How Delta Air Lines Navigates Assured Integrated Reporting

We sat down with the team at Delta Air Lines at a SEC Pro chapter meeting to discuss the evolution of ESG reporting and learn how they empower team collaboration and streamline processes to swiftly respond and prepare for regulatory compliance.

Here's what Kevin Berger, Director, Financial Operations & Audit, Dan Ketchel, Director, Global Sustainability Reporting & Partnerships, Alan Rosselot, Associate General Counsel & Assistant Secretary, and Kirk Willingham, Managing Director, Financial Reporting had to say about Delta's reporting journey.

15 years of voluntary ESG reporting

Q: How did you approach the concept of corporate sustainability and bring it into Delta?

Dan: We've been disclosing our sustainability efforts, on a voluntary basis, for about 15 years. Our report was formerly called a corporate responsibility report (CSR), and it was really focused on employee engagement and environmental compliance with smaller sections on safety, communities, and governance. Our ESG report today, which we're still voluntarily disclosing, has a lot more detail on those sections.

Kevin: We started evaluating the reports five or six years ago from an audit perspective. It wasn't rooted in any regulation or obligation, but we wanted to have confidence in what we were saying. It wasn't about the data going out the door, but about the data sources we use every day to make decisions. We started asking ourselves, "What are the data sources? How confident are we in the data? Do we have good control around the flow of data?" That started our adventure and led to working on implementing rigor, flows, documentation, and internal controls on the data.

From materiality to priorities

Q: ESG is constantly changing and one relatively new concept is the idea of materiality and how we apply materiality. Can you walk through your process to determine metrics and what you need to report on?

Dan: The first thing that you'll notice on Delta's ESG report is we don't call it materiality. We call it Delta's ESG priorities.

The reason for that is the landscape is shifting quickly, so it was important for us and our leaders to separate the concept of regulatory materiality with ESG materiality. We decided to brand it as ESG priorities in our report to explain that this is where we're focusing our efforts. This is where we're focusing our disclosure.

Alan: Words matter, which you would expect a lawyer to say. But that's part of the reason we shifted away from using the term materiality in the ESG report. We were very careful to make sure that we distinguished between SEC materiality for our 10-Ks and 10-Qs and that the results of the materiality assessment were appropriately reflected.

But thinking forward, do we want to begin to take steps toward double materiality analysis that's going to be required with the CSRD? That's going to be required later for us and we're beginning to think about what we want to do next. We're still in that evolution.

Staying prepared in a shifting regulatory landscape

Q: We've seen an onslaught of regulations from Europe's CSRD, the SEC's climate disclosure rule, and California's climate laws. How is Delta juggling compliance, and where are you on the journey?

Alan: When the SEC finalized the rule on climate reporting, a lot of people reacted with "Okay, now we have to do something." But for us, we had already done a lot of work under the proposed rule just to understand it. And so our initial reaction was, let's put the pedal down and go!

With the stay on the rule from the SEC, we've got more time, but that doesn't mean we are totally putting pencils down. We're going to need to build this process no matter what-not just for the SEC's rule. It's just not as urgent as we thought. But it applies to the California laws and the CSRD in the EU. We're continuing to keep an eye on how all of these are playing out.

Implementing strong internal controls and processes

Q: How are you building checks and balances into your processes?

Kevin: Our focus is not to check a number that was published, but really about how we got that number. Our work has been about building the systems and controls so that it doesn't matter what's going to be required in a regulation-we are set up with the right underlying systems and skill sets to respond.

We started with a good old audit methodology, with a risk control matrix. We looked at all the different data elements and asked, what's the impact and what are we reporting. We then started to tour the company and ask the different data owners how they do it, and what controls they have in place to make sure that the data is accurate. We focused on the control structure, so when something changes, you don't lose the information or knowledge around that data.

One of the challenges was getting owners bought into a belief system that it's about the process and controls, rather than it being about the end number. And that's a focus for us, to work with data owners on the importance of process and robust controls.

Dan: The Workiva platform was a great solution for us. We started with Workiva as our ESG reporting solution, based on a best practice from our financial reporting partner. We looked at our audit team and asked what does a SOX-lite program look like? And how can we emulate some internal controls that exist already within financial reporting in the ESG space?

We're not required to disclose yet, but we know it's coming eventually. And we don't have to rush to get there, but we have to start building that muscle. When regulation appears, there isn't a switch we can flip. We have to start exercising that muscle and build it over time.

Efficiency through collaborative teamwork

Q: There's a lot of teams represented here. How do you work together? How do you make sure that you're solving problems together?

Kirk: We're a team: finance, legal, sustainability, audit. All together. We're a team.

We're not trying to do it all by ourselves. We are leveraging the resources we have internally and trying to understand the rules and regulations the best we can. It's something that we're continuing to strive to. Every year we get a little better. We're going to keep moving down the path and try to adopt as we go.

We're giving people opportunities to be curious, to dig into the rules, and learn more and expand the scope of what they've historically done. It has worked really well for us to each be involved in the process and bring our collective knowledge and experience to the table.

Advice for navigating the climate disclosure journey

Q: People are at different parts of their disclosure journey. What advice do you have for them?

Alan: Don't panic, but don't wait. If you're not starting, then maybe you need to start. There's a lot of work to do to be ready for these rules whenever they become effective.

Kirk: Be curious and use the resources you have. We've leveraged knowledge within our industry because we want our information to be comparable to our competitors. We have a great network in the airline industry and we're consulting with them on a regular basis.

Kevin: Be honest with yourself. We all have a million things to take care of, but the end goal is not to check a box. The end goal is to have confidence that you did it right. If you're not healthy in certain areas, then call it out and get healthier. If you don't fix it today, it's probably going to bite you tomorrow.

Dan: Lean on the expertise around you, especially when it comes to regulation. I think every corporation sees future regulations and there's a bit of anxiety. And externally, there's a lot of noise. It's easy to write a check to a firm, but I've learned so much from my peers and I've been successful in this role because of their support and knowledge.

We often say that running an airline is the ultimate team sport. I would say ESG reporting is also a team sport. We really work collaboratively and we ask a lot of questions. I'm not afraid to say, "I don't know," and look to the experts to help educate me and get better.

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