On Aon

18: On Aon’s ESG Focus with Leslie Follmer

Episode Summary

Organizations around the world are increasingly focusing on the impact of environmental, social and governance issues, commonly called ESG. At its core, ESG is all about risk. From climate change and supply chain to reputation and brand, ESG topics are central to executive and board-level discussions at every firm. Historically, ESG was a lens through which socially conscious investors could evaluate investment opportunities. Today, more and more firms are considering environmental, social and governance risks, opportunities, impact and stakeholders in their daily operations. In this episode of “On Aon,” host Andrea O’Leary, Chief People Officer for Enterprise Clients and Innovation, is joined by Aon’s Head of Investor Relations and ESG Leslie Follmer for a discussion about Aon’s approach to ESG, as well as how broader ESG trends are shaping Aon’s work with clients, counseling better decisions.

Episode Notes

Organizations around the world are increasingly focusing on the impact of environmental, social and governance issues, commonly called ESG. At its core, ESG is all about risk. From climate change and supply chain to reputation and brand, ESG topics are central to executive and board-level discussions at every firm. Historically, ESG was a lens through which socially conscious investors could evaluate investment opportunities. Today, more and more firms are considering environmental, social and governance risks, opportunities, impact and stakeholders in their daily operations. In this episode of “On Aon,” host Andrea O’Leary, Chief People Officer for Enterprise Clients and Innovation, is joined by Aon’s Head of Investor Relations and ESG Leslie Follmer for a discussion about Aon’s approach to ESG, as well as how broader ESG trends are shaping Aon’s work with clients, counseling better decisions.

Additional Resources:

Aon’s website

Aon’s 2020 Impact Report

ESG intersects with our client work and company culture. For continued listening, check out our past episodes on our climate commitment (ep. 1), our inclusion and diversity efforts (4), climate and catastrophic events (10), and our apprenticeship program (16).

Global Special Report: Helping Organizations Chart a Course to The New Better

Tweetables:

“ESG is ultimately about risk.” — Leslie Follmer

“If you’re really thinking about ESG in the right way, it really impacts what your company is doing across your strategy.” — Leslie Follmer

“If you take care of your people, they take care of your clients, and that takes care of your business.” — Leslie Follmer

“The ESG commitment is not just about what we’re saying, it’s about what we’re doing.” — Leslie Follmer

Episode Transcription

Voiceover:

Welcome to On Aon, a podcast featuring conversations between colleagues on, well, Aon. This week, we hear from Leslie Follmer about what ESG means for Aon. And now, this week's host, Andrea O'Leary.

Andrea O'Leary:

Hi everyone, welcome to the On Aon podcast series. My name is Andrea O'Leary and I've been a colleague at Aon for eight and a half years. I lead our people organization for our enterprise client group and our innovation group.

Andrea O'Leary:

With me today is Leslie Follmer, senior vice president, head of investor relations and ESG. And we are so thrilled to have her here today, to offer her perspective on Aon's environmental, social and governance efforts. Or, ESG as we'll refer to it quite a bit during this podcast.

Andrea O'Leary:

Thanks for being here today, Leslie. Before we get started, I want to ask you a little bit of a warmup question, just to get you more familiar with the podcast setting. So the first question for you is what is it about your profession that most inspires you?

Leslie Follmer:

Awesome. And, Andrea, just thank you so much for having me today. I am delighted to be here to talk about this topic, which is increasingly important around the world. So again, really excited to be here so thanks for having me.

Leslie Follmer:

And then, to your question, I think the best thing about my job and what inspires me the most, I get to work with incredibly smart people every day. Internally to Aon, externally, outside, our investors come to me with my investor relations hat and ask incredibly smart, thoughtful questions. They're thinking about really big challenges and asking big picture world questions, and really interesting questions, again, about Aon, which then tees me up to go and have really detailed conversations with the people that are delivering solutions to clients at Aon every day. Those are some of the best things happening at the firm and I love learning more about them.

Leslie Follmer:

Overall, just the combination of those two things on the IR side have been great. And, I think on the ESG side, we've got the same thing. We've got experts working on this, all over the firm. And, the questions and the issues that people are thinking about, I'm learning a ton and it gets me incredibly excited just jumping out of bed to start work every morning.

Andrea O'Leary:

I love that. I love just the people aspect of it. And, I'll just say, ditto. I think part of the amazing things that we get to do here at Aon is the people we work with, and just how they inspire us, and motivate us, et cetera. I love that answer.

Andrea O'Leary:

As we think about our next question, so thanks for the response there, can you please tell us first what ESG is and why it's important?

