With a few swoops of a blue pen, Gov. Ron DeSantis on May 2 signed into law a bill targeting “government and corporate activism” — or, as a statement from his office later put it, “a worldwide effort to inject woke political ideology across the financial sector.”
“And with that,” he said to applause, “ESG is officially DOA in the state of Florida.”
ESG stands for environmental, social and governance, three words corporations use to describe conscientious approaches to issues like sustainability, diversity and worker welfare. It’s corporate shorthand that pulls similar programs under one holistic umbrella — even if the programs themselves aren’t new — and it’s widespread across the Fortune 500.
And along with its cousin DEI (diversity, equity and inclusion), ESG is now a prime target among conservative leaders like DeSantis.
DeSantis has called ESG part of the “woke mind virus” infecting America, labeling it an “elite-driven phenomenon” designed to “exercise power over our society” and “change policy when it comes to things that they don’t like.” House Bill 3, signed this month, prohibits the state from factoring ESG into pension investments, blocks local municipalities from weighing ESG criteria when writing bonds, and enables the state to penalize lenders who use ESG ratings in loan decisions.
The problem, proponents say, is that ESG programs are often good for public companies. Really good. And investors know it.
“It’s become a growing area of focus,” said Michael Cooke, former vice president of social and environmental responsibility at St. Petersburg technology manufacturing company Jabil. “We know that what we’ve achieved in the last year, in terms of meeting our sustainability goals, has had a very clear, multimillion-dollar benefit to the company. It’s tens of millions of dollars that we’ve benefitted from in savings across the board, from health improvements to less waste to less energy use.”
Most large public companies in Hillsborough and Pinellas counties have some form of ESG or DEI program in place, from wealth management firm Raymond James Financial to phosphate mining giant Mosaic Co. Some share specific short- and long-term goals; others are more vague. But in federal filings, all emphasize with investors the value such programs provide.
“If you’re doing what’s good for your people,” said Rich Hume, CEO of Largo technology distribution company TD Synnex, “then it’s going to end up being something that’s productive to your enterprise or business overall.”
The Times spoke with leaders at three major local companies about ESG programs and why they matter. Here’s what they had to say.
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A ‘softer, nicer’ approach
By and large, Cooke said, investors are driven by one question: Will this company make money?
But a growing number of investors and ratings agencies do scrutinize ESG decisions. For some, it’s a matter of principle. For others, the concerns are practical: Is this company equipped to adjust to evolving global standards? Can it attract top young talent for whom ESG issues are important? Is it at risk of one day finding itself in a public relations firestorm?
Jabil, which has about 1,900 Florida employees, has for years produced an annual sustainability report that highlights what would now be called an ESG platform (although the company didn’t actually call it that until 2019). This year’s report, released in February, included updates on the company’s sponsorship of Pride events and charitable work in Ukraine, among other initiatives. And it updated investors on the progress of a five-year ESG plan established last year, including direct energy cost savings attributed to the company’s increased focus on renewable energy.
Calling it a sustainability report instead of an ESG report, Cooke said, is a “softer, nicer” way of presenting it to the outside world. It’s not greenwashing, he said; the company does aim to adhere to strict international ESG standards. But the goodwill that comes from keeping it front and center is “an intended, not just an unintended consequence.”
“I know that when we launched our sustainability strategy and started really getting some real momentum with it, employees were telling me, ‘This is good. My children now are talking to me because they think I’m working for a company that’s actually doing the right thing,’” he said. “It does resonate beyond just the numbers. It helps very much the perception of a company that’s trying to do the right thing.”
Cooke does think anti-ESG rhetoric and legislation could temper some of the progressive changes companies have made in the past few years, and in some cases halt them entirely. In other cases, companies will just implement ESG changes more quietly, without as much public signaling, in order to avoid the discourse altogether.
Ultimately, he said, if clients, employees and a significant chunk of investors want to see more attention paid to ESG, that’s what’ll happen.
“If they can actually see that this is helping bring a rise in innovation and bring the right savings and opportunities to Jabil, then I can’t see that we would be negatively impacted by what we’re doing,” he said.
