Member Blog: When Sustainability Comes to Compensation in Cannabis

by Fred Whittlesey, Founder, President, and Principal Consultant of Cannabis Compensation ConsultantsTM
Member of NCIA’s Human Resources Committee

At the NCIA Cannabis Business Summit & Expo next week, there is an all-day workshop on the topic of sustainability. As a member of the NCIA Sustainability Committee, representing the NCIA Human Resources Committee, I have been actively involved in putting this together. While this session will not directly address my specialty, employee compensation, there will be discussion of how broad the idea of sustainability is, and how it permeates every element and every decision in a business.

Not a day goes by that I don’t receive in my inbox one or more blogs, articles, or studies on introducing ESG metrics into executive compensation incentive plans. It’s all the rage. Consulting firms that published opinions only two years ago that this was “not a prevalent practice” and “not consistent with the current corporate governance environment” have been proven wrong.                                                                                                                                        

I have been presenting on this topic, in the context of compensation, since 2014 – in London, Vancouver BC, Los Angeles, San Francisco, Silicon Valley, and Seattle among other places and virtual spaces. 

It has been a priority for the United Nations since the introduction by Kofi Annan in 2006 – first introducing the “ESG” label – followed by the UN’s issuance of the Sustainable Development Goals in 2015. Then the shot-heard-round-the-world in corporate circles, BlackRock CEO Larry Fink’s annual Letter to CEOs starting in 2016, and continuing every year since. ESG is not new.

As recently as 2019 we still couldn’t figure out what to call it. CSR, ESG, Triple Bottom Line, etc. These discussions inevitably include reference to Conscious Capitalism as well. I went to my first Conscious Capitalism conference, in San Francisco, in 2013. The key concept of Conscious Capitalism is consistent and balanced treatment of all stakeholders, not just shareholders. Employees, customers, suppliers, the environment, the community. 

But the discussions today are primarily about adding ESG metrics to existing executive compensation structures. There’s a lot of greenwashing going on there.                                                                                                                                                                                                                                                                           

Sustainability is not just about metrics, as essential as good metrics are for measuring progress. Building a sustainable organization is about more than carbon emissions, recycling, water conservation, and biodegradable packaging. Sustainability is a risk management strategy.

A prominent risk factor in every business is people. Not just regulatory enforcement of labor laws, or risk of litigation from discrimination, or wage and hour law violations. Building a sustainable organization is reducing the constant churn of employees, avoiding destructive labor cost-cutting to pacify shareholders while extracting the funds from other stakeholders, and considering social justice goals when deciding how to pay people.

At that first Conscious Compensation conference for me, I was astounded that employee compensation was not mentioned once. Well, one speaker had one bullet point on one slide that said “employee ownership” – that was it. I returned from the conference and trademarked the term Conscious Compensation® because you can’t practice conscious business without considering how you share value with your employees. From the trademark grew a conceptual model and then dozens of conference presentations, gradually sliding in the sustainability theme while avoiding the appearance of a “save the whales” label.

Now it’s the core of my approach to compensation advisory services. I may not call it that, but it’s in there.

It fits perfectly with the ethos of the cannabis industry. If I was a speaker at next week’s Sustainability workshop, I’d be talking about all of this. In the meantime, check out my other blog this week on the session, Cultivating Your Workforce where we will be discussing compensation.

Fred Whittlesey is the Founder, President, and Principal Consultant of Cannabis Compensation ConsultantsTM, a Compensation Venture Group SPC company. 

Fred is a member of the NCIA Human Resources Committee and the NCIA Sustainability Committee.

Fred is recognized by corporations, professional organizations, universities, media, and colleagues around the world as a compensation expert and thought leader.  His ideas have been presented in numerous book chapters, journal articles, media interviews, conference and seminar presentations, and hosted blog postings.

• Fred’s thought leadership in the field of compensation is evidenced by his delivery of more than 300 conference presentations, seminars, certification courses, webinars and podcasts. He has presented and taught in 26 US States, 4 Canadian Provinces, UK, Ireland, France, Germany, Netherlands, Switzerland, Turkey, and Indonesia.
• He has authored more than 50 peer-reviewed journal and magazine articles, book chapters, white papers, and sponsored papers. He has been a paid writer for PayScale.com, Salary.com, InvestorJunkie.com, and SeekingAlpha.
  Fred has been interviewed and quoted more than 100 times by more than 35 different media sources including Associated Press, Bloomberg, Business Week, Fortune, New York Times, Los Angeles Times, Orange County Register, Seattle Times, San Jose Mercury News, and San Francisco Chronicle. He has been retained to conduct research to support investigative journalism for The Los Angeles Times and The Boston Globe.
  

Cannabis Compensation ConsultantsTM is a division of Compensation Venture Group SPC, a Washington Social Purpose Corporation. The company is a Green America Certified Business. 

The firm specializes in compensation strategy, executive and director compensation, equity-based compensation, incentive design, and employee pay with a focus on sectors driven by innovation. We also provide expert witness and litigation support for civil litigation and regulatory matters.  Our clients include Boards of Directors and executive teams of public and private companies, LLCs, S corporations, and foreign subsidiaries.

Our Canadian sibling consulting firm is Conscious Compensation Group Inc. in Squamish, BC.