Leslie Follmer:

Absolutely. Great question and one that I hear a lot. ESG is ultimately about risk, and typically longer tail risk. Historically, it started as a way that socially conscious investors wanted to think about a company's impact. So typically, based on more intangible factors, so what impact the company's having on the environment or how they're treating their employees. And, I think as compared to maybe the historical way you'd think about evaluating companies based on financial performance or the strength of their balance sheet. And, what investors really saw is, over time, the research shows this, companies with a lower ESG risk profile outperform the market. I think that was the beginning of ESG.

Leslie Follmer:

And I think since then, probably '70s or '80s, and since then it's evolved to be a much broader consideration of environmental, social and governance risks and opportunities. I think it also has expanded a bit to include broader corporate responsibility, in a lot of cases. And, I think what we really see is colleagues, clients, suppliers, the public look at ESG to see what a company values and if it's putting its money where its mouth is. Which has an overall, really, impact on our reputation and our brand and ultimately, what people think about the long-term prospects for Aon.

Andrea O'Leary:

Yeah. It's really interesting you say that. I'm thinking about it because I actually really didn't know a lot about the historical aspect of where ESG came from. But, what I heard you say was, really, the way that ESG has evolved is in its infancy or when it started, was really just about how investors think about a company, and a different way for them to think about it. But, as it's matured and grown, it's almost really about how all the other key stakeholders, in addition to the investors, look and evaluate a company. You talked about suppliers, I'm thinking current colleagues or future colleagues of our firm. And more broadly, even the public or society. Is that right, am I thinking about that the right way?

Leslie Follmer:

Absolutely. I think what we've seen, even from the beginning of the pandemic through to now, I think you're seeing an increasing focus on long-tail risk. But, then I think that switched to then the focus of things like climate change, or even supply chain risks. Or, a bunch of companies realizing their people are their most important assets and thinking harder about how they're going to treat their people. If you're really thinking about ESG, I think, in the right way, it really impacts what your company's doing across your strategy.

Leslie Follmer:

As you say, it's all those stakeholders and it means a variety of things to all those different stakeholders. Which is, I think, the real opportunity for us, to be out there telling our story about what it means for Aon, because ultimately you're never going to be everything to everyone. But, having our story out there like we want to tell it is going to be incredibly important.

Andrea O'Leary:

Yeah. I think the our story, the Aon story part of it is what is the important part about it. It's what really resonates and what can pull people in, for sure.

Andrea O'Leary:

My next question is really around what is Aon currently doing, as it pertains to ESG?

Leslie Follmer:

Yes, another fantastic question that I think people will continue to hear more and more about. And, I think there's two lenses, which is what happens broadly across the firm and then, our first and second are corporate commitments.

Leslie Follmer:

So as you think broadly across the firm, I really think of it in three buckets. There's what we do for clients, what we do for colleagues and then, our corporate piece. I think, from my perspective, I think ESG, it can be real lens for how you look at each of those three pieces. Because so much of what we do isn't ESG driven, but it has ESG impacts, especially when you think about the client side and the colleague side.

Leslie Follmer:

And then, when you look at really what Aon is doing as a firm, there's three big pieces of commitment that we've made along the E, S and G framework. On the E side, environmental side, you've probably seen that we've committed to net zero by 2030, for our operations. So what that means right now is we're actually going through and assessing where are our emissions coming from and it's mostly travel, real estate and our supply chain. So then, for each of those areas, we're figuring out what's the right path to net zero. We're doing that along the rigorous standards of science-based targets, which is essentially just climate accounting standard. But, we're all thinking about this the same way as we measure our impact. That's the environmental piece, when you look across the industry, I think in our industry, that is an industry leading commitment that we've made, that we should be incredibly excited about, so that's environment.

Leslie Follmer:

The second bucket is social. I think what we've really done is, when you look at our Aon United culture, we're certainly not doing things related to our culture to drive the S of ESG, but I think when you think about social impact, what we do for our colleagues is a huge part of it. You've seen the people organization and other parts of Aon take steps to enhance our culture and better support colleagues. And then, you're also seeing a real increase in focus on inclusion and diversity. So particularly through the group of our global inclusive leadership council, you've probably seen our apprenticeship program or commitment to One Ten. And then, we've got a supplier diversity program, where our GSM team is focused on bringing in diverse suppliers into our supply chain as well. So another great area across the business where we've really, going from top to bottom, driving inclusion and diversity.

Leslie Follmer:

And then, finally, I think the last bucket is the governance bucket. And I think, ultimately, we look at, investors look at it and external parties do look at what your governance procedures, and practices and policies are, from what the board is doing, to what kind of ethics and code of compliance practices you have in place. And, even things like data privacy and cyber risk fall into this bucket as well, as another area that increasingly the broader world gets worried about, when it comes to governance.

