Inside Scoop: Sustainability & ESG - Tips to Governance & Disclosure

Kathy Jaffari is joined by Anisa Kamadoli Costa, chief sustainability officer at Tiffany & Co. and chairman and president of the Tiffany & Co. Foundation, to discuss the increasing importance of sustainability and ESG (environmental, social, and governance) within a corporation. Anisa is the principal architect of Tiffany & Co.’s metrics-based ESG program, for which the company has been recognized as one of Barron’s Most Sustainable Companies in 2021. During this segment, she shares her thoughts and practical guidance, covering topics such as the role of a chief sustainability officer, ESG at the board level, ESG disclosures, and what the future might hold for ESG.

Transcript

Kathy Jaffari:  Hello everyone, and thank you so much for joining us today on Inside Scoop, a series brought to you by Cozen O'Connor. Welcome to your 30 minutes of getting the Inside Scoop from experts in corporate governance and securities matters, and learning some tips of the trade to solve the most pressing problems faced by board members, executives, general counsel, and compliance officers. I am very happy to introduce you to Anisa Kamadoli Costa, Chief Sustainability Officer, Tiffany & Co., who will be sharing with us her thoughts on the sustainability and ESG landscape.

Kathy Jaffari:  As chair of the Corporate Governance and Securities Group at Cozen O'Connor, I have had the privilege of advising clients with respect to sustainability and ESG for many years. And actually, as co-chair of the Corporate Governance and Sustainability Subcommittee of the American Bar Association, I have been in this area for over 10 years. I was actually at the launch of SASB back in New York City, some 10 years ago. With that said, it is truly a privilege to speak with Anisa regarding ESG. Both from a governance as well as disclosures aspect.

Kathy Jaffari:  As we all know, this has been one of the hottest topics over the last year, especially in light of the pandemic and the justified cries over racial injustice. The topic has also been at the forefront of many SEC press releases, and just recently the acting director of Corp. Fin. at the SEC, John Coates, has been speaking about ESG and sustainability, including the new to-be organized sustainability standards board.

Kathy Jaffari:  As I mentioned, Anisa is the chief sustainability officer at Tiffany & Co. and chairperson and president of the Tiffany & Co. Foundation. She has been at Tiffany & Co. for nearly 20 years, having built its metrics-driven ESG program, including working on reporting. Anisa also worked closely with Tiffany & Co.'s committee of the board of directors, overseeing ESG on its establishment and governance efforts, and that's going to be really important to talk about Anisa. So with that said, what a privilege to have you join us today. Thank you so much for speaking with me on Cozen O'Connor's Inside Scoop.

Anisa Costa:  Thank you, Kathy. I'm really excited to be here, and thank you for highlighting this topic. It's a really important and clearly, as you said, a very timely one.

Kathy Jaffari:  I'm actually hoping you can provide us with some practical thoughts and guidance on the topic. And in particular, maybe some tips that we can provide to our listeners. That's actually, Anisa, what we try to do with this program. We try to tease out some guidance, some tips, for those actually in two camps—maybe those embarking in this area, or even those who have already been working in this area for some time.

Kathy Jaffari:  So Anisa, I actually have to start with the basic question—what is your definition of ESG? And do you actually mind sharing with us, as chief sustainability officer, what you believe your role is at the company?

Anisa Costa:  Absolutely Kathy. You know, something that I might say just to start is that in this space overall, what we're now calling ESG (environmental, social, governance), what we've actually seen over the years is a number of terminology, right? A wide range of terminology that's been used, so I think it's important to call that out.

Anisa Costa:  I would say it started off as CSR, corporate social responsibility. Other companies call it corporate responsibility, CR. Then you've seen sustainability, which I think also encompasses environmental and social. But really as you rightly, I think, called this conversation, what we're really seeing now predominantly is the terminology of ESG (environmental, social, governance). And I think its good terminology especially at the board level because what it speaks to is the fact that you are looking at environmental issues, social issues and then the governance of those issues. And of course, environmental and social are two simple words with so much packed into each of them.

