On this week’s episode of the On Aon podcast, host and Aon’s Head of Corporate Governance and ESG Advisory Laura Wanlass is joined by Aon’s Head of Investor Relations and ESG Leslie Follmer for a conversation about the firm’s 2022 Environmental, Social and Governance (ESG) Impact Report. They discuss the need for strong goals and embedding ESG in the firm’s culture and emphasize the importance of having a firm-wide strategy that contains ESG elements.
Additional Resources:
Aon’s website
ESG Data: How Businesses can use Data to Gain an Edge
On Aon Ep. 48: On Aon's Game Plan for Switching from Defense to Offense in Managing Risk with Greg Case
Tweetables:
Voiceover:
Welcome to “On Aon,” a now award-winning podcast featuring conversations between colleagues on, well, Aon. This week, we hear from Leslie Follmer on findings from Aon’s 2022 ESG Impact Report. And now, this week’s host, Laura Wanlass.
Laura Wanlass:
Well, hello, everybody. My name is Laura Wanlass, and I've been a colleague here at Aon for the last 15 years, or since 2008, straight out of law school.
Currently, I'm serving as a partner and the Global Head of Corporate Governance and ESG Advisory within our Human Capital Solutions team here at Aon.
And at a very high level, my global team and I provide strategic guidance to senior leaders and board members to be able to navigate topics and expectations from financial stakeholders, proxy advisory firms, rating agencies, regulators, employees. You name it, we help cover it, as it relates to ESG, shareholder voting, et cetera.
But more importantly, today, with me, we're talking about Aon's ESG report, and we have Leslie Follmer here, the Head of Investor Relations and ESG for Aon. So, thanks for being here today, Leslie.
Leslie Follmer:
Thank you so much, Laura. It's an honor to be here today with you. And I take every chance I can, and I want to say thank you because your team... All those things that you talked about that your team does, you have offered to and helped us do those at Aon. And so, you and your team have been a huge part in getting us to where we are today and getting our report to where it is, so thank you.
And I think more broadly than what your team's doing across Aon, this report takes a village. And I wish to say thanks to everyone at Aon who's contributed to the pieces that have come together in this report that I am so excited is being released.
Laura Wanlass:
Yeah, that's great. You're right. It is a team effort from across the firm and from your team, in particular. So, that's great. And before we get started into the meat of all the questions we want to ask you today, I'd like to ask you a quick warmup question. So, why don't you tell us a little bit about your role in our firm?
Leslie Follmer:
Yeah, so in my role in the firm, I've got IR, and I've got ESG, and I think investor... Sorry, Investor Relations and Environmental Social Governance. And in both of those, it's similar a little bit to what you said, Laura. We are reacting to needs from stakeholders around the firm.
So, in Investor Relations, it's communicating our story in such a way that they can value our shares fairly and transparently, and we can answer all their questions. And on ESG, it's around telling Aon's overall story and leading our firm's strategy around ESG, even though, in many ways, that sits in different parts of the organization, like our people strategy with the people org, for instance. But I pull all those pieces together into one story.
So, that story has two big parts, what we do as a firm or our corporate commitment and what we do for clients. And I am more focused day to day on what we do as a firm. But I think the bigger part of the story, the more important part, the more impactful part is what we do every day for clients. And I'm really excited because this report highlights both of those aspects really well. And in fact, that's one of my favorite things about this job, is those two things together.
Laura Wanlass:
That makes sense. Obviously, I get why you and I are on the podcast together. I work with the Leslies of the world at other companies. And what I think I like about what you said is there's just such a cross-departmental nature of ESG within a company.
And it can be a blessing when it goes well and a curse when it doesn't. But obviously, I think we do a great job here at Aon internally, but also with how we present this topic to clients. I think we really help our clients navigate those cross-departmental hurdles that really can exist.
Leslie Follmer:
And I think, Laura, that's one of the... I mean, that is Aon United, and that's one of the best things that your team does, which is you have a bird-eye view, a C-suite view, a board view of ESG, and you're able to go and have a strategic view on ESG and then help plug in and connect to other Aon solutions around the firm. And so, I think that's a fantastic example of Aon United at its best. And as you say, though, that doesn't come without sometimes challenges and opportunities, working with so many different stakeholders.
Laura Wanlass:
Yeah. I like the opportunity versus the hurdle reference.