Andrea O'Leary:

Well, I'd love to, if we could, I actually have questions around each of those lenses, if we could go a little bit deeper.

Leslie Follmer:

Yeah.

Andrea O'Leary:

If I take the environmental and this idea of net zero, so you said the main ones are travel, real estate and I can't remember what was the third one you said.

Leslie Follmer:

Suppliers.

Andrea O'Leary:

Suppliers.

Leslie Follmer:

The supply chain.

Andrea O'Leary:

If I think about, for the listeners out there, when we say net zero, we're not meaning we're never going to travel, we're not going to own any buildings or real estate property, we're not going to have suppliers or do business with certain suppliers. What does it really mean when we're saying net zero, in those different areas, knowing that that's the biggest areas we have opportunity for?

Leslie Follmer:

It's such a good question. And essentially, it basically means, broadly, you're going to look for ways to reduce it. And then, in places where you can't reduce it, we will look for ways to get carbon offsets or carbon credits.

Leslie Follmer:

If you think about something like real estate, we've got a couple levers. We can use less space, we can use less energy in that space, we can buy green energy or you go to the final option, which is those offsets. After we build this really detailed model of where all the energy and impact comes from, then we're able to go through and really figure out how do we move the needle on those four levers, over time. It's something that I'm certainly looking forward to talking more about and hearing more about from colleagues, because once we lay out that strategy, there is a big piece of how do we get people to help, and buy in and support it as we go forward.

Andrea O'Leary:

Yeah. Yeah. Well, I think about the social component of it, of ESG, and a lot of what you talked about is the culture at Aon and the things that we do to support our colleagues. So when I think about some of that social aspect, and I think about some of the work you mentioned, like the people organization or the global inclusive leadership council's doing. I guess when we think about that bucket, is it truly intended to be for our colleagues or is it more about the culture that we create, how does that resonate externally? Because I've always thought of ESG as a bit more of an externally focused lens of an organization, so I'm trying to connect that with culture and people being somewhat internal to an organization but really, how does it connect to that external component.

Leslie Follmer:

Yeah, I think it's both. I think one thing that I've certainly heard others say is if you take care of your people, they take care of your clients and that takes care of your business. I think that's a big part of it. I think if you do it from the investor lens, our investors want to know are you attracting, retaining, growing the right people? Are you paying the right amount? Do you have the culture that's going to enable you to continue to keep driving the business that you're driving?

Leslie Follmer:

So from the business risk perspective, as a people company, this is absolutely at the heart of what we do and where the ESG piece comes in internally. And then, I think you're exactly right, because it's both, on the external lens, too. Which is, what are the impact on our people, but also what are the impact on broader society, both in terms of what we can do for clients and then, the other initiatives and projects that we're doing that are tied into what we do as Aon.

Andrea O'Leary:

Yeah. Yeah. Awesome. No, I think that's super helpful. And then, finally, around the governance piece, I think it's also a bit maybe of the least unknown. It feels like a little bit of a black box. When we're talking about governance, what are we really talking about? Is it the way that our organization operates? Is it the structure we have, from board of directors down to client-facing colleagues? What is it we mean when we truly say governance?

Leslie Follmer:

Yeah, it's another great question and it's absolutely all of those things because it's really about what are you out there saying you're going to do as a company, or not do in the case of ethics and compliance. And then, trust and verify. If that's what you say you're going to go do, how do I know that you're going to do it? What are the rules, the policies, the procedures that you make that make that happen?

Leslie Follmer:

I think, every year, all of our colleagues are asked to do the Code of Compliance. But, that kind of reminding people that's how we are going to act, I think is important. And then, for us to be able to say, "Yeah, we make everyone sign this every year," I think is an incredibly important external statement, just around practicing what we preach and making sure that it's absolutely embedded through the organization.

Andrea O'Leary:

Yeah. Yeah. Well, my last question in this realm, before I ask you a couple of additional questions, is I want to pulse check something with you. Because, as you know, I'm a member of our global inclusive leadership council and we talk about the five pillars, and you referenced that council when you were talking about the social bucket. So we talk about representation, recruitment, promotion and education, and ESG. A lot of people, when I'm talking about the work of the GILC and what we're doing we'll say, "Well, this ESG bucket, we don't really understand how that fits in everything else," in my response to them.

