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Future Forward Series: The Evolution of Responsible Business and the Way Forward

By DTCC Connection | 5 minute read | March 20, 2024

Responsible Citizenship is one of DTCC’s five core values and it’s an expectation we set for all employees to demonstrate in their day-to-day roles at our firm. In this spirit, we recently continued our two-part series, which focuses on the evolution and future of sustainability and corporate citizenship in financial services.

Watch Part One: Reflecting on Environmental Sustainability in Financial Services

In the second installment of this series, DTCC President, CEO and Director, Frank La Salla, joined Emily Bayley, Head of ESG, Private Sector, the World Economic Forum, and Paul Washington, Executive Director, The Conference Board ESG Center, for a panel discussion moderated by DTCC Chief Marketing Officer, Marie Chinnici-Everitt.

La Salla noted that DTCC works every day to protect and advance the global financial markets, explaining that the firm was founded out of the paper crisis 50 year ago. “Our commitment to sustainability and digitization started before it became more widely embraced,” he said.

La Salla reinforced that DTCC takes steps every day to support environmental protections, conserve natural resources in a broader effort to reduce our carbon footprint and decrease the risks associated with climate change, while staying true to our mission of managing risk in the capital markets.

Defining Responsible Business Practices

La Salla said that DTCC has responsibilities to not only our financial services partners but also to our employees and the communities we serve. For sustainability efforts to be effective, practices need to be deliberate and reflect the core values of an organization, he added. If every firm does its part, there can be a real impact. “I’m very encouraged with how the corporate world has pivoted away from just focusing on financial results,” La Salla said. “Companies can transcend this to make a positive impact and while it’s early, DTCC continues to work hard and partner with others to execute our responsible business priorities in an effective way.”

The Evolution of ESG

The concept of socially responsible investing gained popularity in the 1960s as an investment strategy that incorporated non-financial measurements into the assessment of a company. Today, firms are striving to consistently conduct these strategies across all stakeholders — to communities, workplaces, and public domains — with a corporate culture that aligns to these goals.

There is a growing rigor for the focus on financials to be applied to Environmental, Social and Governance (ESG) matters as well. Voluntary efforts to establish a consistent set of ratings and standards that can be published alongside financial results can provide investors, employees and the public with a comprehensive and comparable view of a company.

Ultimately, corporate responsibility involves the entire organization’s commitment and engagement. And today, there is an opportunity for companies to collaborate to advance their ESG goals in a coordinated way. “Industries can make a powerful impact by working together in a cohesive manner,” La Salla noted. Tackling all these issues can be too great for any one company, and every industry has different challenges. But through greater partnerships, and through organizations such as the World Economic Forum and the Conference Board, these conversations can begin.

The Future of Corporate Responsibility

There is a high level of awareness across markets to increase levels of ESG. But more engagement is needed, and a public/private dialogue is paramount to attaining these goals. Every company needs to be deliberate in its culture and priorities, listen to stakeholders, decide how and when to make impact, and stick to those goals.

When stakeholders — including employees — understand these goals, it can unleash powerful innovation, engagement and productivity. Washington noted, “Leadership has to step up – sustainability needs to be joined into existing corporate culture.”

Turning Regulations into Opportunities

The European Union has led the way with mandatory ESG reporting requirements, and last year in the U.S. California enacted mandatory climate disclosure rules. In early March 2024, the Securities and Exchange Commission held a public vote on its long-awaited climate disclosure rule.

These regulations can present more than just challenges. They can also create opportunities for innovation. As European reporting requirements come into scope this year, 3,000 U.S. companies will be subject to ESG reporting requirements. Washington referred to this as, “One of the next frontiers to discuss with vendors and stakeholders upstream and downstream a way to figure out cost savings solutions.”

A Culture of Sustainability
Chinnici-Everitt noted both clients and prospective employees increasingly want to know about a firm’s ESG commitment. Responsible business is the right way to operate; to have an effective ESG strategy, firms need to ensure that their sustainability priorities are aligned with their corporate strategy, ties into their corporate culture and is easily communicated to existing employees — which requires extensive communication, partnership and dialogue.

While the sustainability transformation is in the early stages, it has the potential to have the same impact as the digital transformation. Bayley noted several case studies of voluntary sustainability showed results such as cost savings, increased employee and stakeholder engagement, eased procurement process from lenders and elevated engagement scores.

“The next step is coordinating amongst companies to ensure effort can be as impactful as possible,” La Salla said. “Sustainability, when done right, is good business.”