Salesforce and ESG – a case study

The world of environmental, social and governance (ESG) is relatively new and most organisations are still trying to get to grips with what it means to their growth plans and their balance sheets. 

ESG is getting a hard time in America as right wing conservatives try to undermine it and call it “woke capitalism”?

Others see ESG as a milestone in the development of modern business, which will one day be the core of all business strategies. 

Despite the polarisation of the issue, the world’s biggest companies appear to be embracing the concept and now the practice of ESG. 

Salesforce is an example that shines with relevance in 2022. The firm consistently ranks highly in global ESG performance measures and continues to boast ambitious ESG proposals.

At the same time, it has suffered some reputational setbacks in the same area, which is normal for a business its size. 

In case you’re unfamiliar, Salesforce is an American tech company specialising in cloud technology.

It’s headquartered in San Fransisco and has grown dramatically since 1999 to become one of the top 100 companies in the world for market capitalisation.

The most senior figures in Salesforce have repeatedly demonstrated their unwavering commitment to ESG. Whether the company receives praise or not, it has continued to challenge itself to aim higher. 

The actual level of success might take years or decades to measure, but for now, we cannot fault the company for a lack of enthusiasm.

Earlier this year, Salesforce promised that by 2026, 40% of its global workforce would be women-identifying and non-binary individuals. 

“Our vision is simple — to become the most inclusive company,” the company said in a statement. “To do this, we need to accelerate representation and hone in on the employee experience.”

Salesforce’s most recent figures show that 35.7% of its workers are female, with a further 0.2% identifying as non-binary or not disclosed.

Also in February this year, the company announced that “four ESG measures will determine a portion of executive variable pay for executive vice president and above.”

The priorities connected to this will change every year. For now, they are gender diversity and the increased representation of “Black, Latinx, indigenous and multiracial employees.” 

It will also increase its spending with partners who have signed up to the company’s “Sustainability Exhibit” – a procurement contract to reduce Salesforce’s carbon footprint. 

“Our commitment to equality and sustainability helps us be a better company — and foster more inclusive, equitable, and resilient communities,” says the firm. 

Is this significant?

Yes and no. 

It is always noteworthy when a company this size ties executive variable pay to ESG performance. In that sense, it is a significant step for the company and shows the corporate world precisely what kind of values it considers game-changing. 

On the other hand, it is nothing new. Salesforce hasn’t set the trend, it has merely joined the likes of Apple, Intel, McDonald’s, Starbucks and Siemens in tying variable pay to ESG.

The company was able to announce in September 2021 that it had achieved its goal of net-zero across its full value chain, becoming one of the few countries in the world in this category.

Ultimately yes. The company is a global leader in ESG. It knows what stakeholders expect in this area and follows that path. 

In late 2021, Investor’s Business Daily ranked it seventh in the world for ESG. A few months later, in January 2022, investment and research firm JUST Capital ranked it among the top ten worldwide, singling out its commitment to environmental concerns as its “core strength.”

Salesforce has ambition and is well respected in global rankings, but neither serves as a barrier to controversy, and it has its fair share of that too.

In 2021, for example, the company lost senior manager Cynthia Perry in a less than acrimonious split over the issue of equality – one of ESG’s core principles. 

Perry posted her resignation letter on LinkedIn, claiming she was the victim of “microaggressions and inequity.”

“I have been gaslit, manipulated, bullied, neglected, and mostly unsupported … the entire time I’ve been here,” she wrote before going on to criticise the company’s commitment to the representation of black workers. 

In contrast to the more impressive figures for women, Salesforce’s level of black representation stood at 4.8% as of February 2022. It has been climbing over the last few years, but at a rate far slower than critics would have hoped.

Coinciding with Perry’s resignation, another problem arose for the company in Japan. 

There, an employee with a disability claimed she the company neglected her in terms of accomodation and then ultimately dismissed because of it. The case is ongoing through Japanese courts.

Coinciding with Perry’s resignation, another problem arose for the company in Japan. 

There, an employee with a disability claimed the company neglected her in terms of accomodation and then ultimately dismissed because of it. The case is ongoing through Japanese courts.

Follow Salesforce’s ESG progress through the media, and you will see a heavy level of input from its senior management and board. 

These people love to comment, and what they say indicates a passion for ESG. 

“I’m proud that Salesforce is one of the few companies to have achieved Net Zero and 100% renewable energy,” were the words of CEO and chair Marc Benioff last September. 

“But we can’t stop until we embrace every solution and get every business on board.”

Not only is he praising progress, but he’s actively setting his company new challenges. 

Executive vice president and CEO of the company’s U.K. and Ireland subsidiary also leaned in, saying the company was “on a mission to drive climate action at scale” in a Politico interview last October.

This kind of rhetoric, coupled with visible deeds like becoming a partner at COP26, do wonders for the company’s reputation among its stakeholders.

Salesforce has embraced ESG and worked extensively to figure out what it can achieve in this area, but it does so realistically. 

It quantifies targets based on what is achievable, rather than committing to vague principles. It lays out a roadmap for reaching those targets. When it fails, it estimates how long the delay will be, and when it succeeds, it immediately sets new goals.

Salesforce throws a tremendous amount of time and money into ESG targets, but its setbacks show that headaches can begin anywhere, anytime, and they need to prepare. 

This is especially true in Salesforce’s case. Here is an organisation that doesn’t shy away from showcasing ESG targets, and embracing media coverage when it meets or exceeds them. This kind of exposure thrusts a company even further into the public eye, which can be brilliant… unless something goes wrong. 

If a reputational risk isn’t managed well, or if stakeholders ever embrace a more right-wing, anti-ESG stance, the weight of attention could turn negative in a heartbeat. 

So far, Salesforce’s headaches don’t seem to have stopped forward momentum, but that doesn’t mean it will never happen.

Salesforce is a strong example of a modern global entity committing itself to ESG. 

• It sets itself realistic targets
• It involves senior management and directors more than most
• It embraces coverage when targets are met

There is a heavy amount of reputational risk involved with such vocal support of ESG and, indeed, it may find itself diverting more resources to legitimising the concept in the face of increased opposition, but so far, feats outweigh failures significantly.