Leslie Follmer:
Totally.
Laura Wanlass:
Before we even move to the next question, I think it's funny because Aon's so well positioned when you think about... We have Cybere have limate, D&O, eneral isk ransfer, uman apital. Those are just core ESG topics, so you're not navigating anything that's not core to the company. And I guess that's going to the heart of the next question. So, can you tell us a little bit about how Aon defines ESG?
Leslie Follmer:
Yeah, absolutely. And I think we've got one page... For everyone who's able to check out our report, we've got one page that lays it out really nicely. And so, as you look at environmental, social and governance, we've pulled some highlights about what we do as a firm and what we do for clients.
And so, for us, on environment, for instance, we've got our commitment that we're making progress on again this year to be net-zero by 2030 with our own carbon emissions. But I think when you look bigger picture, our climate strategy team and, in fact, our renewables team and the people that are doing this work in reinsurance, there's tons of work around helping clients understand, quantify, build resilience and grow around climate-related risk. So, I think those are kind of two big parts of the environmental bucket.
On social, I think about it as what we do for colleagues, our own culture and how we drive that in an Aon United way, which means inclusion and diversity, it means supporting our colleagues and it's about what we do in communities.
I think, on the business side, that includes both the health and the wealth and the human capital pieces about what we do for clients.
And then, on the governance side, really, we think about risk mitigation, governance of overall risks. So, that's what the board does and what management does, and what our internal ESG committee do as well.
And then it's topical pieces, like cybersecurity, for instance, and data privacy. And so how we pull all those together to make sure that the right people are looking at the right risks across the firm. And that's another one where I think we've got offerings that can help our clients do that.
And Laura, your team has built the Digital Business Insight monitor, which is a really cool example of giving clients an opportunity to look at risk across their firms.
Laura Wanlass:
Yeah, no, I appreciate you bringing that up. And what I think I like the most about this graphic is that it really does truly showcase how authentic our positioning is on the E, the S and the G at the corporate level and how we work with clients in a very transparent and clear manner, which as you know, people that read a lot of these reports. I think the easier you can make it for people to digest, the better. It comes across as being more clear about where we're focused.
Leslie Follmer:
Absolutely. And this stuff is complete. I mean, these pieces are all embedded. I like to say we don't have an ESG strategy. We just have a strategy that has ESG elements. And I think when you look at what we're doing around smart working, and you look at what Aon Business Services is enabling in our supplier base around our emissions, and you look at inclusive people leadership, they're all essential elements to how we operate and do business that just happen to align to these risks that are called ESG.
Laura Wanlass:
Yeah, I feel like I hear a theme coming through about how a lot of the ESG focus is just core to what we've been doing from a business perspective.
Leslie Follmer:
Exactly. A hundred percent.
Laura Wanlass:
Yeah. And I mean, that makes really logical sense, and we can probably even talk more about that. But basically, we set goals, we make commitments, and it's about providing context to our stakeholders about where we are in our journey towards those goals and commitments. I think that's what I hear you saying.
Leslie Follmer:
Yes, absolutely. Exactly. It's so important that we are holding ourselves accountable and communicating our progress. So, when I look at the stakeholders, there are stakeholders across the board that care about this.
So, I mean, we've got our colleagues, our clients, our shareholders, our suppliers, regulators, communities and others. And I think that's why it's, for all of those different groups, we want to be out there and say, "Here's where we are. Here's what we stand for. Here's how we're making progress" so that we're holding ourselves accountable and demonstrating the validity and the importance of those claims that we've made.
And so, I think in the report this year, as you dig through it, we're highlighting our reduction in emissions, which we're so excited about. And then another I'd highlight that I'm excited about progress is around I&D representation.
So, for instance, and this was a stat that we put in our annual report, our 10-K, and in our impact report. We've increased the percentage of women managers globally, which is one of the big stats we track. And then, in the U.S., we increased the percentage of racially or ethnically diverse managers as well. So, another place where, again, we want to be tracking and showing progress because we know this is a really important topic for stakeholders and for us as a firm.
Laura Wanlass:
Yeah. That makes a lot of sense. And let me go a step further here. So, I get how we're setting commitments, tracking progress towards those commitments. How are we embedding ESG into the culture of our firm? I know we're touching upon this at a high level, but how do you view that we're actually doing that?
