Company in the CSR Reporting Spotlight: Salesforce

By Julia Nehring – Report Analyst-Researcher, G&A Institute

In recent months I have been analyzing many dozens of corporate sustainability, responsibility, stewardship, corporate citizenship, and similarly-titled public reports. Many of these are published by very prominent names with well-known brands attached to the corporate name.

For example, you probably know of Salesforce. As many technology companies have done, the enterprise began humbly in a small West Coast residence in 1999, when several entrepreneurs attempted to re-imagine how businesses could utilize computer software.

Today, the company offers a variety of sales, marketing, analytics, and other business services to its 150,000+ clients, which include startups, nonprofits, governments, large corporations, and anything in-between.

Measuring success, between 2017 and 2019 alone, Salesforce’s employee base increased 44 percent and its billions of dollars’ in revenue increased by 58%.

During this period of significant growth, Salesforce has impressively been lauded as a best workplace for diversity, a best workplace for women, and a best workplace overall, among numerous other types of accolades.

The Company’s Reporting Practices

Salesforce discusses these and a range of other accomplishments in its FY19 Stakeholder Impact Report. However, I am not commenting here to heap praise on Salesforce.

Using my lens as a CSR analyst-intern, I will attempt to highlight several reporting frameworks and concepts Salesforce has chosen to use in its most recent report that provide both transparency and promotional value for the company’s practices and accomplishments.

I also offer my own comments and ideas that come from learning about different reporting guidelines from different agencies, as well as reviewing many dozens of corporate CSR reports as a GRI report analyst.

Clicking on any of the links below will take you to G&A resources mentioned about the topic.

ESG Reporting Frameworks

By far the most commonly-used framework worldwide by companies in G&A’s research is the Global Reporting Initiative (GRI). Salesforce includes multiple references to this framework (formally, the GRI Standards) in its content index. (Best practice: including a content index in your company’s report to help users find information quickly.)

However, the report was not prepared “in accordance” with the GRI Standards. Instead, Salesforce opted to reference only certain disclosures and metrics of the GRI framework, as they apparently deemed applicable internally.

The apparent rationale? Since each framework identified in the report — including the GRI Standards, the Task Force on Financial-related Disclosures (TCFD), and the Sustainability Accounting Standards Board (SASB) — define materiality in different ways, Salesforce did “not attempt to formally reconcile the divergent uses of the term materiality”.

In other words, instead of providing a more complete set of disclosures for one of the frameworks, the company opted to in effect dabble in each.

Along with its GRI references, the report includes some SASB references in the content index, and (positively) mentions its support of and use of the TCFD in conducting a climate-related scenario analysis.

I think investors may find this confusing. While Salesforce is ahead of the majority of companies who do not currently acknowledge SASB or TCFD at all, it is difficult for the report reader to discern which disclosures from each framework have been excluded. This does not help to paint a full picture for the reader.

It appears the company does acknowledge this, as it states that, “Over time we will work to expand our disclosures and align more closely to the leading frameworks, even as the frameworks themselves rapidly evolve.” A good practice, I think.

United Nations Sustainable Development Goals (SDGs)

Salesforce is a supporter of the United Nations Sustainable Development Goals (the 17 SDGs). In its report, Salesforce lists 12 SDGs that the company closely aligns with.

However, the company does not explicitly state how each SDG aligns with a particular action or initiative. Providing this level of detail — common practice among companies that discuss SDGs in their reports — Salesforce could show the reader that these are not merely ideals for the company, but that in fact Salesforce is actually taking actions in regards to each stated goal.

Regarding External Review

Ernst & Young was retained to review and provide limited assurance for select sustainability metrics in Salesforce’s report.

The items reviewed cover Salesforce’s reported GHG emissions, energy procured from renewable resources, and carbon credits. A limited level of assurance and review of only GHG data or specified sections is very commonly seen in CSR reports.