Kathy Jaffari:  Yes, that's true.

Anisa Costa:  But in short, what I would say is that these are areas that are very holistic, they're very interconnected and that's important. And basically, from a Tiffany & Co. perspective, but I think any company really, you're looking to see how you are acting, how the company is acting from an environmental perspective, from a social perspective, from a governance perspective, to ensure a thriving business for a sustainable world. So it's a very symbiotic relationship.

Kathy Jaffari:  Anisa, you know why I love that? I love that because I started the conversation, you know, especially at the American Bar Association, about governance and sustainability. And someone once taught me sustainability is really the capacity to endure with limited resources or resources that may be suffering, or resources that may be a challenge.

Kathy Jaffari:  And so I loved how you just described that in terms of bringing in the concept of sustainability because sometimes I worry the ESG, or even just the “ES”, I want to make sure we're not missing anything. So your touch on talking about it holistically is, I think, key. Do you have a reaction to that?

Anisa Costa:  I would just agree with you. I think that what companies need to make sure of is that they're not missing anything. And that's why I spent a couple of seconds talking about terminology because I think to some people, sustainability might only mean environmental sustainability. Again, I personally don't think that’s the case any more these days, but I think it's important to get your definitions out. As we're talking about things, as boards are talking about these areas, that they know what they're focusing on. They know what it means to the business.

Kathy Jaffari:  Yes. Let's use that as the key to talk about your role. Can you talk a little bit about being the chief sustainability officer at Tiffany & Co.?

Anisa Costa:  Yes, absolutely. So maybe I would start off by saying that the idea of sustainability is something that has been quite important to Tiffany & Co. for some time. It's really embedded in the brand, the company values. From a role perspective, what I do is I really work both internally, of course, but also externally, to ensure that we are thinking holistically, as I said, in a very strategic and thoughtful manner, to embed and incorporate environmental, social governance principles throughout our business.

Anisa Costa:  And then externally, and this is really important, I'm interacting with all of our stakeholders—whether it's investors, consumers, clients, or nonprofit organizations (NGOs), and government—to ensure that we're bringing all of our stakeholders, those voices that maybe used to be considered outside voices, inside, and the inside voices out, right. So there's more communication and cross-fertilization of ideas so that we're constantly leading in this space.

Kathy Jaffari:  You know, you're one of the first people that has brought into that conversation even considering the stakeholder of the NGOs or the government. And I know that you are also leading the charge at the foundation as well. Can you touch on a little bit regarding that role and the ESG conversation perhaps in that?

Anisa Costa:  Sure. What I would say in this space, right, when you're looking at ESG, you really need to make sure that as a company you're, of course, covering all your bases. What are the sort of the things that need to get done that must get done. But you also want to make sure that you're looking at the areas that are of particular interest. What are the areas where companies can lead, be known for, excel in, and really drive not only the business forward, but hopefully their industry, and then the world in different places. And really you can only do that if you're looking and constantly in communication with these multiple stakeholders, right.

Anisa Costa:  So I think maybe that's what I would say on the government and the nonprofit front. I also think that what you're seeing with respect to business these days, is you're seeing business really lead in a lot of areas where it may be in the past government used to lead, but that's no longer the era that we're living in. And we're living in a time when business not only can lead and is leading, but it really has the opportunity. And it's something that employees want to see, right.  And of course with employee engagement, but also retention. And it's something that consumers want to see. Consumers want to know that their purchases are making a positive impact in the world. And that all links to those three letters of ESG.

Kathy Jaffari:  That's true. And I'm going to tease out one of the tips, is that a company can actually lead in this area. I really loved how you use that word in terms of being a leader in this area. So why don't we talk about the role itself, how Tiffany & Co. came to create that role? And what are the advantages to having a chief sustainability officer?

Kathy Jaffari:  And Anisa, the reason I ask is, if you can also share your thoughts—some companies are able to have that role, and maybe some companies are embarking in this area. And if they don't have that role, is there something that they can think about in that area?