Andrea O'Leary:

I want to use this opportunity to pulse check with you, if this feels accurate. I think a lot of, when we think about promotion, education, recruitment and representation, I think about it and we talk about it as internally, what are the things that we're going to do to drive our I&D efforts and our impact ahead, and those are the buckets we're really focused on. And, where ESG comes in, is then how do we actually show up, externally, in all of those things that we do. I think about it a lot as the way that our organization promotes the I&D efforts, the things we're committing to, the way that our organization is firm in the factors of I&D that we're focused on.

Andrea O'Leary:

How does that sound? Does that resonate to you? Or, does that feel somewhat accurate?

Leslie Follmer:

No, I think you're spot on because I do think the big piece ... Again, if you think of ESG as a lens, I think it is this how do the elements of our story, like our I&D story and our commitment, fit into the broader ESG narrative that we're communicating. And, I think as we communicate it, it's not just about what we're saying but absolutely about what we're doing. So I think those two, the GILC and the ESG agenda, just go hand-in-hand because it is ultimately about making sure that we've got these values, and it's making sure that we're executing on them and delivering on them every day.

Andrea O'Leary:

Awesome. Well, thank you for confirming and giving even some more talk tracks for as I'm talking.

Leslie Follmer:

What the GILC is doing, I think that has been a real ... It absolutely it, it's the embodiment of the I&D strategy and it's going top to bottom in the firm. I think that's the only way that these types of initiatives become real, is when they are supported across the firm. And they go not just at the very top, but everybody throughout the organization looking for ways to move the needle on these initiatives and these values.

Andrea O'Leary:

Awesome. Awesome, awesome. I understand that you're new to your role as head of Investor Relations and ESG. Can you share with our listeners, what are you most excited about and what do you hope to achieve in this role?

Leslie Follmer:

Awesome. No, there's a ton to be excited about. And, I think I am on a journey. We've made some progress on ESG, the GILC is a fantastic example and I think there's still plenty more to go. I'm really looking forward to seeing how we move those initiatives forward.

Leslie Follmer:

And, I think you've had someone here on the podcast before talk about the apprenticeship program, for instance, and the impact that we have. I think our supplier diversity program has really been impactful so far and one that looks to continue to build. As we said earlier, I think the things that we're doing on net zero are really industry leading and a great opportunity for us to continue moving the needle forward on the pieces that we want to move.

Leslie Follmer:

And then, I think for me, coming back to this happening everywhere, there's a ton to learn all over the firm. I'm really excited to hear more about what we're doing for clients, how this gets real every day for colleagues and there's probably a myriad of other things that I'm going to find out about. I'm really excited to hear more about all those pieces.

Andrea O'Leary:

Well, I will say that in the society that we live in today, with all the environmental considerations, the climate and net zero, et cetera, and then if you think about just all the societal, social things happening, I predict that ESG will continue to be at the forefront of a lot of conversations, company's minds, investor's minds, et cetera. I think you've got a lot of work ahead of you, Leslie, for sure.

Leslie Follmer:

No, and I think you're right. And fortunately, I am not going to be doing this all myself. There is work, like we said, going on across the firm. And, I think just similarly to how we do it in investor relations, there's a real opportunity to understand what's happening across the firm and really wrap that into the story of how we talk about Aon and how we talk about ESG. And, I think you can't do that unless there's a really powerful platform that sits underneath it, which is exactly what we have. So then I get the awesome part, which is telling this fantastic story as we go forward. I can't wait, it's going to be great.

Andrea O'Leary:

Awesome. Awesome, awesome. Well, thank you so, so much, Leslie. I've got one more question for you, before we sign off for today. It's really just to learn a little bit more, as we think about attracting colleagues to Aon and what might be interesting to them. I'd love to know, what insider tip would you offer someone who is looking to join Aon?

Leslie Follmer:

Man, I think if you have an opportunity to join Aon, this is the time to join. We've got an Aon United culture that is absolutely ... What we're doing with Aon United is different than what anyone else in our industry is doing. The things we're going to be doing around innovation to address long-tail risks are different than what anyone else is doing. And, think Aon United and the connectivity that we've built, it's just making it easier and easier for people to understand all of those things that Aon's got going on across the firm. And, I think we've got this real culture of openness and helpfulness. If you're asking people to help you understand what's going on or help you understand how to get something done, I see that all over the place.

Leslie Follmer:

So again, I couldn't be more excited about where Aon is and this is just a fantastic place to be.

Voiceover:

This has been a conversation On Aon and important topics around ESG. Thank you for listening. If you enjoyed this week's episode, tune in in two weeks for a discussions of Aon's work furthering gender equity. To learn more about Aon, its colleagues, solutions and news, check out our show notes and visit our website at aon.com.