The companies that tend to stand out among their peers in our wide and deep research of corporate disclosure are those that have decided (strategically) to obtain reasonable/high assurance, or opt to have the entire report reviewed by credible third party auditors.

Salesforce’s awards and growth speak for themselves — the company is undoubtedly providing great value to its clients and doing so in a way that people admire.

While its Stakeholder Impact report overall does an excellent job at showcasing the company’s progress, in my comments here I covered the above areas to encourage and provoke thoughts of striving for even greater completeness and reader comprehension.

Not just for Salesforce, but for public companies in general with Saleforce’s report as one example.

Epilogue: Why did I decide to review Salesforce?

During my time as an analyst-intern for G&A Institute, my intern colleagues and I analyzed dozens upon dozens of CSR reports in depth over the months, many of which are reports of The Business Roundtable (BRT) companies.

Many BRT CEO members signed on to the re-stated “corporate purpose” statement last summer and we researched the companies’ sustainability / responsibility track records and public disclosure practices.

In our research, we found that:

  • Twenty-nine (29) BRT companies had upward trends for all Yahoo! platform’s sharing of Sustainalytics scores (including those for environment, social, and governance) since 2017.
  • Of these 29, five had CEOs that were identified on the Harvard Business Review’s Top 100 CEOs list
  • Of these five, Salesforce was the only company whose Carbon Disclosure Project (CDP) score rose between 2017 – 2018 (from “B” to”A” score)

So, while I certainly do enjoy using Salesforce’s tools at my job, it had no bearing on my decision to analyze the company’s CSR report for this project. The company’s growth in spite of (or because of) its commitment to people and planet is very exciting to see.

I hope that my analysis is helpful to Salesforce and other companies that may be following this corporate responsibility leader’s sustainability journey.

* * * * * * * *

Since her internship as a report analyst, Julie Nehring joined G&A as a Sustainability Analyst. She continues her research role as a member of the G&A team. She pursued an MBA at the University of Illinois in Urbana-Champaign and interned at the Caterpillar Inc Data Innovation Lab. Julie previously worked for several years as a project manager for a national environmental consulting firm and for a year as an AmeriCorps volunteer. As the president of her university’s Net Impact chapter, she enjoyed helping colleagues and classmates get involved and volunteer in the community.

Note the views and opinions expressed here are those of the author and do not necessarily reflect the views or position of Governance & Accountability Institute regarding the company.

The Media – And Sustainability & CR Thought Leadership, For Both Topic-Focused and Mainstream Media Coverage

by Hank Boerner – Chair, G&A Institute

The “media” that we choose to get our news, commentary, research results, even crossword puzzles, movie reviews, the latest scientific papers and maybe information about what our friends are up to (such as “social media”) are usually self-selected.  

We tune in to what we want to read or watch or listen to…for information / education / entertainment…and it also helps to define us in many ways.

So here at G&A Institute as we broadly monitor for content related to both our day-to-day and long-term focus areas (the list of topics and issues is long), when we see these things pop up in “not-the-usual places,” we are cheered.

This weekend, for example, we picked up on the following, which were encouraging in that senior management publications are read beyond the folks involved in sustainable investing and corporate sustainability or ESG issues and topics.

In Focus:   MIT Sloan Management Review

This is the publication of the prestigious Massachusetts Institute of Technology’s MIT Sloan School of Management.  “Share Your Long-Term Thinking” was one feature article. Companies need to be more forthcoming about their strategies for long-term value creation when they communicate with investors — especially about ESG issues, write authors Tim Youmans and Brian Tomlinson.

Their observation is that over the past five years, CEOs have faced mounting pressure to produce short-term profits. CEOs do think about the long-term, have long-term plans (detailed and extensive) and these typically are closely held.  Result: corporate strategy and practice are not captured in investor communications.

They then offer six reasons why long-term plans should be disclose and how to do that.  One of these is to help investors understand ESG issues through the eyes of management — because a majority of investors see ESG factors as financially material and expect sound management of material ESG factors to deliver better performance over the long-term. 