Anisa Costa:  So, I think that the role is an important one. And I also think where it sits is important. I think reporting to the CEO, sitting at the table with your executive counterparts, but making sure that as a person, the role isn't only staying at the top. I think that that's important. And the reason that I think that the role is important and that I'll also therefore speak to—if you don't have this role, what do you need to make sure that you're doing—is that you want to make sure that, for example, if you're working on your climate impacts, and if you have a climate strategy as a company, that's of course really critical and important.  We're seeing more and more about that daily. And similarly, we're seeing a lot about human rights and work on that area.

Anisa Costa:  And also for example, a third area, diversity, equity and inclusion. All really critically important areas to be working on as any company, frankly, these days today, right. But if you have a chief sustainability officer, if you have a centralized role at the company, you have someone who is consistently connecting the dots between these areas. And that's something that you might hear me come back to again, because I think it's really important not to let these really critically important functions sit in silos. And I think that that is a possibility if you don't have sort of a centralized oversight and thoughtfulness that's going in to how you're operating business.

Kathy Jaffari:  So if you don't have a chief sustainability officer, how can you be sure there is consistently connecting the dots?

Anisa Costa:  So I think you can do that with the management team at the group level. I think you want to make sure that you have directors then, for example, who are not just climate competent, and there's been a lot of conversation about having climate competent boards, which I think is incredibly important. But again, then you want to make sure that you have sitting directors that have substantive expertise and knowledge in this breadth that now encompasses environmental, social, governance issues. And they can sit there and make sure that things aren't being overlooked, that connections are being made and that value is being seen.

Kathy Jaffari:  I think that's a great tip, right. Because it's staying away from the silos, making sure that that management and the board are connecting the dots, but I have to say, I clearly see the importance of the role. Because I think without the role, I think, especially wonderful companies like Tiffany & Co., having this role can really help the conversation stay connected. But also perhaps for smaller organizations where they can't have that role, per se, at least having somebody responsible for connecting the dots. That's what I've learned from you right now, and I think that is so important. So I think that's a great tip.

Anisa Costa:  Can I add one more thing Kathy?

Kathy Jaffari:  Yes. Please, please.

Anisa Costa:  I Just want to say that the idea isn't that the entire, you know, all these functions and issue areas only solely reside within the role, or that person's team, because it's really critically important. And that's why I mentioned earlier that this role of course, you know, sits maybe at the executive level, or not maybe, but should sit at the executive. But that they're working across all levels, across all geographies, and importantly bringing together different teams.

Anisa Costa:  And I think that it's really important to make sure that that you're embedding their work in the different functions. But as that happens, sometimes that takes more time for certain companies or certain departments over others. But as that happens, it really helps to have that centralized perspective and centralized drive.

Kathy Jaffari:  Anisa, I think this is a great place to actually move the conversation into something that I thought was really interesting when we were talking about preparing for this program, and you were talking about governance, and how you were able to really build out the governance efforts around ESG. And I almost feel like we're kind of leading into that conversation, where we were talking about where the role sits, or how it reports. So can you talk to us about how the governance works?

Anisa Costa:  Yes, yes.

Kathy Jaffari:  And how it came to be? Actually, because of you.

Anisa Costa:  Of course, of course. So from the Tiffany & Co. perspective historically, the first committee that oversaw ESG, what was then called CSR, was the CSR committee of the board, which inherently sort of tells you when that was—it was well over a decade ago. When the committee was established, and this is something that was able to be carried through throughout board of director meetings. The committee would not run in parallel to any other committee meetings. And you know as well as I do Kathy, that everyone's time is valuable, so quite often many meetings run in parallel. That was not the case with Tiffany & Co. CSR committee meetings.

Anisa Costa:  So they did not run in parallel. And in fact, every single director of the company, every single board member attended the CSR committee meetings. And that was really important for a number of reasons. One, again, they were all in the room hearing things that had been discussed, and again connecting those dots that we discussed earlier.