‘Here’s what’s important to us’
With annual revenues topping $62 billion, TD Synnex is by far Tampa Bay’s largest public company. Formed in 2021 through the merger of Largo’s Tech Data and Fremont, California’s Synnex, it has 23,500 employees around the world, including 2,000 in Florida, along with 150,000 clients in 100-plus countries.
And when it came time to develop an ESG agenda, those stakeholders are who the company turned to.
“They came back very clearly to say, ‘Here’s what’s important to us,’ Hume said.
Months after the merger, TD Synnex launched its first corporate citizenship survery and program. Among its ESG goals: hitting net-zero greenhouse gas emissions by 2045; and having “people who identify as women” hold 40% of leadership positions, and 50% of all jobs, by 2030. It also outlined ways in which developing more sustainable and worker-friendly programs could help the company maximize its long-term earnings and value.
The company’s first citizenship report, released in February, laid out some of what TD Synnex has accomplished thus far, such as planting 30,000 trees in East Africa, and minimizing waste and energy usage at its corporate campuses — “no-regrets actions that resonate everywhere,” Hume said. It outlined not only future benchmarks, but a hope that its ESG programs might “drive meaningful social and environmental change” worldwide due to its prominent role in the global technology supply chain.
The report acknowledged, as other companies have, the fact that its ESG policies “may have a negative impact on our business, impose additional costs on us, and expose us to additional risks.” But it also noted that failing to address ESG issues could result in lower ratings from ESG-driven investment analysts, which could push down stock prices and block access to fresh capital.
“There’s some segment of the investment community that is very conscientious about their portfolio and wanting to make sure that there are responsible actions by companies,” Hume said. “You probably limit the size of the pie relative to investors who may be interested, should you not have a program.”
When it comes to the political discourse around ESG, Hume said, “we let that play out, and then just do what we decide is good for us.” That’s how the company operated when it was still known as Tech Data, he said, before the temperature surrounding ESG wasn’t so hot.
“Go back 10, 20 years ago when ESG was not even an acronym yet, to what the people wanted to accomplish in the communities they live in, and what they wanted our company to stand for in the Tampa Bay area,” he said. “We wanted to be known to be a contributor.”
It ‘translates to sales gains’
The parent of Outback Steakhouse, Bonefish Grill and other brands, Tampa’s Bloomin’ Brands is a major Florida employer, with 16,000 employees in the Sunshine State. But it also brought in nearly $500 million in revenues from its 175 international restaurants just last year. And CEO David Deno knows it takes an array of global perspectives to keep those sales rolling.
“I look around the table at our executive team, and I’ve got a Brazilian, I’ve got somebody that was born in Nicaragua, I’ve got someone whose family is from India but was born in England,” he said. “I’ve got all different walks of life on that team, and that’s incredibly helpful.”
Bloomin’ has had minority and women’s training programs for a while, but it was in 2020, as protests over George Floyd’s killing sparked conversations about diversity and equity in the workplace, that the conversation about diversity “dialed way up,” Deno said.
That summer, the company created a diversity and inclusion council and hired a new vice president to lead it. And the next year, it started including diversity updates in its annual reports to investors, including updates on the percentages of women and minorities in both hourly and leadership positions. “Inclusion” is now a tab at the top of the company’s website, right next to “Investors.”
Is it performative? Deno doesn’t think so. Hospitality is a service industry, and if employees feel fulfilled and enthusiastic about their jobs, customers can sense it. And if those customers have a positive experience, they’re more likely to return.
“If you’ve got an engaged employee group, especially in the restaurants, that translates to customer service, which our customers see, and that translates to sales gains,” he said.
Indeed, Bloomin’s annual revenues have risen from $4.1 billion in 2019 to $4.4 billion in 2022, and its stock is up more than $2.50 per share since May 2019. Inclusion programs are by no means the only reason for that growth. But they don’t appear to have impeded the company, either.
“We’re doing it,” Deno said, “because it’s the right thing to do.”