Environmental, Social, and Governance Practices (ESG)
Board of Directors
Nominating and Corporate Governance Committee
In 2020, the Nominating and Corporate Governance Committee reviewed ESG matters presented by the ESG Steering Committee at two meetings and addressed other related risks through various committee meetings throughout the year.
CEO and Senior Executive Leaders
ESG Steering Committee
Formed in 2020, this cross-functional team’s purpose is to support the Company’s ongoing commitment to managing human capital, the health and safety of employees and client families, corporate social responsibility to our communities, corporate governance, sustainability, environmental impacts, and other public policy matters relevant to the Company.
Our focus is to measure what matters for our Company and will drive value for all of our stakeholders.
The ESG Steering Committee includes management representatives from investor relations, corporate communications, legal, health, safety, and environmental compliance, human resources, financial reporting, supply chain management, and executive officers. This committee met at least monthly in 2020.
2020 accomplishments include:
- Utilizing disclosure guidance from the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD) for reporting ESG matters relevant to the Company.
- Defining ESG risks and opportunities at SCI and aligning certain risks with our enterprise risks.
Inclusion and Diversity Committee
Formed in 2017, this cross-functional committee of SCI associates oversees the development of inclusion and diversity programs at SCI, including the development of a mentoring program and Associate Resource Communities or ARCs. Since the committee was established, four ARCs have been formed (EMBRACE and ADELANTE were formed as ARCs in 2020). Other accomplishments include:
- CEO Action for Diversity & Inclusion - Recognizing that change starts at the executive level, CEO, Chairman and President Tom Ryan joined the CEO Action for Diversity & Inclusion™, the largest CEO-driven business commitment to advancing inclusion and diversity in the workplace.
- SCI Women's Leadership Conference - The SCI Women's Leadership Conference aims to inspire and invest in our female leaders, by providing them an opportunity to connect, share ideas, and develop and enhance their leadership skills.
- Leading With Dignity - Our management skills training course, Leading With Dignity, teaches leaders to address different communication styles, establish a positive and inclusive work environment, deliver effective and actionable feedback, and execute best practices for recruiting and retaining top talent.
- The Inspire Series - Our outstanding leaders conduct monthly webinars designed to help our associates grow both personally and professionally. This series of monthly webinars is available to all associates and covers topics including work-life balance, time management, and healthy living.
Associate Resource Communities (ARCs)
VARC aims to inspire, empower, support, and educate veterans, their families and veteran advocates through a team dedicated to veteran wellness, leadership, and advancement.
Advocates for our LGBTQ+ associates. UNITE believes that associates who are comfortable bringing their whole selves to work can inspire meaningful change within the Company and help leverage diverse perspectives and backgrounds.
Focused on nurturing a culture which ensures the inclusion and representation of Black people as a part of its corporate, community, and customer footprint. An ARC focused on inclusion, equality, and service.
Our most recently formed ARC ensures that the representation of Hispanic associates within the Company and our communities is included and heard.
Celebrating our differences and supporting our 24,000 associates
OUR ASSOCIATES ARE THE KEY TO OUR COMPANY’S FUTURE. It’s their compassion, positive outlook, and enthusiasm that heighten our level of care for families and propel our Company’s continued success. We are the best, the brightest and the most experienced in our profession. We strive for a workplace where ideas are welcomed, efforts are recognized, suggestions are put into practice, and new programs such as our new customer-facing technology are deployed to improve our associates work experience.
As last responders, our front line associates have been disproportionately affected by the pandemic over the last year and we are proud that we have been able to reward their incredible efforts with over $10 million of HERO and special bonuses. In this mentally and emotionally demanding year, we have highlighted the mental health services that are available through our Employee Assistance Plan and urged our associates to use them if needed. Our efforts to recognize, develop, and care for our associates is one reason why SCI has been designated as a Great Place to Work® every year since 2017.
WE BELIEVE IN THE POWER OF INCLUSION and we respect our fellow associates’ work, ideas, beliefs, and lifestyles. Through programs such as our Women’s Leadership Conference and Associate Resource Communities (ARCs), colleagues with similar interests connect with others for networking and opportunities for growth. Our leadership team is committed to advancing inclusion and diversity within the workplace, by embracing the many backgrounds and perspectives that make each of us so unique, allowing us to remain relevant to the families we serve.
