deal architect

Building on the Salesforce Stakeholder Impact Report template

It’s the time of the year for annual reports and shareholder meetings. I recently watched Warren Buffett preside over the annual Berkshire Hathaway shareholder meeting. Berkshire owns over 60 companies and has major shares in hundreds of others.  30,000 attended the meeting in person and millions more watched it live for several hours. It ran against the stiff competition of the coronation of King Charles in London that day.

That intense level of interest in corporate governance and the minutiae in annual 10-K and corporate filings that Buffett’s teams routinely parse reminded me to read the Salesforce FY23 Stakeholder Impact Report (for the year ending January 21, 2023).

Salesforce has an expansive definition of “stakeholder” to include “shareholders, customers, employees, partners, the planet and the communities in which we work and live”

CEO Marc Benioff is quoted “When we focus on stakeholder value as well as shareholder value, our companies will be more successful, our communities will be more equal, our societies will be more just, and our planet will be healthier.”

In an interview with Business Insider, Benioff’s definition of a stakeholder was even broader, “Yes, our investors are our stakeholders. Our employees, our customers, the homeless in San Francisco we've advocated for. Our public schools are a stakeholder. Our planet, and journalists — you're key stakeholders also. And I have to manage for all of them. And that's what it means to be a modern CEO today."

The acronym ESG (for Environmental, Social, and Governance) has become synonymous with a broad stakeholder focus. It was first coined by the United Nations in 2004. It has gained momentum in investing and related reporting, but not as much as you would expect over two decades. It is still controversial because much of the guidance comes from the United Nations and entities like the World Economic Forum with no jurisdictional authority. While some companies are still asking “why bother?” the reality is there is only inconsistent guidance on “how do we proceed”. I think the Salesforce template can guide in answering the “how” question

The road is long

Salesforce has been publishing its Stakeholder Impact Report for over a decade now. The FY12 report primarily focused on Sustainability and every year since it has steadily grown in scope. Salesforce’s founders had an even earlier start. A decade prior, they launched their 1-1-1 model, which commits 1% of their equity, technology, and employees’ time toward charitable initiatives. We should expect most ESG initiatives will evolve on a similar, gradual path.

Don’t try to boil the ocean

The United Nations has 17 broad Sustainable Development Goals each with many targets (169 in total at last count).

Throughout its report, Salesforce helpfully points out which of the UN SDGs a particular section meets.  Salesforce does so with its solutions like Net Zero Cloud, Net Zero Marketplace (see their presentation in this Analyst Cam episode), and contributions to entities like 1t.org, a global tree movement they co-founded in 2020 to conserve, restore and grow a trillion trees by 2030.

Salesforce also shares how it decides what to prioritize.

No law requires you to volunteer for all these goals and related targets – or indeed any. There are plenty of activists and regulators who are only too happy to guilt you about each of the goals. Decide on goals where you can contribute the most impact. For example, as a chemical company you are likely to have a much larger emissions footprint than a software vendor does.

Commit to data rich initiatives

Here are some of the highlights from the Salesforce report:

The Salesforce FY23 summary report runs 21 pages, and has another 24 pages of detailed schedules (and includes data on Scope 3 emissions, Sustainable Aviation Fuel certificates and data on Underrepresented employee groups among others) and audit commentary from the independent accounting firm, Ernst & Young.  The more you collect, certify and share specific data the more trust you will create that you are not just “virtue signaling” your commitment to a certain goal or target.

Negotiate more disclosures from activists and politicians

Part of the resistance we hear about ESG is that it is about one-way transparency. Many politicians, NGOs, charities and activists do not appear to be that open to debate or disclosure. Charities should better explain their program expense ratio. In many cases the executive compensation is too high and takes away from funding designated for their mission. Similarly, politicians demand plenty of reporting from businesses, but don’t often reciprocate. Many are banning combustion cars with aggressive timetables. They should, in turn, be able to show whether local utility grids will be able to support the transition needed for regular charging of EVs. They should be able to show the vehicle makers who sell in their jurisdiction have negotiated sufficient supplies of lithium, manganese and other critical materials needed for EV batteries. The Ukraine crisis has shown us energy independence is just as important as a focus on emissions. We have a right to see and debate if their transition plans from point A to B are well thought out. 

Summary

Not every company will take as expansive a definition of stakeholders or ESG as Salesforce has. However, their Stakeholder Impact Report provides a nice template for every company to review and adapt to their more limited commitments. Just as importantly, as a society it also allows us to seek similar accountability and transparency from those who are setting the “rules” for such commitments.

Burning Platform: Ecosystems Galore!

In the 50th episode of the series we have Tyler Prince, EVP Worldwide Alliances and Channels at Salesforce.

While most vendors have siloed groups to manage their SI partners, their platform ISVs and their developer communities, Tyler plays a role in all 3 in Salesforce world. That includes their SI ecosystem with a wide range of global, regional, and vertical specialists, that on their AppExchange platform and in the Trailblazer community.

