Cisco CFO on climate change: 'It starts with the way we manage our supply chain'

Cisco is committing $100 million to help address climate change. Cisco CFO & EVP Scott Herren joins Yahoo Finance Live to discuss.

Video transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. Today, of course, is the 51st Earth Day. We've been talking a lot about government and the role in climate change. But companies, of course, also have a role to play in this. And interesting to see more and more stepping up to play their part in the battle against climate change. And networking giant Cisco is the latest to step up their efforts here with a new $100 million push from their foundation to fund sustainability and technology-based climate solutions.

And for more on that, I want to bring on Scott Herren, Cisco's CFO and EVP joins us now. And Scott, good to be chatting with you. Thanks for taking the time. I mean, there's a lot of different ways, I assume, for CFOs out there running major companies like Cisco to make an impact. So talk to me about the goal with this push and what you're looking to accomplish.

R. SCOTT HERREN: Yeah, Zack, this is really a part of a broader focus that we've had at Cisco on sustainability over the years. It starts with the way we manage our supply chain, the way we've driven sustainability through that. Some of the efforts we've made on renewable energy, we at this point have 100% of our energy needs in the US. And several European countries are fully renewable energy sources, to the way we design products to be much more energy efficient and require less electricity. And so when you add that up, that's a lot that we can do to focus on greenhouse gas emissions. This is just another step that we're taking to really focus on doing our part to drive a more sustainable future.

AKIKO FUJITA: Scott, I want to get much more into this $100 million commitment, but you just mentioned how you're looking at supply chains. And I wonder, if we're talking about tracking emissions, how you do that within the supply chain. We had Microsoft president Brad Smith on yesterday, who said that there's got to be incentives to bring some of these supply chain companies sort of downstream on board with this commitment that's a broader commitment for the company. How do you measure the output? And more importantly, how do you get everything-- those players on board?

R. SCOTT HERREN: You know, what's interesting about this space is that there's no competitors, right? We're all competing against the buildup of greenhouse gases. And so, as we look at companies that we would normally compete for business against, this is a space that we lock arms and that we work together on. And in many cases, we have the same suppliers.

And so just working with other peer companies across the industry to establish a set of standards, because in many cases, we're speaking to the exact same providers and trying to not have them respond one way to Cisco and another way to another company and a third way to a third, is how we can make progress. And so that's something we've been actively doing for several years. And I think it will continue.

ZACK GUZMAN: Yeah, and Scott, you said you've been actively doing it for years. And of course, this is just the latest push, this 100 million. But when you look at the accomplishments so far across the globe with Cisco, I mean, talk to me about which ones have been easiest or hardest out there. Because 100% renewable energy in several countries around the world doesn't seem like an easy feat. But how does that look when you go country to country? And what have you seen in maybe the way that they're tackling that differently?

R. SCOTT HERREN: You know, Zack, this is something that Cisco has focused on for years. And it's a-- I think there's a direct correlation between companies that have a great record on ESG, which we do, and companies that are disproportionately successful, might be the right way to say it. And so, this is our focus on sustainability over the last several years.

And some of the milestones that we've achieved, like 100% renewable energy in the US and in several countries, is part of a broader focus on sustainability that fits not just the ethos of our company, it does-- it fits our culture very nicely. It fits the ethos of our partners. It fits in with what our customers are asking for. And more and more, it fits with what investors are looking for. And I think as we look to the next generation of investors, as wealth transfers from the current generation, the baby boomers, to the next generation down, having a strong ESG, and particularly, a strong sustainability record will most certainly impact the way those dollars get invested by the next generation. And so, I think it really benefits all of our stakeholders.

AKIKO FUJITA: What kind of companies are you looking to invest in through this $100 million fund? Is it about carbon capture, for example, the immediate technologies that are available to make an impact right away, or are you looking at sort of these moonshot projects? And, you know, the larger question for me is, how does that tie into Cisco's business?

R. SCOTT HERREN: Yeah, I mean, so it'll be all of the above that you just talked about. We will invest in companies that are early stage and that are looking at carbon remediation, that are looking at potentially carbon capture, and really focused on a reduction in greenhouse gas, either future emissions or already admitted that they need to be captured. I think the second wave of our investment will go also to broadening awareness and community education on the importance of focusing on this. It's not just a feel good initiative. This is something that I think we all have to take a part in.

I saw a poster. I was on a meeting like this. It was a Webex meeting yesterday. And the person-- behind the person I was speaking to was a poster that said there is no planet B, right? This is one that we have no choice but to succeed in. And so it ties not just directly to our business in terms of all the stakeholders I just spoke about. It's important to our employees. It's important to our customers. It's important to investors. But it also is something that I think is important to society as a whole. And I think more and more, you see businesses stepping up to play the role we need to play to help mitigate this.

ZACK GUZMAN: Cisco CFO Scott Herren, good to chat with you today. Appreciate you stopping by.