Do We Have to Measure Everything for ESG

Why does the electric vehicle manufacturer Tesla have a lower ESG rating than the oil and gas giant Exxon? Today, we're going to try to answer some of these questions and make sense of some of these standards to help you figure out where to focus. Let's jump in. I'd like you to meet LM, managing director of EisnerAmper's ESG and Sustainability Solutions, Danielle Barrs, director of EisnerAmper's ESG Strategic Services, and Charles Waring, who is an audit partner in the assurance and technology control services practice group and a leader in the ESG practice at EisnerAmper.

Danielle, I want to start with you because you recently gave a really good presentation at a conference about these exact issues. I really like the way that you framed them and reflecting on what we as investors, consumers, and leaders think is important. Give us a primer on the ESG standards overall and how they work that help us start off to clarifying some of these issues.
Danielle Barrs:Thanks, Joan. Sustainability is a blanket term that basically calls for companies to do well by doing good. Now, many people have used the term CSR, which is corporate social responsibility, to mean pretty much the same thing. Socially responsible companies look at the impact they have on society as a whole. Since we humans live on earth, doing good for people means doing good for the planet. We have defined sustainable development as development that meets the needs of current generation without compromising the ability of future generations to meet their own needs.

We keep seeing this definition come up over and over again, and it is a great one to tee up the difference between sustainability and ESG. Now, the term ESG was first introduced to the public in a 2005 United Nations report that was titled Who Care Wins. This report proposed the idea that incorporating environmental, social, and governance criteria into investment decisions would not only benefit the company, but it also makes good business sense. In addition, the paper argued that incorporating these elements would ultimately contribute to a more stable and predictable market. Hear sustainability, think corporate responsibility and impact.

Hear ESG, think responsible investing and risk management. Both are material, both are crucial to a company's success. You simply can't have one without the other.
JM:That's really good. I like that. Think ESG, think risk management. By the way though, what was the name of that UN report that you cited again?
DB:It's called Who Care Wins.
JM:The SEC is basing their rules on TCFD, the Task Force on Climate-related Financial Disclosures. But there's also SASB, the Sustainability Accounting Standards Board. There's ISSB, which is the international one. There's GRR. Can you kind of talk about why you think the SEC is using TCFD and how the actual rating systems maybe differ a little bit? I know you could go on for two hours about this, but try to maybe do a short version.
DB:Well, first of all, there is truths to the old adage that what gets measured gets managed. The purpose of ESG and these ratings was to break open this barrier between financial materiality and impact materiality. Within the financial materiality approach, you have frameworks, like you mentioned TCFD, which is what the SEC uses, and frameworks like SASB, which is the Sustainability Accounting Standards Board. SASB is a sector specific reporting framework which focuses on financial materiality geared towards investors and capital providers.

The TCFD, which is the Task Force on Climate-Related Financial Disclosures, looks at climate-related risk disclosure focused on the financial impacts of ESG risks. The inherent flaw in the reporting of sustainability criteria is that sustainability reporting is completely voluntary and completely unregulated. Many of these rating systems that we've talked about that we hear in the news, things like Sustainalytics and MSDI pull data from sustainability reports with data that has not necessarily been properly verified, if at all. ESG ratings are an attempt to provide an assessment of long-term resilience of companies to ESG issues through industry specific evaluation of key ESG risks and opportunities.

We go back to ESG being primarily a risk management tool. When you look at it through that lens, you can understand why the SEC has been using frameworks like the TCFD to focus on global issues like the decarbonization of our global economy. This thing focuses on carbon emissions, global decarbonization, and the beauty of focusing on GHG is that it is quantifiable. If it is quantifiable, it is measurable. We go back to if it is measurable, it gets managed. This is the idea behind the driving force of what the SEC is trying to do to make this a more regulated environment to decrease and essentially increased transparency and honest reporting in the industry.
JM:Investors have real data to work with and they're not just looking it. The point about the voluntariness is so important because corporate sustainability reports and the others are just whatever they choose to put in there. I mean, there are some checks and balances, but not much. Charles, I want to segue to you because you're in the verify the numbers business as the auditor. That's what you do. That's why they're called audited financial statements. Transparency and accountability are at the core of all of this. What are clients talking to you about?

