Salesforce Sets a New Standard for ESG

Salesforce recently announced that the company will, going forward, tie executive compensation to environmental, social, and governance (ESG) goals. Pay for anyone at an executive VP level or above will be determined, in part, by their ability to meet diversity and inclusion goals around hiring, retention, and promotions. These include increasing Salesforce’s Black, Latinx, Indigenous, and multiracial employees in the United States, as well as women employees globally. This is a significant piece of news with implications for ESG reporting. 

What Salesforce announced 

Salesforce made the announcement as part of its 2022 Annual Equality Update. The update shared hard data on Salesforce’s progress embracing ESG, specifically: 

• Black representation in hiring has more than doubled since Salesforce first initiated their ESG programs in 2020. 
• More than 40,000 Salesforce employees have taken part in the Hiring Certification program for managers and recruiters. The program, which includes bias training and addresses inclusive hiring practices, aims to reduce bias in the hiring process and improve access to underrepresented talent. 
• As of February 2022, underrepresented minority (URM) representation in the company grew to 13.6 percent, compared to 11.8 percent in February 2021.  
• Representation for U.S. women and the U.S. Asian population at the vice president and up level (VP+)  also increased, to 38.3 percent and 18.4 percent, respectively. 

But Salesforce isn’t resting on its laurels—it continues to challenge itself to get better. As the report says, “While we’ve made significant progress across underrepresented minority representation overall—there is still work to do for our VP+ population, with a particular focus on our Latinx community. 

We know that representation does not hinge on hiring alone—we must focus on experience. We continue to see higher attrition trends for underrepresented minorities as well as experience gaps in our employee survey data, particularly for Black women. This year we’re expanding and introducing new equity-focused strategies to shift experience and drive retention.” 

Salesforce also challenged itself to improve the “E” in ESG—the environment. 

This is where the commitment to tie executive-level compensation to ESG progress comes into play. Salesforce said, “Going forward, a portion of executive variable pay for Executive Vice President and above will be determined by four ESG measures.” For the current fiscal year, the measures will focus on equality and sustainability as follows: 

• Increasing representation of Black, Latinx, Indigenous, and multiracial employees in the United States, and of women employees globally. 
• Reducing air travel emissions, as well as increasing spend with suppliers who have signed Salesforce’s Sustainability Exhibit. The Sustainability Exhibit is a procurement contract with the goal of reducing the company’s collective carbon footprint and helping our suppliers set and meet climate targets. 

In short, the new initiative is meant to help Salesforce continue to drive meaningful results this year, and accelerate its progress on these important issues. 

Why the news matters 

The announcement matters for several reasons: 

• Executive-level compensation is under the microscope. CEO salaries are on track to set a new record, according to a Wall Street Journal analysis of pay data for most of the leaders of S&P 500 firms. Meanwhile, rank-and-file employee pay also trended up—but at a much slower pace—and the disparity has created negative commentary about economic justice. The Salesforce story potentially changes the narrative about executive-level pay, at least for Salesforce, from economic justice to . . . social good. 
• Salesforce is tapping into a broader conversation about purpose-driven leadership. As we have blogged, the position of CEO is undergoing a re-examination. CEOs are being asked to do more than increase profits. They are being invited to expand their role to that of “chief values officer,” and take on a leadership role when it comes to social and political issues. 

Salesforce CEO Marc Benioff is all in. At the annual Davos Summit in 2020, he invited businesses to cut loose from the traditional mandates of profit-driven capitalism in favor of “stakeholder capitalism”—that is, being a responsible corporate citizen and giving back to the world. 

• ESG accountability is an evolving, rather than a static, concept. A number of emerging metrics rank corporations for their commitment to ESG; businesses are under pressure to not only discuss why ESG is important but also how they are holding themselves accountable (in other words, are they actually walking the walk?). In our own The New ESG Agenda report, we discuss how businesses must back their statements with hard data to demonstrate their commitment to becoming better corporate citizens.  
• The self-created yardstick also matters because of the ways in which Salesforce is talking about it. Salesforce has taken a proactive approach to sharing the news. The company is being transparent. And it’s leaning on its own website to share the news in a human, open way. No hiding light under a bushel, and no hiding behind platitudes, either. This is a best practice for other businesses to follow. 

A resource for brands 

Our new report, The ESG Agenda, discusses several ways businesses can build trust with their audiences via stronger environmental, social, and governance (ESG) communications, including diversity/inclusion. We also rank – for the first time – the Top 10 businesses around the world that articulate their commitment to ESG via digital.   

Read this report to understand what a successful ESG story looks like -- and how to get started telling yours more effectively.  

Contact Investis Digital 

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