Announcer: [00:00:00] Welcome to What That Means with Camille, companion episodes to the Cyber Security Inside podcast. In this series, Camille asks top technical experts to explain in plain English commonly used terms in their field, then dives deeper, giving you insights into the hottest topics and arguments they face. Get the definition directly from those who are defining it. Now, here is Camille Morhardt.
Camille Morhardt: [00:00:37] Hi, welcome to the show What That Means. Today we’re going to define Corporate Responsibility with Suzanne Fallander. She heads Corporate Responsibility at Intel, where she works with many teams across the company on overall strategy, stakeholder engagement and public reporting. She’s got more than two decades of experience working in the sustainable investing and corporate responsibility fields. Prior to Intel, she served as vice president at institutional shareholder services where she managed the firms Socially Responsible Investing Division. She’s got an MBA from Arizona state university. And she currently serves on the board of Net Impact.
Just recently in 2020, Suzanne was recognized by the professional business women of California with the 2020 industry leader award. And she was also named by GreenBiz–this is one of my favorites–as one of the 25 Bad-Ass Women Shaking Up the Climate Movement in 2020. Suzanne, I’m delighted to have you on the show today. Thanks for joining me.
Suzanne Fallender: [00:01:38] I’m really happy to be here with you.
Camille Morhardt: [00:01:39] I’m hoping that since you’re such a bad-ass, you can kick us off by giving us a definition of what exactly is corporate responsibility in under three minutes.
Suzanne Fallender: [00:01:51] Sure, thank you. Um, corporate responsibility, a lot of people think about it as just doing the right thing. But increasingly it really is viewed by many as being a management approach in which you take into account a whole range of issues, you know, from inclusion issues to sustainability, um, environmental compliance, supply chain responsibility, and really look at how those issues are met and managing them proactively can help you reduce risk, find ways to be more efficient in your business, really build brand value and trust and also identify market opportunities. So really thinking about it as an approach that helps you both create business value and societal value.
Camille Morhardt: [00:02:32] Okay, so this episode is the perfect example for me, of terms evolving or changing. When I was in grad school, the term we were using was Corporate Social Responsibility. And now it seems there’s a new term or an abbreviated term, or we’ve dropped social. Is that because of COVID we’ve just given up on the social part?
Suzanne Fallender: [00:02:53] No, and in fact, I would say in 2020 social issues have really continued to increase in importance in, in the broader discussion. I think, um, there are lots of different terms out there. Some people even use Sustainability to be very broad and encompassing of, of social. And no matter what term you use–and a lot of terms are in use– I think that that core foundation and definition is really the same. You’ll also see a lot of acronyms. One thing that investors use is something called ESG, Environmental Social, and Governance. Um, but I think that the, the complexity of the issues, the interconnectedness of the issues and, and the importance of the social impact, part of all of this, I think continues to increase.
Camille Morhardt: [00:03:32] Okay, thank you. Um, let’s dive a little bit deeper. I actually pulled up the Intel report that just came up and I, I mean, I want to talk about this more broadly than Intel, but it gave me sort of a, grounding to check it out. All the goals, like pretty impressive. I don’t know if that’s like the fancy layout of the document or if they are actually just impressive.
But one thing that caught my eye is in the report, a couple of the goals actually weren’t met, and this is like very bad news if a financial goal isn’t met on Wall Street. So I’m wondering, is that different in the corporate responsibility world?
Suzanne Fallender: [00:04:13] Yeah. And so maybe a little bit of background and context. So one of the key things in Corporate Responsibility, and it’s been developing for a number of decades now, Is about transparency in reporting on your performance, but also about setting ambitious goals and then being able to report on those goals.
Intel’s published a voluntary report actually since 1994. So even before many companies or standards existed, we were, um, you know, publishing our reports. And really what that helped us do was to really take early action and, and continue to drive accountability across our teams over time.
When we set the 2020 goals that we’ve included in our most recent corporate responsibility report that’s on our website, the thinking behind setting these goals is you’re setting goals that are ambitious. And, and I actually tell people internally, it’s, it’s actually, I think more credible if you don’t hit a couple of your goals because it meant that you didn’t just set out goals that you knew that you could meet.
Camille Morhardt: You didn’t sand bag it.
Suzanne Fallender: Yeah, exactly. And so, um, if you are truly going to be ambitious, there may be ones that you, you set. I think what’s important about the goals that we didn’t meet all the way. We still drove significant. Um, improvements in those areas by having those goals out there and by having the teams work toward those.
