The executive makes the case for why companies should rigorously account for their performance on environmental and social metrics.
Janine Guillot does groundbreaking work at the intersection of two crucial topics: sustainability and accounting. As CEO of the Sustainability Accounting Standards Board (SASB) Foundation, she helps businesses identify, manage and report on sustainability topics that matter most to their investors.
A graduate of Southern Methodist University (SMU) in Dallas, Janine started her career as a technical accountant and auditor with Ernst & Young LLP predecessor firm Ernst & Whinney, first in the National office in Cleveland and later in San Francisco. She visited with us recently to speak about her career, SASB’s work in setting sustainability disclosure standards and the value of businesses reporting these metrics.
What does it mean to you to be an EY alumna?
I value my experience at EY so much, because of the role models I had and the skills I developed. The firm had a program in which it would send four staff accountants — new recruits — to the National office in Cleveland for a year before we went to a field office to start our auditing career. Through that, I was exposed to complex transactions and comment letters to standard setters.
[Retired US partner] Billie Williamson is the reason I got that opportunity. She handled the firm’s campus recruiting at SMU and was amazing. As one of the first women partners in the firm, she was a huge role model for women graduating from the accounting program. Denny Beresford [retired partner] ran national accounting and auditing at that time and went on to chair the FASB [Financial Accounting Standards Board]. Everyone had tremendous respect for Denny.
After my stint in the National office, I came to San Francisco, where we had a tight-knit group. One of my close colleagues was Debbie Choate. She later went to Paris for the firm and is still there as a tech company CFO.
Where did your career take you after that?
I left the firm to work for Bank of America and was part of the accounting policy group. We handled the accounting for unusual, emerging transactions like the first credit swaps. I moved into business unit CFO roles, but then my career radically changed direction. We undertook a large finance change project and it not only re-engineered all our processes, technology and organization structure but also implemented new performance metrics and cost accounting. I learned that what I really love is being part of a senior management team driving change, so from there I moved into roles that tended to oversee large change programs.
Then you moved abroad?
Yes, I went to London, where I was chief financial officer and chief operating officer for Barclays Global Investors. That was terrific because I really liked the asset management business and thinking about how you deliver financial returns and help people finance their retirement. I was at Barclays for seven years, first in London and then in San Francisco. From there I went to CalPERS, the United States’ largest pension fund, as chief operating investment officer. I did that because I always wanted a second career in public service.
How did you connect with SASB?
At CalPERS, I led an effort to define our investment beliefs – guiding principles to manage our investment portfolio. Three of those would now be considered sustainability or ESG [environmental, social and governance] related beliefs. They asserted that risk to a long-term investor is more multifaceted than volatility and includes risks that evolve over a very long time, like climate. The beliefs also said that to effectively deliver long-term returns, you need to manage multiple forms of capital, including human capital and environmental capital. But there is a gap between developing these beliefs and implementing them, and that gap is the availability of data – standardized data that connects sustainability to financial performance.
Around the same time, Dr. Jean Rogers was launching SASB. Her idea was to mimic the processes used to set accounting standards by the International Accounting Standards Board and the Financial Accounting Standards Board and set standards for sustainability disclosure. When Jean was putting together the concept for SASB, she visited CalPERS and asked what we thought. I thought that what Jean was trying to accomplish was brilliant and exactly what a large asset owner like CalPERS needed. Eventually, I decided to join SASB to help bring Jean’s vision to life and build support for SASB among institutional investors.
How does SASB approach its task?
SASB sets standards for 77 industries, and the standards identify the sustainability issues that are most likely to impact financial performance in each industry. SASB’s standards development process is evidence-based and market-informed. We issue our standards for public comment, and the final decision-maker is our Standards Board. Marc Siegel, current EY partner and former FASB Board member, serves on SASB’s Standards Board.
How have things changed in terms of how organizations think about sustainability?
A lot of leading companies have been thinking about sustainability for a long time, but the huge change in the last five years has been large mainstream investors coming to believe that performance on sustainability issues impacts risk and return. There’s been an increasing focus on how to integrate sustainability considerations into investment decision-making in a rigorous and systematic way across entire portfolios.
What about changes in the way boards look at this?
We have significantly greater interest from directors who are asking: What is ESG? Why is it important? Why do investors care? What should we do? That’s been a sea change in the last year, and it’s a result of investors being more vocal about their interests.
What is SASB’s Investor Advisory Group and its focus?
We would often hear from companies that they weren’t going to report to the SASB standards until they were confident that investors really want this information and will use it. We formed the Investor Advisory Group to be a very visible demonstration of investor support for SASB. It consists of 49 major investors, asset owners and asset managers from around the world, and they collectively hold $34 trillion in assets. They help their portfolio companies understand why investors value SASB. We also publish case studies from investors about how they use the SASB standards to support investment decision-making.
EY has committed to being carbon-neutral by the end of 2020. How has EY helped advance SASB’s mission, and how can our alumni help?
EY is a leader on this topic. Along with the rest of the Big Four, EY supports SASB financially and professionally, and we’re very grateful. As the world rapidly evolves – facing opportunities and challenges from technological innovation to climate change – corporate financial reporting also needs to evolve. We don’t need to replace traditional accounting, but we need expanded information sets to really understand what’s driving corporate value over the long term.
EY alumni are in finance and accounting leadership roles all over the world. They can think about how their companies should deal with sustainability disclosure and how to use the SASB standards to improve their communication to investors. But most important, they can help connect sustainability to financial performance and business strategy so that it’s not just about disclosure. It’s also about how we integrate these topics into ongoing management and strategy and governance processes. SASB’s website, http://www.sasb.org, has an implementation primer for companies that want to start thinking about how to use the SASB standards and why.
How does your personal vision and purpose drive your work?
I’ve always been interested in sustainability, and I am very passionate about sustainable agriculture. I serve on the board of the Marin Agricultural Land Trust (MALT), which has put conservation easements on over half the agricultural land in Marin County, California. Much of that land is now certified organic, and there’s a local, sustainable agricultural community that has survived and thrived because of MALT easements. So my work at SASB is also connected to what I’m personally passionate about. I couldn’t be luckier.
More about Janine Guillot
Home front: Janine met her wife, Shannon Wilson, in college. In May, they will celebrate 37 years together.
Great outdoors: She loves to be outdoors, hiking or spending time on farms and ranches.
Seeing the world: Janine enjoys traveling and feels fortunate that her job allows her to work with people from around the world. Italy is a favorite destination.