What many of the leaders and executives who are looking at these new rules maybe don't realize is that they will need to be verified, they will need to work with accountants like EisnerAmper, whoever, to get these validated even if you're not publicly traded because you probably do business with the company that's publicly traded, which we can get into. But talk to me about what maybe some of the customers are telling you. What are your clients asking you about all of this? I mean, do their eyes glaze over? Do they bring it up and what do they say? Where are they focused?
Charles Waring:When I'm having conversations with CFOs at our clients, they might be aware of the various sustainability or ESG related initiatives that they have going on within the organization, but the whole aspect of reporting and report verification is starting to be a new topic for them. The alphabet soup of frameworks that you went through with Danielle is a new set of terms and areas that they have admittedly no experience in and frankly that they're challenged to dig into deeper.

The biggest thing that we have is kind of the coordination between the finance group or function within an organization and connecting with if they have that sustainability leader or whomever's responsible for those gathering of that data and it's being used either in that self-report, CSR, ESG report. It's kind of connecting the dots there and then trying to put their finance lens. Many of them are recovering auditors, so they've got that view as well. And also they're the ones dealing with the external auditors, so they start to recognize the questions that are coming up.

The biggest thing there is connecting the dots and having them dig in and starting to ask those questions that the finance professionals or the auditors typically ask. It's a whole new world for them and it's trying to make heads or tails of that.
JM:I bet they are. Are they asking about specific rating systems? Are they asking what the difference is between the rating systems? I mean, where does the conversations start with clients? Does it come in with, "I'm hearing about these rules. What the heck are they? So and so mentioned SASB." I mean, where do they start?
CW:It depends on their circumstance. We've got clients that have had a rating issued. Typically, it's a less than desirable rating, It's why they're reaching out to us. They're trying to dig into how that occurred. That could be one. Others are maybe a little bit more in the forefront and they're seeing the proposed SEC rule coming down, getting closer and trying to prepare for that and what we're deeming as being audit ready, so how do they get there and what's the journey to get to that point.
JM:Thank you. One more thing about this and then I want to bring in some of the financial risk issues with LM, but these numbers have to be verified. I like that image of connecting the dots, connecting the finance people with sustainability people, which hasn't been done before. How do you verify the quality of this data? I mean, some of it, as Danielle said, can measure metric tons. You can measure your electric bill. But how do you verify the quality of the data? Because as an auditor, you're testifying, if you will, to the validity of the numbers that you got.

And that's why investors rely on audited financial statements because they trust that that's quality data, that it's accurate, reliable, consistent, et cetera. But as the auditor, that's your job. How are you validating this whole new set of data, some of which is absolutely measurable on your fingers and toes and some of it is kind of not?
CW:Right, and that's where we have the aspect of... With financial reporting, financial data, we look for the process and the internal controls from the start of the transaction where it's initiated, initiation of the transaction, through to the reporting piece. It typically crosses multiple different systems, hand-offs there. There's multiple checks and reviews that occur. That ensures that data is maintained in a controlled manner. It has been altered as it lies in state from one system to another. It gets handed off completely accurately.

That's the gist of what we're looking for, ESG climate-related data from the standpoint of where is it conceived and how is that process through. A lot of it is aggregation there. How is that aggregated up? Is it done in a controlled meaningful manner? What we can't have is that if there's a sustainability officer, he or she is assembling this on a napkin. I mean, that does not mean like a controlled environment there. Shucks!

That's really where organizations that are on that higher end of that maturity model, but just need to get to that hurdle for audit readiness that they might have a full strong self-reporting program in there, they've got various initiatives. But how do they demonstrate the internal controls in the controlled manner in which data is collected, assembled, aggregated, and ultimately reported out? How can that be referenced and re-performed by a third party such as an auditor?
JM:That's a really good point, that it can be replicable, that somebody else can verify it. LM, one of the challenges with these ratings and one of the reasons why the SEC is stepping in is that there are such differences in how these are rated. I mean, as I said in the introduction, Tesla, it's compared to industry to industry, but within the industry, but Tesla has in fact recently been kicked off a sustainability index. Exxon is still on that index, et cetera. People are like, "What the heck? Electric vehicles versus oil and gas, explain this to me." Talk about the challenges with the ratings and why it almost seems like every investment firm or analytical firm uses a different formula. Help us make head or tail out of this.
LM:Sure. I think we have to take one step back and understand what a rating is. I have to unpack in order to understand the different parts of the rating. That's the first thing that we need to do. We need to understand how a rating is conceived, what's the process behind that, what kind of data that is used, what kind of variables are considered and the final outcome. That's the first thing. The second thing is awareness and education. Investors, the general public, everybody needs to be aware of how these ratings are developed, are created so that they can make informed decisions, so they can understand what it is about.