So the couple of the goals we didn’t meet was on our Product Energy Efficiency goal, but, you know, that was really ambitious to drive a 25x improvement, um, in energy efficiency. Well, we did drive for Notebooks of. 14x increase and for data centers and 8.5x increase, which still created significant value for Intel and for our customers.
Camille Morhardt: [00:05:59] Yeah. And I think the other one was in the supply chain space, and then I read the fine print and I was like, “ha ha, we’re going to really see it here.” And the fine print was like, “well, we met 90% of nine out of the 12 metrics. I was like, Oh, okay, well that’s, that seems pretty good to me. I don’t know for not having met a goal.”
Suzanne Fallender: [00:06:17] Yeah, exactly. And I think the, um, and our supply chain team, you know, against celebrating with them of really, they did set very ambitious goals. And, and part of the reason you set goals is you also learn over time. I think the key is they, if they hadn’t set those ambitious goals, um, in all those different areas and components of that goal, um, they wouldn’t have really had the impressive results that they, that they had.
Camille Morhardt: [00:06:40] I have to say, I don’t think I’ve seen really supply chain specifically called out in a lot of this of CSR or CR reports. Is that kind of unique or is that emerging as a common thing?
Suzanne Fallender: [00:06:54] It is increasingly, um, focused. Uh, I think you see it in some industries more than others, but I think about a decade ago, you didn’t see it in many reports. I think you’re seeing it more and more, um, as people recognize the importance of not just doing, um, actions in your own operations, but really looking at those system-wide impacts. And I think especially for the technology industry, um, we have addressed a lot of these issues as a sector. Um, because I think each of us can take actions on our own, but we’ve worked through an organization called the Responsible Business Alliance, um, which we can work with our direct customers and others in the industry collectively on some of these system level challenges, like how do you make sure you’re setting common standards around auditing for labor concerns? How do you address working hours collectively so that everyone is reinforcing the same expectations on ethical behavior?
Camille Morhardt: [00:07:49] So that kind of reminds me of another thing. Um, I had. Read an article. Um, that Forbes came out with actually at the beginning of last year. And they were looking at some of the expectations for 2020. And one of the things they called out was that transparency isn’t really enough anymore. Um, we have to actually look at truth.
And I think we’ve always, I mean, I don’t know, I’ve always considered transparency to be a proxy for truth, or at least a window because now I can, I can see what’s actually happening. But they were kind of saying you need auditors or other sort of checks to verify that what you actually have a window into is accurate. How are you addressing that? Or how has the industry really of sustainability and corporate reporting addressing that?
Suzanne Fallender: [00:08:40] Yeah, I think, you know, there’s been the financial reporting standards and audit standards have evolved over decades. Um, I think we have seen a similar conversation evolving on, um, the ESG topics and the corporate responsibility reporting. Um, at Intel, we actually have been using third party assurance over our corporate responsibility reports for many years. Um, and it’s similar to the process you might have for auditing where you are going through your processes, your data collection, processes, your internal systems, and really looking at the quality and the process checks there.
Investors are also, you know, increasingly using this information and we do a lot to reach out to investors and we’ve seen a significant increase industry-wide um, of how, of the types of investors that are asking these questions. It, when we started out, it used to be really more of the kind of specialty firms, the values-based investors. Now really it’s all the leading financial services firms that are, have policies on ESG and are looking at this data.
And for them to be able to incorporate this information into their investment processes, they need reliable, accurate data. So there is much more of a robust discussion happening about how do you standardize this data more? How do you make sure there’s that third-party assurance over the data points?
Camille Morhardt: [00:10:00] Yeah, that’s kind of an interesting crossover when you sort of have the financial sector coming in with its tradition of auditing into the, the responsibility sector, because it’s now influencing the financial sector.
Suzanne Fallender: [00:10:14] Yeah. And you’re seeing it within companies, too. Um, not only Intel, but other companies where you’re also getting your corporate finance teams more directly involved in the disclosure process and, and, uh, working on what’s called “integrated reporting.” Um, so for example, at Intel, we work closely with the External Reporting team within our finance group to integrate, uh, certain content into our 10 K in securities filings, as well as our, and our legal human to our proxy statement.
Camille Morhardt: [00:10:41] So how, um, I guess this is come down to just sort of the bottom line here, right? I mean, when, when, um, I guess when I was in business school in a far land, far, far away, many years, um, it was like, you know, ultimately the, the goal of a public company is maximizing shareholder value. And that was always interpreted as profit, which was measured in stock and earnings per share and things like that.
Um, And then, you know, at the same time there was kind of this concept emerging of the triple bottom line. And maybe we should look at some other stuff in here in addition to just that financial bottom line. But there was always this question that when it really comes down to it, um, in a publicly traded company, it’s always going to be about the financial bottom line.