Anisa Costa:  But it also helps with any sort of transition that happens at the board level or otherwise. Just to have that continuity and to have those meetings and this topic area be seen as important enough, that was the case.

Kathy Jaffari:  And so, how often do the boards—you might've mentioned this—but how often do the committees meet and the boards meet? Is it once a year? I know some people are just starting to embark in this conversation and they're thinking about once a year. Is it more often than that? And if it is, why? So that we can see the importance of that.

Anisa Costa:  So for Tiffany & Co., what we had done historically was set a minimum of three committee meetings annually.

Kathy Jaffari:  That's impressive, Anisa, right? Because I think folks are just starting to embark on this, and they're saying, "Do we have time to even have one meeting?" And clearly we know that because of the importance of the topic, people are realizing that you need to make the time for that.

Anisa Costa:  And every company is going to have to find the right model that fits for them, right?  And how they work to integrate and incorporate sort of education area within the board. Education and then of course oversight. But that's what worked for us.

Kathy Jaffari:  That's wonderful. I think I want to move the conversation a little bit to, folks have always talked about ESG and sustainability being a matter of risk mitigation. And I would say one thing that always captured me in the conversation was the opportunities for great strategic growth, and ways to not just look at ESG from a risk mitigation perspective, but also from really that opportunities and strategy perspective. Is there anything that you can share on that topic with us?

Anisa Costa:  Yes. In short, what I would say is that smart companies view this area as both value protection but also value creation, right? It's clearly both, and I think you want to make sure that you're looking at it as such. And if you're only looking at it as risk mitigation, then I think you're leaving a lot on the table.

Kathy Jaffari:  Anisa, I'm going to call this a tip, because just those words, to the extent that the audience can walk away are perfect in terms of, in terms of the place for ESG—value protection and value creation. Sorry, I had to repeat those. I might use them. I hope I can use them in the future.

Anisa Costa:  Feel free.  That's the point, open source.

Kathy Jaffari:  Wonderful. Open source. Sounds perfect. So let's talk a little bit, if you can, give us some examples, or some maybe tips or guidance, in terms of how ESG—maybe from a governance perspective and also from a disclosures perspective—works?

Anisa Costa:  I would say, this has been an evolving topic as well, right, and I think at the core transparency is really critical and it's important. And moreover, compared to a number of years ago, it's expected, right. It's expected from investors, it's expected from consumers, and it's also expected from employees these days, right. And Kathy, if you're doing fantastic work in the ESG space, in the sustainability space, but you're not connecting that work to consumers, if you're not connecting that work to employees, to investors, then you're not realizing the value that you should be, and the value that you're actually creating.

Anisa Costa:  So that's something important as well, I think, to the reporting and to the transparency—you could have the best program, but if people don't know what you're doing—and that's a two-way street—then you're not going to get the value out of it that you should be.

Kathy Jaffari:  Got it. Can you give me an example? So when we say you're doing the work, or you're doing something in that area, can you give me an example, and then how the transparency plays out?

Anisa Costa:  Sure. So if you are looking, for example, at your supply chain, which every company is, clearly, right? But you're not disclosing the good work that you're doing in terms of ensuring that you have an environmentally and socially responsible supply chain;  if you're not disclosing it then investors don't know that you're doing this work and reaping value from it. Your consumers don't know and therefore they don't know that this is a company that is active in the ESG space, and where they might want to put their dollars if choosing between different companies.

Anisa Costa:  And if employees don't know on the whole, then they are missing out on an opportunity to feel proud for the company that they're working for—to be connected. And proactive transparency also really gives you the opportunity, I will say, to frame the challenges that you might be facing, and to educate your stakeholders. So, that's to point out that not everything always turns out as you'd like it to, but I think actively taking the opportunity in a company sustainability and their company's ESG reporting to talk about what you tried to do, that also shows a lot about, sort of, your efforts and where you're potentially headed.

