ESG Pushback and the CHRO Role: A Business & Communications Imperative

Heidi Capozzi of McDonald’s, Mirian Graddick-Weir, Member of the Boards of Directors for Yum! Brands and Booking Holdings, and Tony Fratto of Goldman Sachs, spoke with HR Policy’s Ani Huang to discuss the precarious position that companies find themselves in during the ESG “tug of war.”

Engage the board on the communication framework. Ms. Graddick-Weir shared that her boards are “unwavering in their commitment for sustainability, climate and DEI,” but recognized that when companies “are threatened with legal action, you can’t ignore the vulnerabilities and risks.” She encouraged management teams to “engage the board on their playbook for making decisions” for when to communicate on ESG issues both internally and externally.

Determine the path forward. Ms. Capozzi discussed many of the public ESG commitments that McDonald’s has made and the strong progress achieved with initiatives aligned with their company values and brand. After experiencing backlash for not fully reaching an animal welfare goal and receiving opposing shareholder proposals on diversity initiatives, they “realized there were a lot of numbers put out over the years and we needed mechanisms for monitoring” them. The team created a strategic scorecard to measure their progress and gained valuable insights from auditing their commitments and measurements. “Rather than wait until you missed a goal, be proactive. We now think long and hard about what goals we put out there.”

Running into the fire. Mr. Fratto described his experience with crisis management citing “you run to the issues.” He emphasized that “If you don’t have the processes in place and trust with the right audiences in a regular and repeatable way, you will do it poorly.” Mr. Fratto suggested “early communication to employees on what you will not speak out on, things you will speak on and issues that you will take action through lobbying.”