State Farm's annual accountability report details efforts the Bloomington-based insurance giant is trying to make across three areas: sustainability in the environment, society, and governance.
The 2022 report cited gains in gender equity employment, diversity and inclusion, and reducing the company's climate change footprint.
Illinois State University emeritus professor Den Patten has done research on this type of document that businesses put out. Patten said since the 1990s, businesses have increasingly used such standalone reports, and State Farm’s effort is typical for its type.
State Farm declined a request for an interview with diversity and environmental executives, saying the company will let the report speak for itself.
“Companies try to emphasize the positive aspects of the things that are going on within their company. They tend to be much more of a public relations tool than an accountability tool,” said Patten.
He said it’s hard to tell what’s missing from such documents without more research. State Farm’s disclosure on environmental issues misses several pieces of context, said Patten.
“One of the things they highlight is their 46% reduction in greenhouse gas emissions relative to 2019 base levels. While they sort of mentioned that the COVID experience played a role, they're really not highlighting the fact that the vast majority of what we're seeing is due to the reduction in the use of their facilities over that period of time. I think what's missing is any discussion of what they anticipate will happen as they gear back up or start using more facilities again,” said Patten.
The company document noted State Farm had 33.5% of its workforce still fully remote last year, 65% had a hybrid schedule, and just 1.5% of the workforce was fully in-office.
“I think it is unrealistic to believe that (emissions) it's going to stay at the level that it is at right now. And I would like to have seen them discuss a little bit more in anticipation that might happen,” said Patten.
State Farm has said its goal is to reduce greenhouse gas emissions by 50% by 2030, including direct emissions from owned or controlled sources and indirect emissions from the generation of purchased energy.
“In 2022, we realized a year-over-year decrease in GHG emissions of 13.6%,” said the company.
Reducing paper use
Other points the report made include a reduction of nearly half the direct emissions from fleet vehicles since 2019, though there was an increase in that category last year, and steep declines in the use of paper through paperless billing and emailed communications.
“In 2022, we welcomed 3.8 million customers to global email opt-in, which includes paperless billing and policy documents preferences. (We) avoided printing and posting more than 105 million mailings and 315 million sheets of paper. (We) saved $58.4 million and an estimated equivalent of 31,500 trees,” according to the report.
This year, State Farm said it hopes to save $87.3 million by sending about 140 million fewer mailings. That would be more than double the savings in 2021.
“They do have some things I think are very proactive types of actions with respect to environmental issues. For example, some of the reliance on alternative energy at some of their buildings, and the commitments that they've entered into,” said Patten.
The company also touted conversion to more energy efficient lighting in its buildings, closing some facilities as well as expanding solar projects and carbon neutral energy acquisition.
“Eight State Farm facilities will procure approximately 103,000 megawatt hours of renewable energy per year. This is the equivalent of 74,000 metric tons of carbon emissions annually,” said the report.
Patten noted State Farm focused on its 13 largest facilities and did not present the context of how that matches up with the rest of the company's properties.
Diversity and inclusion
State Farm cited some gains in gender parity. At the executive level, 38% of employees are female, up from 36% in 2021.
Management-level workers were 46% female, unchanged from 2021.
“At the executive level, the gender representation is certainly lower. And that might be a function of time as much as anything,” said Patten.
For the entire workforce, State Farm employees were 59% female, up in each of the last two years.
“It is the state of the insurance industry in the United States,” said Patten. “Their numbers are really almost perfectly in line with the industry average.”
That male-to-female ratio also is comparable to the average gender breakdown in undergraduate college enrollment in the U.S.
“I don't know that there's a real correlation with the possible exception that it is insurance as a white-collar industry,” said Patten.
Forty-three percent of the State Farm workforce identifies as minority and 57% as white.
“My sense is that they have a history of trying to be actively involved in promoting racial equity within the company and trying to advance the diversity within the company,” said Patten.
State Farm hired more than 16,000 new people in 2022, out of a total workforce of about 61,000. Patten said not all the new hires are new positions.
Consultants have noted the broader insurance industry faces the same challenge as the rest of the country in attracting new workers. Average time in position has fallen and worker mobility increased.
“What's missing is where's the turnover coming from? And what are the issues that need to be addressed relative to keeping people on board as opposed to just bringing new people in?” said Patten.
The new hires were 68% female and 32% male, according to the report. Patten noted if that ratio continues, State Farm will continue to make gains.
“It's just that what I would like to see in a report like this some discussion of that. How is it affecting this particular company? And what did they do to try and address those issues?” said Patten.
He said as long as that kind of report continues to be voluntary, if is likely to remain one-sided. Patten said he has long advocated for more regulation on what gets reported in the areas covered by the report.
