companies’ core business and to its internal and external stakeholders. With these findings, companies can then begin creating a plan that addresses those core issues.
How small and medium-sized businesses can address these challenges?
Businesses should start by conducting a Materiality Assessment and then asking how their core products and services can be adjusted to address those material issues. Where can a product use less water in its manufacture? How can a process be modified to use less energy? Fundamentally, businesses should be looking to their core products and services to drive their sustainability strategy, not just relying on philanthropy and employee volunteerism.
All companies pay more attention to the environmental part. How important do you think the S and G parts are?
Together, environmental, social and governance activities serve as a three-legged stool for a strong company. All three are important as they work together.
The environmental issues are complex, from scoping the company’s carbon footprint from its operations to mitigating waste and water use. Environmental issues are relatively tangible and easy to measure and to change business operations around in comparison to long-term social issues, such as gender pay inequity and hiring practices to systemic racism and limited access to affordable housing.
Yet the social and governance parts are equally important even if they impact a company in different ways. These issues affect a company today and in the long-term, whether it’s through its ability to attract strong candidates for new positions to its employees can afford housing close to the company offices or manufacturing sites with good schools and public services. Good governance underpins every company, from the board of directors down to its processes to address employee complaints, partner with its suppliers or serve its customers.
While a company may start with the environmental issues, it must address the social and governance as part of its strategy.
Many companies present their products or services as sustainable, but there are no uniform reporting or reporting standards in the industry. It is difficult to compare investment options without uniform ESG reporting standards. How can investors make sense of or trust the information they are given?
In comparison to the audit and assurance fields, the measurement and reporting processes for environmental and social data is relatively new. Most standards in the market are a few years old, and one of the oldest, CDP, is 20 years. The Sustainability Accounting Standards Board (SASB), now part of the IFRS Foundation, was founded only in 2011. A decade is a short period of time for a voluntary disclosure to receive full market adoption and implementation.
Given this, investors must develop robust internal requirements for reporting and review processes for data received from their investments. It does mean that investors need to develop the expertise of their internal analysts to analyze the data. As the reporting market matures, and reporting becomes increasingly part of global regulatory requirements, the quality and availability of the data will increase.
When do you think there will be a single framework and transparency across all markets?
It is unlikely that there will be a single framework and transparency across all markets for a long time. This is not only because developing the frameworks is complex, but also because new solutions to reduce carbon emissions and address environmental and social issues more broadly are being developed annually. Unlike other reporting frameworks, the ESG frameworks will likely need to be updated more frequently.
Could you elaborate on your experience at Fannie Mae and your motivation for writing the book?
At Fannie Mae, I first launched and led the Multifamily Green Financing Business and then the enterprise’s ESG Strategy. Over the course of a decade, my team and I launched new green mortgage products that served as collateral for over $51 billion of green bonds. In my next role leading the ESG strategy, my team and I developed the framework to support Fannie Mae’s continued focus on affordable housing and addressing environmental and social issues affecting the housing industry in the US.
My motivation for writing “Chief Sustainability Officers At Work” was to draw together the deep insights of other Chief Sustainability Officers (CSOs) and Heads of ESG at global companies who were driving impactful sustainability and ESG strategies. The CSO and Head of ESG role is unique among the C-suite roles. It requires skills such as deep technical expertise in environmental and social issues to the ability to be a futurist who anticipates how the markets and customers will respond to the increased pressure of climate change. Leaders in any seat can learn from the personal and professional stories shared by the CSOs in my book.
In your book, you conduct over 20 exclusive interviews with the Chief Sustainability Officers (CSOs) of Fortune 500 companies such as Amazon, Coca-Cola and Procter & Gamble and globally recognized brands such as IKEA and Netflix. Is there a single example of achieving sustainability, or are each of these companies following a different path?
There are common actions that these executives pursued. One important one is that they build partnership with internal peers and external stakeholders and modify existing processes and products to integrate sustainability principles.
For example, Virginie Helias, CSO of Procter & Gamble, and I talked about her success with the globally recognized shampoo, Head & Shoulders. Virginie successfully partnered with the leader of the Head & Shoulders brand to launch a new shampoo bottle made from plastics collected on French beaches. The new bottle was a huge success and additional internal peers reached out to Virginie to replicate it with their brands. Her story is just one but it exemplifies how there is value in modifying existing processes and products rather than only relying on creating fully new green products.
What advice would you give companies that are just starting out on their sustainability journey?
Companies starting out should first conduct a materiality assessment to understand the environmental, social and governance priorities for stakeholders. Next the company leadership should discuss ambition. How ambitious will your goals be to address those priorities? Does the company want to meet regulatory minimums, be at the same level as peers and competitors, or lead the industry? Finally, the team should discuss the implementation plan to address the priorities. The focus should be on who will own the implementation – and it should lie with the business and operational leads, not the head of sustainability or ESG. These three steps set up a company for success on sustainability.
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