Kathy Jaffari:  I want to tease out a little bit. Can you talk about what the transparency looks like? Can you give us some examples? Can you tell us what maybe Tiffany & Co. has done? That would be really helpful.

Anisa Costa:  Yes. I mean, I think at the most fundamental level, what you have of course is your sustainability report, your ESG report, which I believe should be really metrics driven. You can have different components. There are different ways it can manifest itself, right. But you need to make sure that you have those metrics in there. And I think it's also important to understand what metrics are you assuring as a company, right. If it's not everything, what's the subset that you're looking at. And that assurance is going to be critically important as time goes on. So at a basic level, there is that sort of reporting.

Anisa Costa:  But then also again, increasingly, again, depending on your industry and your business, you want to show that you're connecting your work to the products and to the consumer. And that's different because that steers more into marketing, but you can do it in really thoughtful and very clear ways, which I think are important.

Anisa Costa:  Something else that maybe I should mention is that around the data. You want to give the data context, right. So data is data, but the space is really evolving and there's a lot of apples and oranges out there and people don't necessarily always convey very similar data in the same way. So it's important to think about that. It's important to understand what management systems you have in place as a company, and from that, that goes to your risk question earlier, but that's really critical to look at the management systems.

Kathy Jaffari:  So Anisa, I want to pull out a tip, and one of those tips is to be metrics driven. I'm not sure how we can tease this out, but is there a way to explain how Tiffany & Co. got to that place to be metrics driven, even by way of example?

Anisa Costa:  I mean, what I would say is that increasingly you're seeing companies set goals, right. Sustainability goals, ESG goals. You can't set goals if you're not starting with conversations internally that are metrics driven, right. And usually they're quantitative but sometimes they can be qualitative. But you want to capture the data of where you are currently and where you're trying to go. And if you're not measuring it, it's such an overused—

Kathy Jaffari:  I know, but—

Anisa Costa:  It’s a very true one, right?

Kathy Jaffari:  It is very true, I know. I think it's true. And I will say in the conversation of ESG and sustainability, I don't think the conversation started, you know, if we were talking about the focus of it 10 years ago, it really started with metrics driven, per se. I think we got there over time. I think frameworks, like all of them, from GRI to CDP, to SASB, to TCFD, you name the framework, I think they helped get us to that conversation of being metrics driven. I don't know, do you agree? Or am I maybe oversimplifying it? I'm not sure.

Anisa Costa:  No, I think you're spot on Kathy. I think that these frameworks helped to solidify the reporting, and that’s why it's evolved so much over the years. I will say also that I think it's really important, and there is a lot of work as you spoke to that’s happening, to sort of steer that conversation so that there aren't a multitude of frameworks because I think that the sooner we're all using the same definitions and this language, and that even goes back to one of our first points of this conversation, what are you calling this work and what does it mean. That's really important to understand and to get down.

Kathy Jaffari:  Well it's so interesting because we did come full circle in a way, didn't we? In terms of definitions. And while I would agree the frameworks definitely provide some parameters, some guidance, especially in light of the world of disclosure, and as a securities lawyer, I think of materiality, right. I am sure your work internally with the general counsel is about materiality and where you disclose and how you disclose.

Kathy Jaffari:  I have heard that if we can get to a framework that, I don't know if we can say we'll ever get to one framework, but something that folks can agree upon, then it could—I don't want to suggest that it makes the world easier, what it does though, is something that I think you highlighted, provides an opportunity to make the world a bit more comparable.

Anisa Costa:  Exactly. And I think that's important because I think the other thing that you have these days is you have a lot of companies filling out a lot of surveys to rank. And they're all, you know, I won't say that that's not important but it's time consuming. And something I think that it's important to think about and have a conversation about is, how much time do you want to spend responding to those surveys?

Anisa Costa:  Because, of course you want to be transparent, it's not about that, versus doing the work. And it's just a balance. And so I think that standardizing some of this will help with some of those issues.