Tim Youmans is engagement director for Hermes Equity Ownership Services and Brian Tomlinson is research director for the Strategic Investor Initiative at CECP.

They conclude for the magazine’s audience (aimed at corporate executives and senior managements in the main): “The long-term plan is a new tool in the regular sequence of periodic corporate-shareholder communications and represents an unprecedented opportunity for leading companies and investor together to drive sustainable value creation and help to clarify the role of the corporation in a sustainable society.”

That is not all for the MIT Sloan Management Review audience in the Spring 2008 issue.

“Why Companies Should Report Financial Risks From Climate Change” is another feature — this from Robert Eccles and Michael Krzus.  They  focused on the Financial Stability Board’s Task Force on Climate-related Disclosures [recommendations].

“Investors and the rest of the world is watching to see how companies will respond to the TFCD recommendations” — the ask here is that company managements will expand their disclosure to report on the risks and opportunities inherent in climate change in such documents as the 10-k.

Boston Common Asset Management LLC and ShareAction organized a campaign with institutions representing US$1.5 trillion in AUM participating to pressure financial institutions (especially banks) to implement the recommendations.

Companies should follow the recommendations, authors Eccles and Krzus argue, because this could lead to evolving better strategies to adapt to climate change — and be able to explain these strategic moves to the their investors.

They focus on the oil and gas industry, looking at disclosures in 2016 by 15 of the largest industry firms listed on the NYSE.  A few have made good progress in adhering to the TCFD recommendations (so there is not a “blank slate”); there is work to be done by all of the companies in enhancing their disclosures to meet the four top recommendations (in governance, strategy, risk management and metrics and targets areas).

Their article is an excellent summation of the challenges and opportunities presented for such companies as BP, Chevron, ExxonMobil, Sinopec, Statoil, Total, and others in oil & gas.

Bob Eccles is a well-known expert in corporate sustainability and sustainable investing and is visiting professor at Said Business School at the University of Oxford. Mike Krzus is an independent consultant and researcher and was a Fellow of G&A Institute.

Wait, there’s more!

The magazine’s columnists had important things to say as well.

Kimberly Whitler and Deborah Henretta penned “Why the Influence of Women on Boards Still Lags,” applauding the rise of the number of women on boards and offering two important criticisms — the growth rate is slowing and boards do that do have female members often limit their influence.

Although there are measurable positive results of female board inclusion — they cite Return on Equity averaging 53% higher in the top quartile than in the bottom — women still are not making more rapid inroads with fewer reaching the most influential board leadership positions, even with more women on boards than 10 years ago.

The authors set out ways for making more progress in board rooms.  And they advise: “For real, lasting change that wins companies the full benefits of gender-diverse decision-making, boards need to look beyond inclusion — and toward influence.”

Kimberly Whitler is assistant professor of business adminstration at the University of Virginia’s Darden School of Business; Deborah Henretta is an independent board director on the boards of Dow Corning, Meritage Homes Corp, NiScource Inc and Staples (she was a Proctor & Gamble executive).

There is much more for executives and board members in the issue, which has the overall theme of: “In Search of Strategic Agility – discover a better way to turn strategy into results.”

The content we outlined here is powerful stuff (our own technical term) to crank into corporate strategy-setting, and savvy execs are doing just that, as we see here at G&A as we pour through the more than 1,500 corporate reports we analyze each year with titles such as Corporate Sustainability, Corporate Responsibility, Corporate Citizenship, Corporate Environmental Sustainability, and more.

And so it is very encouraging when we wander beyond the beaten path of reading the reliable staple of sustainability-oriented and CSR-oriented media to see what the senior management thought leadership media are doing!

We recommend that you read through the Spring 2018 Strategy magazine from MIT Sloan.  Link: https://sloanreview.mit.edu/