Leslie Follmer:
Yeah, and I think that's what we said before in so many ways, which is, I'd flip it even, which is it's not that we're embedding ESG in our strategy, it's that we already have a strategy that incorporates and takes into account and acts on these ESG factors. Because those factors that we talked about, they get bucketed into ESG, but truly, they're just risk, and they're things that all companies and organizations should be thinking about.
And I think, ultimately, these issues and opportunities around people and the environment are really essential elements of our strategy. As we said, I mean, Aon Business Services is how we operate efficiently and support our clients as they go to market, but it also enables us to drive efficiency in our supply base because we can see it all in one place.
And smart working, where we're letting people be more flexible with travel and commute, and giving them the digital tools and the connectivity to do that, is another one that helps; has the nice side effect of driving engagement and reducing our carbon footprint.
Laura Wanlass:
That makes sense. You're empowering colleagues but also helping with our footprint at the same time. It's very-
Leslie Follmer:
Exactly. And I don't think you can do one, it's really hard to do one without the other. I think it's really important that all these pieces fit together because, otherwise, to your point, I don't think it's authentic, and I'm not sure that we'd have as much success as we've had so far either.
Laura Wanlass:
Yeah. And you're hitting on a couple of other important themes about the context of your actions and you just making those connections for everybody in terms of how that relates to ESG. I think that is really an impactful thing for other IR professionals to realize, making that connection as transparent as you can.
You also touched a little bit, or you have been touching a little bit, on our own footprint. So, I'm curious a little bit more about, as we look at the environmental and social challenges that the world is facing, which is pretty multifaceted and, in a lot of cases, urgentGiven this, can you give us a little more context about how we're operationalizing our sustainability ambitions for colleagues and clients even beyond smart working?
Leslie Follmer:
Yeah, absolutely. And so, I think we are managing our own footprint, and you see it in how we think about real estate, how we think about travel. In the report, you can see we've committed to supporting sustainable aviation fuel, which is a biofuel that will help us reduce the carbon footprint of air travel.
And then, on the ground, it's not just something that comes from the center. We actually have a sustainability network, a global set of colleagues who are incredibly passionate about sustainability and are leading local action. So, we've got a sustainable meeting and events guide, we're reducing single-use plastic, there's tree planting and beach cleanups, and all those kind of things as well where you've got colleagues coming together to help drive impact at a local, at an office level.
And then, I think, most impactful is as we look at what we can do for clients, we really see this opportunity to help them. It's really three big buckets, and I think we've talked about this before on the podcast with others from climate, around really helping clients quantify risk and build resilience. It's around helping them report risk if they need to for regulatory or other reasons and then about helping them grow and look for opportunities in the transition that's going to happen globally to a lower-carbon environment.
And so, maybe two examples I'd highlight there that I think are interesting. So, one of our real exciting opportunities there is within IP solutions, and we've got an opportunity to help growth-stage companies fund their operation, borrow money by... We can value and then help them get insurance on the value of their IP, which they can then use to borrow money.
And so, some of the companies that we're able to support as they do this are ones that are driving that transition to a green economy. So, we highlighted one called CHASM. That's an advanced materials company, and their products are enabling the manufacturing of lower-carbon cement. Just one really great way that we can help de-risk the world's transition towards decarbonization.
And then, maybe one other area I'd highlight is, as you think of what's happening in the U.S. right now, where regulation or sort of government rules are coming into place... In the U.S., you've got the Inflation Reduction Act coming through, which is actually going to spur a bunch of construction and innovation, and investment in the U.S. And that's another place where you can do everything from just really traditional insurance solutions to more advanced ways to support that investment driven by regulatory change all around the transition to a greener economy as well.
Laura Wanlass:
Yeah, so that's neat. I mean, there's no shortage of examples, like you just mentioned. I feel like there's just so much innovation that's taking place at our firm and in the industry in general. So, beyond our own footprint, it's neat to see how we're able to help facilitate channels and open channels for clients to do the same type of work and more.
So, a couple of things. This is a question near and dear to my heart because I help the Leslies of the world. I want to know, what are our investors most curious about when it comes to ESG and our ESG strategy?
Leslie Follmer:
I love it. And I think it's hard to give it one answer because it is a huge topic for investors, and they do want to understand a lot of different pieces of it. But ultimately, it really comes back to two things, what we're doing as a firm and where are the opportunities around ESG to help clients and ultimately drive revenue and drive shareholder value.