To Danielle's point, ESG ratings are there and there's only one objective is to measure the risk of that company to fail because of an environmental, social, or governance factor. We have to understand what these factors are. The environmental, for instance, climate is not the only one. We have water security. You have biodiversity or lack of biodiversity. You can have pollution. You can have, I don't know, waste. All of these elements are part of that rating. You have to understand what are the variables that are used in order to compose the final score that will become a rating for that company.

If a company has a large dependency on water and water security is a huge risk for that company to reach their financial objectives and if a drought, for instance, is going to impact the ability of that company to produce the product and sell it and generate cash flows, that will be a huge risk and that will definitely impact their ESG ratings and their ability to generate these future cash flows and to perform in the market. That's the elements that the general public need to understand. In order to put all these elements together, it's not only environmental, we have social part as well.

We have employee engagement, things like diversity, equity, and inclusion factors and governance, composition of the board, how the company manage their risks and compliance. All of these elements are going to be transformed into a series of variables in that equation. In that equation then you start putting all these weights and these variables will be transformed into a score, and therefore a rating. You ask why companies have different ratings, one of the reasons why is because there is no history and there is no target, lacks statistical data, or the model that has been used is not the adequate one.You have to use judgment in order to come up with those weights. In order to compose that equation, all these weights will be different because different people will use different data in order to calibrate the ratings. Every company that is developing a rating will have access to different data and also different judgments, because it's a judgemental system. It's a judgemental scoring system. Therefore, the outcome will be different. It's expected to be different. Because these different ratings did not disclose the weights or the variables that they use, what kind of data they use in order to calibrate, it's very hard to compare.

But if you compare only the outcome of these ratings, you see the correlation between them is very low. You cannot compare. It's very hard to compare. And that impacts the second issue that I mentioned. It's called awareness and education. People are confused because they start comparing those ratings from one company says the client is good, from the other one says the client is bad or not as good as the other rating. What do I do? Which one would I rely on? If you ask me what is the solution of this, how can we solve this, first of all, it's education.

You have to understand what is inside and what's taken into account for each of these ratings and how you aggregate social aspects, social risks with environmental risk, how do you aggregate employee engagement with, I don't know, waste management. It's very hard to get it straight and then to calibrate and that's why it's so confusing.
JM:I want to pull out a couple things that you said. First of all, you said that these are subjective, that the way they're weighted is subject to a judgment call. Who makes those decisions of how everything is being weighted? I mean, is it industry? In the beverage industry, water's got to have a heavy weighting versus paper or, whatever, the plastic would too because it's an aluminum because of how the bottles are made, how the liquid is made. Who makes that decision? And then kind of associated with that is don't these rating systems have to disclose their methodologies? Why wouldn't the methodology descriptions help people understand how they're developed?
LM:Sure. Let's go by parts. The first answer is each and every rating agency have internal analysts that start analyzing risk management and risk impact of those elements, E, S, and G, in the financial statements of each of the companies that they are analyzing, depending also on the industry that they belong. The analysts, they know what are the factors. For that specific industry, that specific factor will be riskier than for another. SASB is a good starting point for that as well. SASB can give you some indication of what are the material variables that will be important for a specific industry when compared to other.

SASB has 77 industries that they cover and each of them has different variables. That's a very good indication that it's also industry dependent. These analysts, they look at data, of course, they understand the market, they understand the companies, and they understand what's the risk framework or the risk taxonomy for that specific industry sector. And that is translated into, of course, different variables, E variables, S variables, and G variables, and then they're put all together with different weights that also, as I mentioned, are judgmental, are subjective.

Looking at the distribution of companies and ratings and scores, they have to calibrate this, statistically speaking, because you have a large population should look like a normal distribution. Therefore, they come up with these different weights. You mentioned about disclosures and you mentioned about transparency. One way of solving this issue of lack of transparency, not being able to access the weights, the general public do not have access to the weights that were used and the variables that were used in order to calibrate that model and in order to come up with the rating, one way of doing this is through regulation.

Regulators could come and create a regulation rule that will make these ratings more transparent to the general public. Just like what we have for credit ratings today, credit ratings today are way more transparent than they were before 2008. Now they are extremely regulated. One thing that could solve this and will be beneficial for the general public and for the uniformity of all the rating systems is through regulation. That's one way of going to this transparency and making sure that the investors are aware and educated to make informed decisions. That's the way I see it. You also mentioned that the methodologies are not disclosed. The methodologies are disclosed.
JM:That's what I mean. That's why I'm wondering why that methodology disclosure is not enough.
LM:It's not enough because we don't have access to the weights and you don't have access to the variables that are used. Environmental variables could be as wide as lack of biodiversity, waste management, pollution, climate, and the SEC is just mentioning climate. You have other variables. It's very hard to compare one and the other. These variables could be different from one rating system and then the other.

