Key Takeaways from NACD New York Event
It was a pleasure and honor to be a panelist at the Virtual Webinar on Purpose Beyond Profit in Today’s Boardroom, organized by the NACD New York Chapter. The panel was moderated by Stephen L. Brown, Senior Advisor, KPMG Board Leadership Center. My esteemed panelists were Pamela J. Craig, Independent Director, Merck, Progressive Insurance, 3M, and Holly J. Gregory, Partner, Co-Chair Global Corporate Governance and Executive Compensation Practice, Sidley Austin, LLP. Ever since the Business Roundtable Statement (BRT) declared that corporations “share a fundamental commitment to all stakeholders”, the discussion about purpose and profits has taken on heightened awareness in corporate boardrooms. Boards of directors are actively engaged in discussions regarding how best to address the issue of how the company articulates its purpose and communicates it to all stakeholders including the impact on workers, customers, communities, suppliers, the environment, and society.
I’d like to share some of the highlights from my contribution to the discussion.
Making Purpose a Part of Your Organization’s DNA
I serve on the board of Amalgamated Bank and we were big public supporters of the BRT statement when it came out in September 2019. Amalgamated Bank is not new to this. For 98 years, we have been a purpose-driven bank.
We were built at a time when banking was just for the wealthy few and our point of differentiation was that we serve the underserved. Since our inception, we have always balanced the good of society with the good of the bank.
It is one thing to talk about purpose. It is quite different to do something about it. We believe our actions speak louder than words.
We believe companies can make a profit while still adhering to strong principles. In fact, we believe that, in the future, companies that care about societal issues will be more appealing to customers and investors, and therefore, more successful.
Purpose is ingrained in our policies, products, operations, and culture. What differentiates us is that we use our voice, and our network to stand up for what we believe in.
As America’s socially responsible bank, our mission is to empower organizations and individuals to advance positive social change. We do that in several ways. Let me elaborate.
We’ve created a culture that encourages diversity, equity, and inclusion, innovation, and creativity, and it supports our employees’ personal growth and development. This allows employees to bring their authentic selves to work.
Amalgamated Bank’s employee base is nearly 60% women and 60% people of color, which makes us different from a lot of banks that are our size.
And our board is highly diverse. Of the 12 directors, one is a male person of color, five are women of which one is Latina, and another is a member of the LGBTQ+ community thereby providing us with a truly diverse point of view.
We’ve created products and services that actually benefit the communities we serve, and care about.
For example, we have offered products that increase and preserve affordable housing, help to grow woman and minority-owned businesses, and help immigrants and working-class people save money, reduce debt, and participate fully in the American dream of home ownership.
Last year, we also focused on advancing clean energy initiatives and lent almost $900 million in this sector. And just this month, we launched a suite of ESG investment products called ResponsiFunds that are sub-advised by Invesco.
We are unafraid to use the power of our voices to advocate change at the policy level while also growing the value of the bank. We have gone on record supporting the issues we care about including environmental policy, racial justice, LGBTQ+ justice, immigrant justice, support for voting rights, and gun safety.
More recently, we publicly endorsed HR 40, a bill to investigate reparations from slavery for African Americans because we believe it’s the first step in moving our country forward in building an equitable economy that creates opportunities for all individuals to thrive. And we’ve been a leader in climate change. For example, the Net Zero Bankers Alliance is a global alliance founded in part by Amalgamated Bank and launched as part of President Biden’s Global Climate Summit to encourage financial institutions’ commitment to Net Zero financed emissions.
All are great examples of how the Bank’s mission has been deeply ingrained in our culture and our work.
When we choose which companies to lend money to, we consider not only financial and other risk factors, but also how the various companies safeguard the environment, advance social justice, and employ good corporate governance.
As such we established firm policies about industries and companies that we will not lend to or invest our own money in. For example, we will not lend to companies that are incongruent with the Bank’s mission such as companies that pollute the planet, those involved with firearms, weaponry, and ammunition manufacturers and distributors, or businesses that promote hatred of any kind, to name a few.
Finally, we recognize that we need to give back through charitable contributions. In 2020, the Amalgamated Foundation paid out more than $60M in grants to support democracy and racial justice, workers’ rights and economic justice, climate justice, and the environment.
Being a Public Benefits Corporation (PBC) and Certified B Corporation
In March of 2021, we created Amalgamated Financial Corporation, a holding company for Amalgamated Bank, and became the first publicly traded financial services company to incorporate as a public benefits corporation (PBC).
As a PBC we govern ourselves by considering the impact of our decisions based on a triple bottom line embodied in formal commitments to give social and environmental benefits equal standing with profit goals.
Both our holding company and bank charters specifically state that in discharging our duties, directors shall consider the effects of any action or inaction upon the shareholders, the employees, suppliers, customers, community and society, the local and global environment, the short and long-term interests of the company, and the ability of the company to create material positive impact on society and the environment, taken as a whole. Because of this, we discuss “purpose” and mission at every board meeting and track our progress on how we are building “America’s socially responsible bank”.
While we just became a PBC last month, we have been a Certified B Corp since January 2017.
B Corp is an independent third-party company that verifies social and environmental performance, public transparency, and legal accountability to balance profit and purpose. It analyzes the bank on its entire operations and provides an impact score.
Our B Corp rating has increased from 87 in 2018 to 115 in 2019 — proving that our commitment to social responsibility is being recognized and validated. And now that we are a PBC, we are evaluated by ESG rating agencies such as MSCI which just gave us an A rating in 2021. These scores and ratings have helped us not only attract new investors, but also new clients.
Communicating Purpose to Stakeholders
Communication needs to be a constant stream and be of greater transparency than ever before. Internally, our employees want to understand the Bank’s priorities, what we are supporting, and why it matters. Externally, our communications align with our work while seeking to push our respective sectors forward. We are extremely vocal on the issues we care about through social media, public relations, blogs, the website, our sponsorships and affiliations, and our digital marketing channels. We have also set up a hub on our website for all matters ESG including our annual Corporate Social Responsibility Report which details our socially responsible actions across all areas of the bank.
Now that every company is focusing on social responsibility, it is particularly important for companies to have authentic and grounded communications. Consumers have a good nose for greenwashing, so Amalgamated Bank is focusing on important initiatives that we believe will truly add value.
As with any strategic priority, it’s important to remember that what gets measured, gets done. So, companies that lead with purpose and take all stakeholders’ perspectives into consideration must be sure to define success upfront, establish appropriate metrics, track your progress, and be transparent.