And then, on the other side, they want to understand how we're managing risk and looking for opportunities in our own firm. So, it's really that, "How are you going to help clients with these pieces?” And then “What are you doing as a firm to make sure that you're not really going to get blindsided by one of these risks coming through and that you're seizing opportunities?"
And so, one of the big areas that they focus on within that is really how we're supporting our people and our talent, and they want to know what we're doing to support and grow talent, how our people are excited about our Aon United strategy. And they'll push on the risks around that and how are people feeling, and all those kind of things that go with it.
So, I think that's a place where we're excited to talk about all the ways that we support our colleagues with training and development. We're certainly excited to talk about how Aon United and pieces of it, like smart working, help our colleagues. And we'll talk about things like colleague engagement, where we've been at all-time highs with the firm over the past couple of years because of all the steps we've taken to drive connectivity and support teams, and all those pieces together.
Laura Wanlass:
Thank you so much, Leslie, for that answer. Your comments about investor sentiment echo so much of what I feel like the team and I hear in the field every day. And, as a colleague that sits within Human Capital Solutions, I love to hear the continued focus of investors on what is basically a material ESG topic for every company regardless of size, industry and maturity, which is your people. So, I think it's obviously-
Leslie Follmer:
Absolutely.
Laura Wanlass:
Yeah, it was the first SEC-mandated ESG reporting for a reason.
Leslie Follmer:
I think that's right. And I think investors understand how important our people are to our business, and that's ultimately what they come back to. And that's another piece. I mean, I can't say it enough, right? It's like, we don't have a people ESG strategy, we have a people strategy, and it's driven by Lisa Stevens, who leads our people organization, and Eric Anderson, who leads our business.
It is driven by everything that Aon needs to achieve as a firm. And it just happens to contain these elements that are part of our ESG strategy that we're picking up and kind of pulling out and highlighting in the report that we think are so important.
Laura Wanlass:
Absolutely. And it's actually the lowest-hanging fruit for every company that's looking to make a mark on ESG. Just master your people strategy, and you've probably already made good progress towards having a good ESG profile.
Okay. With that, as you know, since you've been a guest on this podcast quite a few times before, before we sign off, we like to ask our guests a personal question to let our listeners know a little more about you. Are you ready?
Leslie Follmer:
As ready as I will be.
Laura Wanlass:
All right. So, tell us a little bit about the last book you read.
Leslie Follmer:
Great. I'll tell you about a recent book only if I get one question for you, Laura, before we get out of here because I think your answer will be more interesting.
So, the last book I read... One book read recently that I was really excited about, especially as it relates to this topic, is called Ministry for the Future. And it is a sci-fi rendering of how the world eventually solves the climate crisis.
The guy who wrote it is called Kim Stanley Robinson. And the first chapter, I would warn anybody, is a horrible tragedy, but then it carries on in a much more positive tone, and it's a really expansive look at the challenges and opportunities that come with addressing climate.
So, I've read that. And then, kind of opposite end of the spectrum, I'm currently reading Goodnight Moon on repeat for my little boy, who's one and a half, because his favorite thing in the world right now is the moon. And so, that is-
Laura Wanlass:
Oh, I love it.
Leslie Follmer:
... a fixture every night in my house. But I mean, that's me on books. And I just have to ask, Laura, you've got to say something about what you're doing this weekend, from the opposite spectrum of book reading. What are you getting into this weekend?
Laura Wanlass:
It's funny you ask. I am partaking in electric vehicle usage in that I will be riding my electric dirt bike with my husband and 11-year-old daughter this weekend in the trails of the Arizona desert.
Leslie Follmer:
That's fabulous. And maybe someday, Laura, I will continue to be as cool and exciting as you are on my weekends. One of my other goals in addition to continuing to make progress on our ESG agenda.
Laura Wanlass:
Challenge accepted. I will meet you in the trails.
Voiceover:
This has been a conversation “On Aon” and Aon’s 2022 ESG Impact Report. Thank you for listening. If you enjoyed this latest episode, tune in soon for our next edition. You can also check out past episodes on Simplecast. To learn more about Aon, its colleagues, solutions and news, check out our show notes, and visit our website at Aon dot com.