And not only that, the weights that are going to be used, the importance of waste management or water security from one rating system could be different than another. Therefore, it would be a different score for the same company. The methodology is disclosed. We know how they come up with these numbers, but we don't know what numbers or the weights of each variable and what the variables are.
JM:Wow, that's really helpful. Danielle, speaking of regulation, the focus of the SEC reporting is on two types of risk. You've all alluded to this a little bit in our discussion so far today and that is climate impact and then the transition to net zero. Talk about how risk affects the ratings you get. But as LM said, evaluating what risk is still somewhat subjective. Are they comparing it to NOAA reports, from the National Oceanic and Atmospheric Administration? How do you suggest leaders determine their risk and be able to report it accurately?

You had mentioned CO2 emissions is really measurable, but explain these two different types of risks that the SEC is driving at and how leaders can make head or tail out of it and know what to put forth.
DB:Starting with the two risk buckets, they are, as you mentioned, physical and transition risk. When we talk about physical risks, we are talking about the relation to the physical impacts of climate-related issues. When we talk about transition risks, we are relating this to the political and regulatory changes that come with this global transition towards a low carbon economy. Now, if the recent devastation that Hurricane Ian had on the State of Florida is any indication of the very real consequences of climate change, which I myself experience firsthand, these extreme weather events are becoming more frequent and more intense the longer we postpone real action.

We are postponing real action in part because of a political landscape, but also we need to make sure that these criteria are, as you mentioned, as we've mentioned before, measurable and quantifiable. And that these ratings that help investors make these informed investment decisions are standardized and completely transparent in a way that really gives a good picture of the risks and opportunities that things like climate change pose to businesses and the very real ways that they can change operations and the way that the company does business to make a better impact on things like climate change and help reduce emissions.

An ex BlackRock executive recently said that climate change is the greatest market failure in history. He said that only true regulation can prevent ultimate disaster. This is interesting because it is in direct contrast to CEO Larry Fink's statement that free markets, not systematic government action, are the best way to address the climate crisis. As I mentioned earlier, the SEC very smartly focused on very quantifiable metrics, which are carbon emissions. This is not subjective. Zero is good, high is bad.
JM:I want to bring Charles in here for a second and then go back to LM because, again, you have to validate these numbers. What should leaders think about as they look at this craziness that LM and Danielle are talking about? I mean, which numbers to look at? I mean, the SEC's final rules are not going to come out for another several months, but some of the reporting starts next year in 2023.

What should leaders be thinking about, maybe one or two points about collecting and reporting this data now? You mentioned earlier about preparing in advance. How can they prepare in advance now? What questions should they be asking their accountants, their CFOs, their auditors now? What systems should they be putting in place?
CW:Absolutely. As I mentioned earlier, having those internal controls in place around the climate-related data that's going into that reporting is critical.
JM:Like what? Give an example.
CW:I was using before that the sustainability officer isn't just writing this down on a napkin. Having the defined source systems, whether you're pulling your emissions data from your building or systems or from having from your utility bills, whatever the source data that you're using, there's a variety of vendors. Danielle's the expert in this. I just trace it through the system. Having that in a controlled source system and then assembling it and aggregating it into defined... I mean, we typically look at well-controlled spreadsheets that have supporting schedules and data and everything is linked.

It's not just I'm plugging in a number and where did that number come from? Because that's the first question auditor is going to come with, is where did that number originate? If you're aggregating it on your notepad and that doesn't go into the final file, how do I know what... Going back to the re-performable standard, how can I re-perform it to verify that it's materially accurate? Having that, heaving reviews, sign offs, and slotting it into various aspects in your report is the critical component here. Ultimately, just like what we typically see in your financials, you have a general ledger system that is your core repository of all your financial information.

Essentially companies supporting reporting are going to have to have that central repository for their climate-related and/or other ESG data. It's just the way that you have that key data information that's controlled environment there, and so that it's not open to anyone within the company. It's limited to just those people that need to have that access and just those people that can update those information, et cetera. That is the defined set of processes, systems, and controls that we look for. That doesn't get put together overnight. That doesn't get done in a quarter. I mean, these types of things require...