So I’m wondering if you can talk about maybe how that’s evolved or if we’re not having to make that trade off anymore.
Suzanne Fallender: [00:11:37] Yeah, I think you really are seeing an evolution in that thinking to A) I think people realize that it’s not kind of a black and white issue, right. I think that there are a lot of, um, of these quote nonfinancial factors that do impact, you know, performance and financial performance. It may be hard to measure and quantify exactly how those are impacting, or it could be a time horizon question, right? They may not show up really in the short-term, but they can really have significant hidden costs in the long-term.
I think there’s also an understanding of if you, and there’s been statements in the last year from a number of industry associations and companies around “stakeholder capitalism,” and really thinking about not just on an issue by issue basis, but if you think about the increased focus from your investors and expectations there who are really trying to look at how do these things impact long-term shareholder value, customer value.
So at Intel, we think about the role we play in the technology ecosystem. Our largest customers also are setting big goals in this space. Facing the same challenges of increased expectations. How do we make sure we are helping our customers create value out of this work and focus on the right issues?
Also employees. I think that’s the other piece that we’ve seen this shift in terms of who do employees want to work for and how does this connect with employee engagement and kind of pride and, and, and engagement when, who you’re working for. And then we’ve also seen definitely a shift in thinking on the regulatory framework, especially for global companies that are operating in, in all parts of the world in terms of thinking about how these issues both create new requirements on your business and getting out ahead of that with some voluntary initiatives so that you’re doing it in the way that’s best for your business.
But also it does open up opportunities. If you think about the climate challenge, we face, there’s a lot of people talking about, you know, the role of technology and really helping whole other sets of industries really be able to create more value from a, both a business and financial standpoint, but also strategic perspective.
Camille Morhardt: [00:13:43] Actually, I saw one of the things written in the, um, the Intel report said, and I kind of wrote it down cause I actually did think it was interesting. It said “perhaps most importantly, we will engage our employees and a broad group of stakeholder organizations to undertake collective actions and unleash the power of technology to tackle critical global challenges together.”
Interesting, right. I mean, there’s a little bit of, um, you know, kind of markety wording around that, but the essence of it is that we would tackle critical global challenges and that is like not the stated goal of, you know, creating chips or creating things or, um, data centric compute or networking or software or AI type stuff.
Now we’re talking about, uh, um, applying the, the resources of the company to help the world. And I know that like Intel formed a division around the sort of COVID response. I’m just wondering, is this a trend among companies or big tech companies or what where’s this coming from?
Suzanne Fallender: [00:15:01] Yeah, I’ll, I’ll start first with, um, kind of the broader trend and I’ll talk a little bit more specifically about Intel, but I think the trend we’re seeing in terms of when we looked back, you know, 10 years, you know, when you thought about what is, when we’re setting our 2020 goals, what does leadership look like in corporate responsibility? And it really was about doing less bad and, and, and individual company accountability.
That’s still important. You know, companies are kind of being looked at to kind of continue to raise the bar for themselves, drive those expectations through the supply chain. But when we started to talk with kind of some of those stakeholders, I mentioned with investors and customers and kind of experts in the field about where leadership, uh, how it would be evaluated 10 years from now, there really is this understanding that the issues that society faces in business face, the complexity, um, the interconnectedness of these issues really does require leadership will be about convening people together to drive forward on these issues and really leveraging kind of the skills and the expertise of different businesses, um, in the right way.
And cause I think if everyone just keeps doing things on their own, we’re not gonna make as much progress if we have that kind of industry collaboration or kind of that broader kind of innovation focus, especially around the role that technology can play. And so for Intel, yes, we make chips, but our purpose is to create world-changing technology that enriches the lives of every person on earth. Really aspirational, really kind of hard to measure sometimes from it, from us really data centric and an engineering company. But that purpose is really, I think, what guides these new global challenges that we set out. So in our new 2030 goals, we set those operational goals, uh, for Intel. And, you know, we’ll continue to drive, um, performance in those areas. But then we also set out these global challenges and there were three key challenges, one to revolutionize health and safety through technology; two to make technology fully inclusive and expand digital readiness and three to achieve carbon neutral computing.
All three things that Intel technology and the role we play in the ecosystem, we can bring people together in new ways around those, but there are also things we can’t solve by ourselves. So there’s really important conversations we’ve started already with some of our largest customers who have similar focus areas in, in those spaces that we think if we can come together, um, we can move things forward, quicker.