That gives him a unique perspective on the cross-currents across these very different ecosystems and the vital role they will play to deliver to CEO Marc Benioff's ambition to get to revenues of $50 billion by fiscal 2026 (in FY 2021 they delivered $21 billion)

We also discuss the impact the pandemic had on the SI community and the move to virtual project delivery, how Salesforce has woven diversity and inclusion in its ecosystems and the growing role of Slack acquisition and the Success from Anywhere initiative as lockdowns continue around the world.

Refreshingly different perspective on ecosystems!

Burning Platform: Diversity Trends in Tech

Brian Sommer and I have recorded 12 episodes in this series - see index here. Last couple of weeks, we have had several guests like Rob Kugel of Ventana, Josh Greenbaum of EA Consulting, Bonnie Tinder of Raven Intel, Frank Scavo of Avasant and Dennis Howlett of Diginomica.

The BLM movement this summer has brought more urgency for HR and procurement groups to diversify employee and supplier bases. Related to this, I did interviews with two prominent African-American tech executives, Tony Prophet, Chief Equality Officer at Salesforce  and Charles Phillips, Chairman at Infor. Also a presentation by Barbry McGann of Workday on their new VIBE product which allows companies to better visualize employee diversity from multiple dimensions.  The Tech sector should be proud of its efforts.

While the recent intense focus is nice to see, it would be remiss to not point out we have been making steady progress for a long time. I invited Cindy Jutras, President of Mint Jutras to talk about her 45-year career at software vendors and analyst firms, and draw from her experiences on how gender and ethnic-based diversity have evolved in the industry. I add my own experience as an immigrant and someone who has worked in and traveled to 70 countries and seen the US "from the outside in" in the video below.

I particularly liked Cindy pointing out the movie, "Hidden Figures" about a team of female African-American mathematicians who served a critical role in NASA during the early years of the U.S. space program. As she says "we have come so far"

We also touch on age discrimination. Silicon Valley and outsourcers tend to be focused on young recruits, but even corporate IT tends to be ambivalent about older employees. The pandemic has resulted in many older employees who are traumatized or those who finally having spent more time at home with families and have relished the experience. Both categories are opting for early retirements. These accelerated (and unplanned) exits may also bring more of a focus on the age attribute as companies refine their diversity policies.

It is a not a "woke" conversation. It is a realistic discussion about why a system of meritocracy, more enlightened executives and driven individuals work better than forced mandates for diversity.

New Normal: A conversation with Stephany Lapierre of TealBook

I have been doing video interviews with a number of C-level execs and practitioners about acrobatics they have been seeing in various vertical sectors during the COVID-19 crisis and the "New normal" they can expect as the economy wakes up. Here is the index to the growing list of interviews. 

This time it is Stephany Lapierre, Founder and CEO of TealBook. The Toronto based company is helping companies with what they call "Universal Supplier Profiles". Traditionally procurement has mostly relied on portals to collect information directly from suppliers and that gets stale quickly. With TealBook, the data layer is constantly maintained through AI and machine learning (harvesting data from 400 million websites), so customers don't have to spend so much time maintaining their data, relying mostly on supplier-provided data or searching for new vendors via their own web searches.

Matt Palackdharry, VP of Strategy had presented here in the Analyst Cam series about Discovery, Diversity, Sustainability and other use cases they help many of the Fortune 100 customers and many other organizations with.

Stephany has many examples of heroics. In the first few weeks of the pandemic she describes how the UK government, desperate for PPE supplies and looking for choices beyond China, leveraged TealBook for information on 60,000 ISO certified PPE makers. She describes 170 other requests in the first 3 weeks from around the world to help source N95 masks or their components (Matt shows that use case in the video above)

During the BLM crisis and the many diversity initiatives since customers have leveraged TealBook's 800,000 certificates for black and minority owned businesses. More impressively they have helped a number of smaller businesses self-certify (she says 95% of them find formal regulatory certification too cumbersome or too expensive) and become more visible to companies. As a result, companies have reported they found $30 to $100m in spend with minority businesses they had not identified from their existing records.

The focus is next switching to sustainability initiatives and similarly finding suppliers with appropriate focus and certification on green matters.

We also talk about shifting global chains - the "China +1 initiative" in many companies. She says it is "China +2 or 3" for some customers.

We next talk about trust in data. While in enterprise world, we routinely talk about "single source of truth", the reality is Mark Twain's comment today would be about 'Lies, Damn Lies and Big Data". The person on the street has little faith in data because so much of media has cherry picked data to suit its narrative. She has some thoughts about how to build trust.

Finally we talk about data science and careers for our young. She says "we are just beginning" and clearly is a role model and recruiter for a number of young data and ML graduates.  

She is a very impressive entrepreneur and we cover a lot of ground as you can see below.