I mean, what we're talking with clients about is anywhere from nine to 12 month lead time there between doing the assessment, finding all your holes, and then implementing those processes controls and the systems that's required there. That is the one big takeaway is that this is not something that can be done, stood up overnight. Once you start to have an auditor or an internal auditor kick the tires on something, there's going to be stuff that falls out. You're going to sit there and say like, "Well, that's not how we thought we were going to be reporting that. How can we enhance that in our own processes?"

Again, that takes a while to address and remediate. It is something that, yes, we're starting to get onto the horizon of the SEC's timeline here. There's other things that are kind of creeping up, but the time to act is now or we might already been behind the eight ball. The organizations need to start to assemble this information in these processes.
JM:Wow, that's a long time. That's really critical. I like what you said about testing it to see if it can be done again, Can I repeat this? I have somebody try to repeat it and see if it works. Danielle, you've been invoked here. If you're helping these people collect the data, talk about where you get that data from a little more in the actual work, because you're the one who's counting these carbon emissions and how to get a positive ESG rating anyway? What does it take to get one and which framework should they use?
DB:We keep going back to this concept of sticking to what is quantifiable, what is measurable. Carbon emissions are such a central topic because of their measurability. For example, when we talk about carbon in products, which is something called life cycle assessment, which is coming up more and more, we are looking at transportation logistics. We are looking at material extraction. We are looking at end use and disposal, recycling, circular economy. These things are coming up more and more. We're also looking at carbon in operations. We're looking at energy efficiency, renewable energy integration.

Again, we go back to that central repository, as Charles mentioned. This is what takes that data from just being out there in the product or in the operations to being verifiable. That's where insurance and third party verification come in. You can think of it in a few steps. Number one, collect. Number two, verify. Number three, strategize, and number four, execute. Now, it comes to these ratings, the industry has recognized that these ratings are not comparable across the board and this poses a real issue to comparability and transparency and standardization. For example, some rating systems have letter grades, some have number grades.

This is really hard for investors to compare these things across the board. Now, Joan, you mentioned Elon Musk earlier and Tesla, and this has been in the news earlier this year because this really hits the nail on the head of why it's so important to understand the difference between a rating, a framework, and this double materiality concept again of financial versus impact materiality. When we talk about ESG ratings, we really are talking about ESG as a risk management tool, so what these outside impacts, how they can affect our business.

When Tesla, for example, got booted off I believe it was Sustainalytics, there was a controversy about some of the companies like Exxon that remained on these indexes in these rating systems. What's important to note is that when it comes to these rating systems, you aren't measuring things like whether the company is selling electric vehicles, whether the company's selling a low carbon product. You really are looking at these impacts, I mentioned extreme weather events, to your business and then also the opportunities.

Tesla is a great example of a company that may get kicked off a rating system for not looking at social issues, for example, even though the product itself is focused on reducing carbon emissions. There are other ranking systems that will... MSCI and Sustainalytics are voluntary, but there are other ranking systems like ISS that will rank you whether you like it or not. These systems will take the absence of data as an indication that you have not actually measured and therefore not managing this data.
This is a very real issue where companies are looking at the ranking systems and not understanding why they have low rankings because they don't have a CSR report or they're not including this data in their annual statements.
JM:Just to pull this out real quickly, this is kind of what Charles was talking about, where clients are coming to them going, "Hey, we got a bad rating. What the heck is up with this?" They didn't even know they were being rated.
DB:In some cases, that's true. In some cases, they did, and those are usually the companies that feel like they are going to get a higher rating. That, of course, makes sense. But there are rating systems out there that are collecting data and basing the absence of information to indicate whether or not you are really looking at these issues. This goes back to the concept of greenwashing and making sure that we really are being transparent to inform these better investment decisions. And that's what it all comes down to.
JM:LM, in closing, I want to play devil's advocate a little bit. There's these ESG index funds and people invest in the indices in general. People say, "Oh, well that's good. I can put my money there, or if I want to be a good steward, I'll put my money where my values are." But what you're saying is if they're subjective, if these systems are developed subjectively, then they may not really be accurate. But the devil's advocate part comes in with, if I want BlackRock to invest in me, if I'm a company and I want to be in those funds and I want to get a high rating in those indexes, don't I have to play my BlackRock's rules regardless?
LM:I think the answer to this question is many fold. First thing is let's get back to basics. Again, back to my message that we need to understand what these ratings are and what's the purpose of these ratings. These ratings measure the risk that that company is facing, is exposed to in order to reach their objectives or produce credible and sustainable cash flows in the future. Any of these environmental, social, and governance risks that may impact that ability of this company to generate reliable, credible, and sustainable cash flows in the future, that's what needs to be identified and assessed.

