June 15, 2021
Responsible Leadership: An Interview with Pamela Davis of NIA
Corporate responsibility and environmental, social, and corporate governance (ESG) is top of mind for many leaders today. An increasing number of businesses are looking to do good in more than shareholder value; they’re looking to provide value to all stakeholders including employees, customers and even the environment.
I’m Zack Wisniewski, a Principal in Johnson Lambert’s Business Advisory Services practice and have had the pleasure over several years to discuss with C-suite executives some of the initiatives, actions and measures they have developed to move the needle on ESG. I recently spoke with Pamela Davis, founding President and CEO of Nonprofits Insurance Alliance (NIA), who championed the tenets of ESG long before it was the hot topic in business journals.
We talked through her experience founding and leading the organization for more than 30 years with corporate responsibility as the primary lens through which organizational decisions are made.
Q: Tell me about your organization.
“NIA is a group of 501(c)3 nonprofit insurers that provide affordable property and liability insurance to over 21,000 nonprofit organizations across the United States. From the beginning, our guiding principles have been service to underserved nonprofits that have specialized insurance needs. We began in 1989 out of a need for insurance for nonprofits because it was a terribly hard market for nonprofits which were deemed high risk in the ‘80’s. As an organization within the nonprofit sector, I felt we’d be in a better position to serve nonprofits because of our values. It has worked out amazingly well, I would say.
It hasn’t always been easy. Our early years were very challenging. We started out with a $1 million loan from foundations for capital and $40,000 in the bank and then the Loma Prieta earthquake hit in our first year of operation. But we made it and quickly learned that nonprofits were insurable like any other business. And not only could we insure them but we could help them with managing risk through education, discounts on screening services, and free consultation with experts. We found that nonprofits wanted to do the right thing, but until NIA, they didn’t have resources that were designed for them.”
Q: What inspired NIA to make corporate responsibility a focus of your organization?
“We were started as a service to nonprofits, to support them in doing what they do. It seemed to me that no one should necessarily profit from insurance for charitable nonprofit organizations so that is our baseline.
I started with social screens on our very first $1 million that we received as a loan from the Ford Foundation and a few others. I didn’t believe we should be investing in the types of problems that nonprofits are trying to solve. So, from day one we invested in fixed income bonds with screens or restrictions on what they can invest in. Our options for investment managers were very limited at first because nobody was doing it back then.
But for us, corporate responsibility and accountability to stakeholders has always been intertwined with our mission as a nonprofit organization.”
Q: How does diversity, equity and inclusion fit into the equation?
“Very early on, we believed that a diverse workforce would be key to our organization. At NIA, we feel we’ve done well hiring people with insurance experience and simultaneously cultivating a diverse workforce. As an example:
- 29% of our staff identify as a racial or ethnic minority,
- 38% of our senior leadership team is women,
- 74% of our mid level managers are women,
- 27% of our board members identify as a racial or ethnic minority, and
- 46% of our board members are women.
At NIA we believe we arrive at our best decisions because of our creative and diverse workforce. This diversity gives us the freedom and obligation to solicit input on important decisions from stakeholders across the company and even outside the company, that may be impacted by our decision. We don’t have the typical composition of leadership at NIA and we don’t maintain the appearance, often demonstrated by the dominant caste, that those at the top have all the answers; we allow ourselves to be more open to a variety of perspectives before arriving at a decision.”
Q: What are your current priorities as they relate to corporate responsibility?
“Right now, we’re enhancing our enterprise risk management (ERM) program. The lens through which we look at every decision is equity and sustainability. They are not things that you can improve around the edges. They are core values and that is why we make them the lens through which our ERM program views risk.
Some of the ways we have acted on equity and sustainability as an organization include when we had to move to a new headquarters, we decided to build a net zero energy building. The building produces all the power that it needs. It was built using many sustainable materials. You can open the windows, so we have lots of fresh air. We also think about things like the cleaning materials we use. We use only biodegradable cleaning materials that are safe for staff and no toxins in the landscaping.
We’ve been thinking more broadly about sustainability of the nonprofit sector. During the pandemic we spent a lot of time thinking about how we help our members and making sure our members were treated fairly throughout the pandemic. Not just focusing on our bottom line. You’re missing a huge part of the joy of work and life, if the only focus is the bottom line. There is so much value to be gained by bringing up everybody around you and improving your community.
These priorities have been pillars of the organization for a long time and our ERM enhancement is intended to formalize our priorities and help us communicate them throughout the organization.”
Q: What has been the impact of these efforts so far on your members, your employees, your organization and other stakeholders?
“Our members are really drawn to the fact that we have a mission that’s about more than making money. We have to stay financially solid, but we have more things that we value like investing in socially responsible investments and making sure that we have equity among our staff and leadership. We believe that our focus on equity and sustainability leads to success and is in no way a detriment to it.
It has actually had more of a direct impact on our staff. There are a lot of studies that say that people, especially younger generations, want to do something where they feel like they’re contributing to more than the bottom line. So, a lot of things we do make it easy for us to attract really high-quality talent. We give them the opportunity to work for an organization that is doing its best to improve the community.
In terms of the organization, we are fully invested in either screened or active ESG investments. This was not without controversy. It took us 10 years, and working through initial objections from some of our board members, to get 100% invested in these funds. When we dipped our toe into active ESG investing in equities, we found these funds did as well as, and in some cases outperformed, other funds. It was eye opening to many. The experience reinforces the position that those who make decisions based on what is best for the community will ultimately benefit.
We impact a small sphere and we continuously ask how we can enlarge that impact given our size and resource limitations. We do this by raising consciousness that these things are important to us. We developed an addendum for every proposal request where we ask organizations that want to do business with us: ‘What are you doing to promote equity and sustainability?’ and ‘What is the composition of your executive leadership?’ We want to work with companies who demonstrate our values. For example when we were evaluating auditors, we were impressed that one of the founders and 50% of the partners at Johnson Lambert were women. From my own experience, I know that women and minorities, often disfavored by the dominant caste, have to be on top of their game to succeed. Johnson Lambert also operated with a paperless audit environment, eliminating waste, and was comfortable with remote work earlier than most.”
Q: What advice do you have for a company who is interested in starting out on a corporate responsibility journey?
“As with any major initiative, CEO and senior leadership support, buy-in, and involvement are critical.
Internally, we are in the process of trying to distill what really matters to us and what goals will make the most impact if we achieve them. One of the ways that we’re doing that is by developing a dashboard that will include financial information, and additionally, metrics on how we’re doing with the workforce, and what we’re doing to influence the organizations we work with in terms of their practices.
The equity and sustainability conversation is really about challenging the status quo and daring to make a different choice. The world has said that to be successful, you have to focus on the bottom line and it has marginalized all the great things that you get as a human being from helping others. It’s not an either/or. And it’s the same way with investing and treating staff with dignity–It’s not like you can either make money or you can help the community. You can do both and enjoy the benefits.”
Pamela’s insights and perspective are inspiring, and she highlighted many ways that equity and sustainability can be incorporated into organizational principles that can add value to many stakeholders.
If you’re looking for additional resources on ESG, we recommend looking at the Sustainability Accounting Standards Board (SASB) ESG reporting standards, which can help guide you in considering what is important to your organization, what metrics you can track, which standards and frameworks make sense for your organization, and how you can share the information with stakeholders.
If you have additional questions or would like assistance in determining your next steps, contact the Johnson Lambert team.
The views expressed by individuals are not necessarily those of Johnson Lambert LLP.