hello and welcome to ESG talk your go-to source for insights and advice from leaders and environments social and governance I'm your host Manny McReynolds today we're joined by Allison Anderson book from Baker Hughes asmussen is the chief sustainability officer where she leads the company's energy transition her leadership has helped Baker Hughes gain recognition on newsweek's 2023 most trustworthy companies in America list congratulations to you Allison and your team for this incredible work and honor welcome to the show thanks for having having me here today it's it's always great to come on and talk about where the world's headed in the world of sustainability so and for the acknowledgment on our our hitting the trustworthy companies list that was I would say one of one of the highlights for me in the time that I've had a paper he is is that we've gotten to that point that we're actually being really transparent transparency and trust is is quite the journey and I I love that you started there even as we get recognized sometimes people forget what the journey takes to get to that point so let's dig in there because you had set a net zero Target by 2050 and an interim Target by 50 emissions reduction by 2030. so just afford these ambitious goals even robust Frameworks you demonstrated your state sustainability really Best in Class ESG reporting and that was supported by workiva so that's how you and I know each other and now let's kind of dig in there where did you really start to build this Best in Class work and how has that evolved over the years for you you know uh I've been with Baker Hughes about the thing I just got here and the other size it feels like it was like 8 like uh it's complicated math to get where we started was first taking stock as to the efforts that we had had today and what have we committed to first okay so that tells you your minimum standard like we've got to at least say that we do that bit well in the data collection and showing our progress right and so for us it was really because I was brought in to really help us build out the strategy on how we get to NetZero as a company uh it it focused heavily on the admissions side and so Baker Hughes had been reporting its emissions for about what 10 to 12 years by then to the uh it was then called the CD the carbon disclosure project at cep today and when I took a look at the emissions I could tell that we were missing some some data governance and fidelity and potentially whole buckets of emissions were yet accounted for and so since we had this Net Zero goal I'm like okay let's back the truck up a little bit and let's let's dig a little bit deeper and that actually led to a multiple year Journey on saying like let's focus on inventory first because even though we developed our Net Zero strategy in parallel we had to think about what's the size okay and is this actually what we thought we were getting into when we made the goal and so the long and short of it is because we are pretty transparent here is is that first year we under reported by about 22 percent and it wasn't due to any thing that we were trying to hide it's just we just didn't yet have everything that we needed to go out there and get all the information and Pull It in so that's where we started it was deeply in that space of is this right if we're going to hang a road map off of it it's got to be right and so so that that launched everything and then where we went over the years is is I suppose uh worth spending a little bit more time in but I value there about your candor and transparency is people often forget that getting quality data to be decision useful and strategy useful is a multi-year journey so oftentimes people want to get right away to that aspiration or right away to them ambition and it takes time and I also you know as you get into this work I always tell people too remember there are some standards still being written for different Industries and so you may under report because working from a home doesn't have a global standard yet or what you might find is you over report because you that's the data you can estimate at that time for the calculation and I love that you talked about the adaptability the refinement but also the transparency these things happen that's why there's footnotes in reporting that's why there's an acknowledgment and report and that's why the best practice is to do it annually so so as you've in your experience experienced some of the the work and the transition over three years what do you think is the advantage and how has that really strengthened relationships with your stakeholders I I would say it's that we can we can give investors a high degree of confidence that that we don't have any surprises and as as Regulators around the world are really waking up to this idea of requiring mandatory sustainability so there's not just emissions we've got to be uh tied to how we account and that we are we have a high degree of data Fidelity accuracy and clear governance structure to ensure that everything's in place right the advantage then is when you think about like pulling back a little bit what poses a material risk to the company on the financial side well if you made a net zero goal and you're a company like ours which we're trying to really heavily get into that abatement part of the energy transition it's really important to our company's value proposition that we're able to show that we can do that internally okay and so you got to make sure that that we walk our talk and that we are able to to go out and and then replicate that um year over year for customers all right and so that advantage of what we're doing here is laying out a really firm foundation and it took Mandy it took like twice as long as I I thought initially to get it going uh but that's because we were trying to figure out what the human capital part was as well so it's not enough that you think I got to I've got to go do the things most sustainability teams today are really quite small still and uh and so and then maybe they're being reskilled so you've got to work in those constraints and so all these things just take a bit and I think that's an interesting Collide in the market and you have the tech and the talent and the teachers