Gil is pulling on a baseball cap, trying to cover up the fact that he has not showered today. He signs into the Zoom call with Sydney and Eli for their Friday afternoon virtual social hour and to continue last week's discussion about sustainable investing. As he joins, Sydney is talking to Eli. Sydney: . . . so, yeah, even with shot number two done, I will still wear a mask. Oh, here's Gil (pauses, with a smirk)—nice hat, Gil. Gil: (ignoring the wisecrack) Wait—you already got both shots? How do you feel? Sydney: Okay, I guess. I'm just glad to be on a path to, hopefully, putting this behind me. (Changing the subject) Did you guys learn anything about ESG? Eli: I did. So, I was supposed to learn about E, the environmental aspects of ESG. Here—I'll share my screen. Eli fiddles with his computer and after a couple of tries, succeeds in sharing a slide presentation. Eli: (flashing a few slides) As we know, ESG stands for Environmental, Social, and Governance. It's a new focus of investors who believe a good ESG track record indicates a better investment. Gil: (inquisitively) Sure, but what does the environment have to do with sustainable investing and how does that relate to our work at the utility? Eli: (flipping to the next slide) Great lead-in, Gil. The E element includes things like water and climate change. For many investments, water availability, drought, and climate change are risk factors. In our jobs we address these risks, like our watershed protection program or drought response plans. Those plans help make us less risky to investors. Sydney: So, are we good on E? Eli: (looking upward with a head tilt) I think we're okay. But we can probably do more—especially communication and measurement to show how our work maintains continuity of operations. Gil: That makes sense. If we are environmentally prepared and resilient, lenders will have greater confidence in us, and we will be less of an investment risk. Eli: (no longer sharing his screen) You got it—it helps, of course, that we are already doing many of the right things for our community. And that's where Sydney takes over—the social part, right? Sydney: That's right. Like E, there's a lot to understanding the social, or S part, of ESG. Think of it this way. We provide water to our customers and that allows everything in our society to happen—public health, fire protection, economic prosperity, education, recreation, and more. (Sydney pauses to let that point sink in, then she continues). And as we do that, we need to respond to the demographic and social realities of our community. Gil: (with Eli looking equally perplexed) What are you talking about—we just provide the water? Sydney: Actually, we do so much more. Our service area has an aging and ethnically diverse population—other communities don't. Also, some of our customers have lead service lines and now there's PFAS, too. We don't just provide water, we provide it to our community, which has its own unique social issues—including COVID-19. Eli: I see. So we need to do the work of providing water and clearly addressing the social elements of our community—just like we're addressing all the environmental elements. Sydney: Yup. So how does governance fit into this? Gil: (adjusting his cap) That is easy, and hard. The easy part is that governance is a process for decision-making, and our board and leadership team are good at that. It's hard because, for those of us in the public sector, there are governance requirements at the local, state, and federal levels. Eli: (bewildered) That's a lot of government. Gil: It is. The way I see it, we need to understand the state and federal issues and take responsible action locally. Also—and here's the connection—we need to understand how our utility governance helps address our social and environmental challenges. Sydney: (decisively) I knew it! E, S, and G are all tied together. So, what now? Eli: (exhaling) Well, I anticipated that question. I already spoke to our general manager and she'd like us to come and talk to the leadership team about ESG at their next meeting. Gil: Really? That's great! Sydney: It sure is, and Gil (Sydney grins), nix the cap for that meeting. Scene 2 fades to black as Gil, Eli, and Sydney sign off. To be continued in next month's Last Drop.
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