Intel Makes ESG a Competitive Advantage
Sustainable and socially responsible investing now represents $1 in every $4 under professional management. As this type of investing becomes increasingly mainstream, companies around the world are scrambling to make environmental, social and governance (ESG) data available to investors so they can be included in ESG-focused portfolios.
Some firms, however, are already ahead of the game. In a 2018 report, Morgan Stanley called out big names like Campbell Soup, Microsoft and Intel as “first mover companies that are already capitalizing on investor interest in ESG.”
Intel, in particular, started engaging with investors around ESG issues nearly 20 years ago. Through so-called “outreach roadshows,” company representatives met with investment firms to share Intel’s ESG metrics and gather feedback about the data points of greatest interest to investors.
Of course, when Intel started its outreach, few investors were asking about social and environmental performance. “When first starting out, we primarily engaged with specialized socially responsible investing firms,” recalled Suzanne Fallender, director of corporate responsibility at Intel.
The company’s initial actions proved to be prescient, as mainstream investors became more interested in ESG and began to seek out more of this information from companies.
“Our early engagement helped not only to build the right relationships externally with the ESG community, but also to build the trust and collaboration internally,” Fallender told CR Magazine.
“This has enabled us to work effectively across multiple departments to drive an integrated strategy for our ESG disclosure and outreach.”
In recent years, Intel transitioned its annual roadshow to a year-round outreach strategy that engages departments from across the company, including its investor relations group, corporate secretary’s office and corporate responsibility office. In 2018, these teams discussed ESG and other issues with investors representing at least half of Intel’s outstanding shares, said Fallender, who managed the socially responsible investing division at Institutional Shareholder Services before joining Intel in 2007.
In this context, dialogue with investors around ESG essentially boils down to making the business case for sustainability and social impact policies—and explaining how these efforts help the company reduce risk and remain competitive for the long term.
“As a global manufacturer, we regularly share with our investors how our proactive approach to corporate responsibility and sustainability has created more efficiency and reduced risk over time,” Fallender explained. “For example, since 2012, we have invested more than $200 million in energy conservation projects in our global operations, resulting in cumulative energy savings of more than 4 billion kilowatt-hours and cost savings of approximately $500 million through the end of 2018.”
Intel was also among the first to publicly disclose its diversity numbers and engage with investors around inclusion strategies, with a focus on attracting and retaining top talent. In 2015, the company set a goal to reach full representation of women and underrepresented minorities in its U.S. workforce by 2020. It committed $300 million to support this effort and, more broadly, to help drive inclusion across the tech sector, Fallender said.
Last year, the company met its representation goal two years early. “This achievement was the result of a comprehensive strategy that took into account hiring, retention and progression, and is just the beginning for Intel’s work in this space,” Fallender told us.
Action on key ESG issues like energy conservation and talent development gives Intel plenty of good news to share with investors. “On issues like these—where the business benefits and the broader societal benefit closely align—that’s where we see the greatest opportunities to drive impact and results,” Fallender said.
And as younger generations are poised to pour up to $20 trillion into ESG-focused investments over the next 20 to 30 years, according to research from Bank of America Merrill Lynch, Intel’s early outreach and disclosures position the company well for what’s to come.
“Publicly reporting our goals and performance has improved accountability, and allowed us to share best practices and insights with others, including our customers and suppliers,” Fallender explained. “What we have found over time is that our ability to continue to drive greater efficiency and be transparent about our results has only increased in importance, as our customers and investors increase their own focus on sustainability performance and goals.”