Kathy Jaffari:  So I'm not sure we'll get there but I do know folks are trying. I do know, as we know, they're looking into a potential sustainability standards board that might be able to bring everything together. And the interesting thing about it is it is international. I would think that that would, especially from your perspective in your role, that that would be helpful because it seems like stakeholders are from all avenues and all places. And standards across the world are different.

Kathy Jaffari:  And even expectations from maybe the same category, i.e. investor, is different depending on where they are. And I'm so glad you highlighted employees because even employees expectations may be different depending upon where they are. So a form of standards internationally may be helpful. How does one juggle all of this? I'm putting you on the spot with that question but is there a tip or a piece of guidance that you can give in terms of juggling all of this?

Anisa Costa:  I think you just have to make sure that you are staying abreast of all the information that's coming out. And I think that that also comes very naturally with anyone that is working in this space, right. Whether they're in this space and serving as a director, in a governance capacity, or serving as a CSO within a particular company, you just want to make sure that you're staying abreast of the trends and that as a business you're a part of that dialogue so you're contributing to it.

Anisa Costa:  I would also maybe add that sometimes compliance with the law is not enough, so you want to have that global perspective because laws of course vary depending on region. So you want that global perspective. And I think many companies increasingly, depending on who they are, they want to actually raise the bar. So that's a differentiating point.

Kathy Jaffari:  I want to tease out that tip. It's not just about a compliance. It's also about contributing to this area. I loved how you shared that because I think by contributing, not only are you being a leader, that brings back to our leading conversation, right? Not only are you being a leader, but I think also what I'm hearing is that by contributing, it can also be really effective in terms of providing a lens to the actual organization. Rather than just trying to respond to everybody else, it's another form of “Let me share with you what we're doing.” And that in and of itself can be a contribution.

Anisa Costa:  Exactly.

Kathy Jaffari:  So Anisa, I think I would like to end with a question on what do you think the future of sustainability and ESG may be?

Anisa Costa:  Well, that's a big question.

Kathy Jaffari:  I know. I'm sorry.

Anisa Costa:  It's a good one though. It’s a good one. I think that the future is that companies are only going to think more and more deeply about all the different elements within environmental issues, within social issues, how they're governing, what those internal management frameworks are for working on sustainability and ESG. This is an area that is critically important. We've seen this not just over the past few years but as you said, it's been heightened over the last year.

Anisa Costa:  So seeing this interconnectedness between people and planet. And I think ensuring that at the director level at companies that you have that competency is going to be important as companies strive to really be thinking ahead, in terms of their business and their value propositions and their strategy.

Kathy Jaffari:  Anisa, I really appreciated that this conversation was about what does the framework of ESG within the corporation look like? I know you and I could actually talk for hours about individual aspects of the “E”, and the “S”, and even how the “G” addresses all of the “E” and “S”. I may want to pick your brain in the future regarding the actual “E” and “S” parts, and even talk about what some of those metrics-driven areas could look like because I think folks are trying to determine how do we meet the challenges as well as the opportunities that the ESG world can provide us. So I hope we can call on you in the future again to even get more into the depths of the area.

Anisa Costa:  Anytime.

Kathy Jaffari:  With that said, thank you so much for giving us your insights, giving us guidance, and really sharing with us what I would call a little bit of the Tiffany & Co. journey—in terms of having a chief sustainability officer and what that role looks like. I also want to take this time to thank the audience for joining us today and listening to this conversation. If you have any questions, you can always contact me at kjaffari@cozen.com. And I'm sure if we need to get in touch with Anisa, we may be able to do so.

Kathy Jaffari:  With that in mind, please keep your eyes out for future programs, including some programs that we're going to have regarding some trends in D&O insurance, as well as other topics, such as, corporate culture and what that could look like. So all of this will be brought to you by Cozen O'Connor Inside Scoop. Thank you again for being with us today. Thank you Anisa, and have a great day. Bye, everybody.


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Katayun Jaffari

Chair, Corporate Governance & Securities

kjaffari@cozen.com

(215) 665-4622


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