My advice to any company that wants to become more attractive to investors, any investors, should be paying attention to managing their risks better. They have to identify those risks. They have to identify the risks that are more important for their industry, for their business. And that's why in the 10 Ks the first thing that you see there is the business description and risks that will impact that business. It's already there. The hint is already there. The SEC is asking nothing different from what they've been asking for for ages. That's exactly what it is about.It's about paying attention to the risks that the company is facing, identify those, identify how these risks will impact your financial statements and do something about it and manage those risks. How you manage environmental, social, and governance risks, you have to find opportunities that will mitigate those risks or will adapt to those risks. Climate change, you can mitigate or adapt. You have to start thinking about how my company, my cash flows, my ability to meet my objectives is influenced, is impacted by climate. If it's physical risk, if my factory is in Florida, I'll be prone to physical risks.I have to understand that at some point in time, it will happen, now it's happening more frequent, that I will have a loss because of a hurricane. That will impact my ability to generate future cash flows. That's exactly what the ESG ratings are measuring. The problem of subjectivity and lack of comparability and uniformity and standardization is that each and every rating agency will have a different way of assessing those risks, and they will have different weights for that. Remember, ESG ratings is not only climate. You have to put biodiversity. If you have a life science company, it will be very much more exposed to lack of biodiversity than, I don't know, another industry.
JM:A fashion company might be exposed to it too.
LM:Exactly, fashion. Fashion depends a lot of water, for instance. Water is a huge risk for the fashion industry. Waste as well. For specific types of industry, they'll have different types of factors, and those factors will have different weights, different importance in the final score. Not necessarily this level of importance, this weight will be the same because they are based on judgmental. It's hard to come up with a statistical model that will measure this in an objective way. We can try this using more advanced techniques like machine learning and all of these techniques, but it's still very hard. Now that's the problem of comparability.

Again, if I'm an investor, I want to know where I'm investing. I need to know if that company is managing their risks and how this company is managing the risks and what is the impact of those risks in the business. Can I have a transparency to understand if those risks will influence the future cash flows of that company or not? Do I have this confidence? That is exactly what the SEC wants us to have. As an investor, I'll be much more comfortable to see that this company is managing their risks properly, identifying climate related risks, understanding the impact of those climate related risks in my financial statement and my ability to generate sustainable cash flows in the future.

Again, going back to basics, risk management evaluation, manage your risks, you'll be projecting cash flows in a much more reliable way and your evaluation will be better, your cost of capital might be, so your access to finance will be better, access to liquidity. That's where you start linking all the actions that you're making, all the changes that you're making in your company and seeing that those changes, those actions being translated into real impact.

And that's only when you can say that, well, any change in my risk management practice, my ability to identify those risks and manage those risks will have a direct impact in my ability to generate these cash flows, in my ability to have a better cost of capital, to have better access to finance, and therefore have a better evaluation. And that should be considered as a competitive advantage for the companies. Because I will be, as an investor, much more comfortable to invest in a company that manage their risks and is transparent enough that shows me how they manage their risks than another company that is obscure and not transparent.

That's why we see that the SEC is moving towards that direction. It will become a competitive advantage. When I started working with this topic back in the late '90s, it was a nice to have discussion. My clients back then were just starting to understand what the impact of environmental and social risks in their business. Now it's a must. In the future, it will become a competitive advantage. That's why should understand that going back to basis, they understand that why the SEC is doing all this is important.
JM:Wow! We could talk about this for about five hours, which is why, lucky for everybody, we have a few more episodes of ESG In Focus coming up. LM, I could ask about 1,700 questions to follow up on that, but we'll save them for the next episode. Any questions that you have from all of this, if you're totally confused about what you need to do and what you need to set up and what numbers you need to count, as Danielle says, reach out to Danielle Barrs, LM, or Charles Waring on EisnerAmper.com. Stay tuned for our next episode of ESG In Focus to help you unpack a lot of what they've said today and go back and listen to the previous episodes too for some more clarification.

The key though here is to use ESG, as LM said, as a competitive advantage, to maximize them for the benefit of your business and to know what to disclose, how to do it, and how to put those numbers together. Thank you so much, Danielle, LM, and Charles for today's conversation. I look forward to talking to you again next time. Thanks for joining us today. I'm Joan Michelson. See you next time.

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