and consultants and I tell people you pull those levers at different times to help get you to to the right operational status and I think that will continue to evolve as teams upskill the other part that I think is unique or interesting is you talk about stakeholders we just had our our task force and we did a reflection because we actually paused and we took a meeting and we talked about looking at our strategy or material issues 18 months in you know where did we play the strategy of sort of checkers like the movement there of short-term targets and where did we look at chess this broader notion of targets well I thought was interesting was all the executives um the highest Post-It note or big conversation was I love that we're walking our talk and I that just so I think that's the part that we underscore is in transparency and Trust how important that is to your internal team to see that and experience that so I couldn't agree more with that statement I'm curious you mentioned as as you're preparing there's some regulation coming into play what does that look like for you and how are you grappling through the regulational landscape today so you know we we for a while were focused like so many U.S companies on thinking about what's the SEC going to do right because you're thinking like like that's it like as long as we we get that and we're compliant in our country in which we're traded we're good no okay this you are not good because we operate in 89 plus countries and so all those countries are also thinking like hmm he is doing this and the US is doing this like we should think about this and so now company or countries are thinking about mirroring each other we find ourselves in a position where we may have to then comply with with slightly different standards in many different countries and so the one that's top of mind for us and for most bigger you know Fortune 500 uh publicly or ftse companies is that in within the EU it's pretty serious what they passed in the reporting directive I mean it's like it's seriously I'm a former regulator okay and I will tell you like I I used to have some of my colleagues who were like wow it's a really serious regulations but what we were requiring while it was hard did not have the economic impact that this this kind of a rule making out of the EU does have okay so when we did a comparative analysis between where we're at today Mandy and where the directive and this is without the member State guidance like the country level we counted about 1100 metrics today we have information governance that's analogous in the U.S to something like Sox level or like under the Gap current gas standard what you would do for financial reporting and so we have that over you know 250 metrics and we're like fairly Advanced okay and and we know that we are fairly advanced in how we've had a very systematic approach to layering governance controls sharing um and all of that stuff and like I can't imagine what other companies are thinking when they see that if they're just getting started so the single greatest challenge then is knowing that we're ahead making sure that people understand even internally that doesn't mean we're going to get to where we need to be in two years and I think for listeners of this podcast the important takeaway is it's not enough that you're reporting on a certain thing and having governance you also have to have your 30th third party independent independent verification so you've got to transform what used to be this it's a very financially driven data ecosystem into something that includes all of this these disparate pieces of data that don't even have um system of record keeping behind it so now you're gonna have to build that too okay so the more complex your company is the harder that is to do and so we've been building that out bit by bit because uh for for the size of us and all the legal entities it's not going to be clean so I gave you kind of a long answer but what a journey to go on and you know we still got a long ways to go but for everybody else just getting started my the key message for the entire podcast is don't wait this one's hard guys this one's really difficult well and I think that the csrd the regulation that you're talking about is just on a panel recently and um it was shocked because it was a lot of ESG people who were transitioning upskilling from primarily social roles or e-rolls into a broader role and getting ready for this this change this evolution in the field and you ask the question in the room how many of you are multinational 60 room full it was supposed to be like a smaller session we had to like bring a few more chairs in and um 90 personal hands went up and they have their U.S headquarter but have Global presence and I think it's very telling that just because you're not headquartered you still have to abide by by the new Global regulations and standards and it is that work to to get ahead and the three things that I tell people is exactly what you said Partners there they might be your internal audit team it might be your external Advisory Group or looking at those who are supporting you and your finance that have understand the rigor that needs to go into this it may be partners in your ecosystem if you're looking at impact because you're going to have to show double materiality policy like participate provide feedback and the policies that are happening and then Pilots I love where you went people are trying to attack it all and you've got to start small scale from their our own merkiva journey is we're working on emissions first we're working on governance and our strategy of that the whole ESG goes and then we're scaling to some of the other elements over the course of time Pilots are perfectly good so congratulations you you know talking through all this work you have finally released the report you've got the report out um which is a huge lift to do in q1 and Q2 for organizations um which new components of the report did you find most exciting well I think every year is just the journey okay for one is exciting all right because I can't we layer stuff every year like what you just were talking about on Pilots every year we go in and I'm like okay this is you're gonna turn this on because you