Companies like Dell Technologies that span the globe and operate in multiple markets have to juggle several different regulatory regimes to enact their ESG strategy
Comprehensive regulations around environmental, social & governance (ESG) factors are on the doorstep of global companies — and one of these corporations is Dell Technologies. Cassandra Garber, VP of Corporate Sustainability & ESG discussed how Dell is preparing for the reporting requirements of the European Union’s Corporate Sustainability Reporting Directive (CSRD) regulatory regime and other frameworks that are being adopted by their customers.
In fact, Dell Technologies’ strategy includes impact areas, such as climate action, circular economy, inclusive workforce, upholding trust and digital inclusion (with the latter being focused on shrinking the digital divide.) To execute its overall strategy, Dell outlined nine key goals that are set for 2030 and beyond. In addition, its plan dictates how the work is done and which of the company’s function areas leads the work through the company’s Operating Model and Governance process, playfully nicknamed OMG to bring some levity to intense work moments.
The incoming CSRD expands the regulatory footprint of disclosure rules with a phased-in implementation schedule over the next few years. It applies to all large companies governed by EU law, or stock-listed in the EU, or created in EU-member state rules that meet certain minimum requirements around employees, annual revenue, and total assets. It will also apply to non-EU companies and small- to medium-sized enterprises in a few years.
Major areas of expansion of the CSRD are the inclusion of double-materiality assessments, supply chain (Scope 3) greenhouse gas reporting, detailed list of disclosure requirements per topic, and third-party assurance. In fact, affected organizations must furnish details in accordance with the European Sustainability Reporting Standards, which are harmonized with the Global Reporting Initiative and the Task Force on Climate-related Financial Disclosure, regarding their governance and strategic measures aimed at tackling significant sustainability issues; the consequences, risks, and opportunities stemming from these issues; as well as quantitative metrics and objectives.
Dell priorities to prepare to meet CSRD requirements
Garber elaborates on the comprehensive ways in which Dell is preparing to meet major expansion areas of CSRD, including:
CSRD requires impacted organizations to conduct a materiality assessment from a financial standpoint and to analyze materiality through the lens of environmental and social topics (with the latter being a new obligation.)
The environmental impact assessment includes aggregating greenhouse gas emissions, including supply chain emissions, in line with the Greenhouse Gas Protocol and results from lifecycle assessments outlined in product-level environmental footprints. Likewise, the social impact assessment includes aspects of human rights, working conditions, culture, and business ethics.
Currently, Dell is undergoing a double-materiality assessment to include environmental and social impact assessments, according to Garber, a move which expands the internal functions that are involved in the process. Indeed, the savviness of customers, in particular, has increased around making their buying decisions with regulatory considerations in mind, as well as product impact assessments, Garber adds.
Governance of sustainability program
European sustainability reporting standards also outline requirements for sharing companies’ sustainability strategy and business model. Details of the G in ESG issues include a description of sustainability policies, processes, external and internal control, and risk management.
Garber says that she and her team spend a significant amount of time preparing and making certain they have the tools to ensure compliance with the myriad regulations and requirements required for a global company like Dell. This includes data mapping and analysis to make sure that processes can outline where raw data originates, how such data is aggregated and validated, and which company function areas are involved in data gathering, analysis, and verification.
As a result, the organization tracks more than 600 issues in a spreadsheet across three main regimes, which include those required in CSRD and the U.S. Securities and Exchange Commission’s (SEC’s) proposed climate rules, as well as the International Sustainability Standards Board (ISSB) to identify overlapping requirements and increase efficiency.
Another aspect of CSRD that Dell and other companies must address is around areas of environmental impacts that, for many, are newly elevated expectations. These include topics like circular economy, biodiversity, and healthy ecosystems. Because Dell’s approach to ESG is comprehensive, it already includes climate action and driving a circular economy; therefore, while compliance with an evolving regulatory landscape will require significant resources, directional steps to comply with some of the additional reporting requirements are already being addressed, says Garber.
Detailed governance and higher purpose will ensure success
Of course, it can be difficult to remain optimistic when complying with multiple frameworks and standards. Bringing sophistication to data gathering and analysis, staying abreast of changes in ESG rules and regulations, and acknowledging the general perception that we aren’t doing enough fast enough to slow climate change are issues that sustainability practitioners are faced with every day. Garber explains that she and her team have ways to maintain their optimism.
To manage the complexity of multiple reporting regulations, for example, details are critical. “We have put a level of detail around our governance, which is truly the reason I feel confident and comfortable we will navigate this stage successfully,” says Garber. For example, the detailed Dell OMG plan maps the company’s governance process from the board, the executive team, and cross-functional councils. Each council has proper charters, clarity of roles and responsibilities, and a cadence for how often they meet to share progress.
To stay connected to every business unit in every region, Garber launched an ESG Interlock, which includes representatives from almost every single function area within the company. “In every single business unit and every major region, a specific role has been identified to lead sustainability and ESG for their area,” she says. “They are a part of the discussions, a regular series of events and updates to ensure information is exchanged throughout the organization and we are making the progress we need to stay on track with our commitments.”
In addition, Garber says she and her team remember the bigger picture for what they are trying to achieve. “The biggest opportunity we have is to move faster together to address systemic change and meaningful outcomes,” she says. “What is happening right now with regulations and with customer and consumer demand is forcing the conversation about why this work is good for business and society — both now and in the long term.
“And building environmental and social considerations and performance deeply into business models is how we’re going to achieve real, sustainable change.”