Camille Morhardt: [00:17:25] Yeah, that that is interesting. It’s you’re taking goals that you’ve actually don’t have, um, specific control over. So you have to partner and you have to get other people on board. Yeah. Hmm. Um, I want to ask a little bit, since we’re on cyber security podcast, what does corporate responsibility have anything to do with cyber security?
Suzanne Fallender: [00:17:46] Yeah, it does actually. And I think it’s continuing to evolve. I think kind of what we just talked about with, you know, the increasing role of technology being looked at, not just by Intel, but across the whole industry as being part of the solution for many of these global challenges of, as we think about, um, know, electrifying the grid, or if we think about autonomous driving and safety and autonomous driving, or if we think about digital access and connecting more students around the world through technology, all of that has a cyber security expectation that’s going to run through that in order for people to be able to safely, um, address those challenges. So I think it will be increasingly important in the future as we move into this data-centric world.
I think the other piece where we’ve seen it show up. Is really in the basic expectations for governance and risk management. This has come up in conversations, um, in the investment community, around how they’re looking at companies for corporate responsibility. And they’re, they’re asking specific questions about how boards of directors are looking at these issues. And then also the third party sustainability and ratings and rankings that are out there that cover a broad range of criteria, you know, across all the topics we’ve talked about. But they also often will have cyber security and product security questions as part of that.
Um, and then many of these ratings also will include, uh, descriptions of potential controversies or, uh, potential things that are flagged in the media. So for companies that aren’t, that are facing this, how you respond to those issues, uh, comes up as well.
Camille Morhardt: [00:19:22] So another area that I saw in the report, and it’s common in a lot of reports now is inclusion and diversity. And that seems like a hard thing to define. So I’m going to start by just asking you how in the world people set metrics around things like inclusion and diversity.
Suzanne Fallender: [00:19:43] Yeah, I think the, the, it is, like I said, with the, um, within the events of the last year, it’s become even more of a focus for companies and investors. Um, but Intel set a very long history of being very transparent on our data around the work that we do, not just on representation, but also the work we do to continue to build an inclusive culture within the company.
Um, we have more, I think, more than 30 different employee resource groups on many different, you know, communities, topics. Um, and really our approach is to make sure that everybody can bring their full selves to work. So there’s a lot of quantitative disclosure that we can look at and, and I think there is this focus in the industry about how do you get comparable data to understand how companies are progressing in these areas.
But then there’s also a lot of qualitative disclosure, um, and discussions that we have with investors and other stakeholders about not only what can we, what are we doing within Intel? but what are we doing across our supply chain? We have a supply chain, diversity and inclusion goals. And then also we do a lot around social equity, social impact, digital inclusion, technology skills development that is helping not only Intel in the long-term, um, you know, by helping to build that pipeline of talent, but really also helping our local communities and, you know, more broadly.
Camille Morhardt: [00:21:00] You’ve been, um, working in this field of, uh, corporate responsibility for two decades. Um, I’m wondering, is there, is there one element of it that’s personally particularly important to you.
Suzanne Fallender: [00:21:17] I think the thing that’s most important to me has been, and it’s really an evolution I’ve seen across the industry is, is around integration, right? As companies continue to really more fully integrate this into their culture, integrate this across the business, really tie it more closely to the kind of the product teams, functions like finance and marketing and other places the favorite part of my job is actually helping people in those roles build the expertise in these areas, so then they can lead the initiative in that area.
You see it in kind of the work we did in supply chain. About a decade ago, there were really only a few people working in supply chain responsibility. Now we have a full, comprehensive team that then they lead that strategy, um, really embedded across everything we do in global supply chain.
So that integration just the passion of people of well how can they help leverage. Specific expertise. And if we’re talking for this audience, so people working in cyber security, how do you look at the landscape of cyber security and say, how do we help from our expertise, help others, maybe who are interested in sustainability, corporate responsibility, understand what the implications can be and what the strategic benefits can be of thinking about this holistically.
Camille Morhardt: [00:22:32] Thank you, Suzanne, for your time.
Suzanne Fallender: Thank you very much.
Camille Morhardt: I really enjoyed the conversation and, uh, to those people who are listening, thank you for joining. Uh, Suzanne brought up a couple of terms that we have episodes that get into more detail on. She mentioned Carbon Neutral Compute, and we have an episode with, uh, John Miranda also at Intel. Uh, and we also have an episode with Isaura Gaeta where she dives a little bit deeper on diversity and inclusion specifically with respect to cyber security. So, thanks, thanks again for listening. And also be sure to check out, uh, many episodes on Cyber Security inside.
Announcer: [00:23:23] Join us for the next episode of Cyber Security Inside. You can follow at Tom M Garrison and Camille at Morhardt on Twitter to continue the conversation. Thanks for listening.