don't want to disrupt the the annual production of things so much so that suddenly you're you're putting it out and it took you eight months like then it's then it's kind of so so we turn on on things every year and so this year we continue to I get excited about things frankly that are pretty nerdy uh Mandy and so uh it's like all the time but I would say that that the nerdy bit is we expanded the amount of the planet data to uh third-party verification by our independent auditor and so we're nearly at 100 completion finally and now we've got two-thirds of our data under independent verification and just for anybody listening I'm always excited that all of our emissions data goes through the highest level of assurance by both internal audit and reasonable Assurance by KPMG for scope so that's pretty exciting the other part okay now if you read a report you would never be able to pick this up is that we went to a fully uh kind of automated solution that actually put pushes up into the back side of workiva yes as a part of our pilot together and that was really exciting and so so we did something and it was kind of by the skin of our team because we were turning this on over time but but we had just gone through gotten all of that back end record keeping everything done in time to do the last end of the year close on emissions our Automation and then pushing it into working that was audited and we we got it back and did it again the second time and that's what you see in our numbers this year and I got to tell you we had a lower number of findings we had a much stronger ability to close it out I mean I'm so excited that was great on performance that's a whole other thing okay because we continue to to advance our energy transition journey in a really positive way uh and so continue to see a deeper emissions reductions we're almost 30 percent of the way there to the 50 Mark and so we're right on track to where we need to be for that and then the other pieces is as you look at our performance in Social and governance the we had some we had some some warts I'll just say we had some parts that were less awesome and what was so good this year is that we're finally able to articulate where we're focused strategically to really move the needle on how we think about people more sustainably that is so important and making sure that it isn't just about diversity it's also about inclusion and other aspects and so so you if you turn the page into the report you'll see we articulate what we think is entails sustainable for people planet and principles and how we're going to get there in our progress so that even if it was a little wordy you'll see that we have we have the the clear way that we're going to advance progress towards becoming sustainable that's new I love that I think that that's resonating Around the Globe Best in Class looks like a movement away from Perfection and I think it's a movement towards the transparency and Trust needed as the license to operate people have asked a lot about like energy you care about green washing or purpose wash and I was like I don't think people intentionally went out and tried to do that I think people were very good practitioners I have a lot of faith in colleagues like yourself in the field I think it's pushed this idea but I can not be glossy I can admit what you just said my warts and I'm seeing Best in Class now look like more of a reality check that we see in earnings you acknowledge what went well you acknowledge the number you didn't make and you freaking tell the street what you did and what you're doing you know get back on course it's not that hard we do it in finance and I love that you and others are leading the way on how we acknowledge that in the same same way so as we wrap up this episode it's been a Powerhouse time together Allison what's one takeaway related to reporting that you would offer up to myself and others like us um that we share our sustainability team should be thinking about I would remind people that there's a lot of times there's this uh I'm thinking I won't say adversarial but people are a little bit leery about having a lot of board engagement okay and it's it's sort of like exposing your operations and trusting that your board has your back and your best interest I will say like like one of the single greatest areas of strength trained company is is our board has gone through a bit of an educational process as we have okay and they've been there every step of the way I mean we've got a couple of very strong board members in this area who have and frankly one was the one who looked at me in my first year and said Allison you have to own the words too okay and uh and and like that moment of truth with her was so incredible for me and so to to have that trust in the that Earnest conversation with our board and have their support is is great so lean into the strength of having a really amazing and capable board for anybody who's in a a publicly traded company it is so important okay don't fear that embrace it it's only going to make you stronger and help reduce your risk in the company the more questions they ask the better you are as a company I love it no and I think you're you're exact and boards are changing boards are changing to assess members who have environment social governance changes boards are changing to embrace it across the different committees where they have accountability and I think you're right it's nothing to fear and by the way if you're going to your first board meeting people like us we we start somewhere you start somewhere in a board room and you you know write down the lessons learned it's like any other part of the job and if you're great at stakeholder engagement with most of us are just a different group of stakeholders that that you're now engaging with so love that as our close out and takeaway Allison thanks so much for being with us today what a privilege and to our audience thank you again for joining us in this episode of ESG talk brought to you by workiva the world's only unified platform for financial reporting ESG audit and risk if you enjoyed this episode please write and review us on Apple podcasts subscribe to see future episodes on Apple Spotify or YouTube we'll talk real soon