SCI Workforce Diversity
Our Company demographics closely mirror U.S demographics
SUPPORTING THE PERSONAL AND PROFESSIONAL GOALS OF OUR TEAM MEMBERS is a priority at SCI. We provide opportunities for career growth through mentoring programs, discounts and tuition reimbursement through our many university partnerships, and a robust online training portal that offers more than 2,000 courses.
Training by the Numbers
- SCI leaders completed more than 7,000 hours of leadership development training in 2020.
- During 2020, 85,000 hours of training completed were dedicated to ethics, health and safety, and cybersecurity.
- In the past year, SCI associates spent more than 200,000 hours completing Dignity University online courses.
Fostering a culture of giving and volunteerism
AT SCI, EVERYTHING WE DO IS IN SUPPORT OF PEOPLE – our associates, the client families we serve, and the people who live in the communities where we operate. We are committed to supporting causes that enhance and promote the well-being of individuals from all walks of life. One way we are uniquely positioned to fulfill that commitment is through the SCI Foundation, our Company's nonprofit charitable giving arm. To further drive our long-term charitable giving objectives, we funded $6 million to the SCI Foundation in 2020.
We established a new SCI Foundation giving strategy that aligns with our core values and business strategy, and with the causes our associates care about the most. As part of the new strategy, established in 2020, our SCI Foundation giving is guided by three mission statements:
- Honoring Those Who Serve: We are dedicated to supporting and honoring military veterans.
- Comforting Those Who Grieve: We are determined to ensure no one grieves alone.
- Celebrating the Significance of Life: We are committed to raising awareness of the lifesaving gifts of organ, eye, and tissue donation.
We have developed multi-year partnerships with nonprofit organizations whose programming aligns with these missions, including the Tragedy Assistance Program for Survivors (TAPS), the National Alliance for Grieving Children, and Donate Life America.
TAPS provides comfort, care and resources through programming such as grief support groups, grief camps for children and teens, peer mentorships, and educational seminars. Through our partnership with TAPS, we're able to support all those who have experienced a military or veteran loss.
The National Alliance for GrievingChildren provides resources and education for professional and family caregivers supporting grieving children and teens. Their extensive network of member organizations provides opportunities for our funeral home locations to better support the families we serve.
Through our partnership with DonateLife America, we are able to provide service excellence to families of organ, eye and tissue donors, while also building enduring relationships with the organ, eye and tissue donation community. We are also able to have a direct impact by advocating for individuals to register as an organ, eye and tissue donor.
SCI is also a long-time supporter and committed champion of the United Way of Greater Houston. We believe supporting United Way is the best way to reach a myriad of community-based organizations dedicated to strengthening the local community. Through associate fundraising and our dollar-for-dollar company match, SCI has contributed over $9 million to the United Way since 2014.
Community Spotlight: Comforting Those Who Grieve
The funeral is just one part of the grieving process, and we are committed to supporting the families we serve before, during and after the service. The loss of a loved one and the accompanying grief can be extremely difficult, especially during a pandemic when we may be unable to gather to celebrate the life of a loved one.
We have partnered with Charles Nechtem Associates, Inc. to provide families with helpful benefits and resources, such as the 24-hour Compassion Helpline, which provides families with free confidential phone access to professionals trained in grief counseling for up to 13 months after the service.
We also offer the Dignity Memorial Guidance Series, a suite of grief materials featuring the insights of renowned grief experts, at no cost. This extensive collection of booklets, brochures, and online resources offers professional advice and compassionate guidance to help families understand and process the complex emotions of grief. Visit the Dignity Memorial digital grief library: https://www.dignitymemorial.com/support-friends-and-family/ grief-library.
We believe in supporting causes that mean the most to our associates. That’s why, as part of our new SCI Foundation giving strategy, we also allocate funds annually to each Associate Resource Community (ARC) dedicated to helping them achieve their community outreach goals.
Identifying and Addressing Cybersecurity Risks
THE COMPANY'S INFORMATION SECURITY PROGRAM INCLUDES security awareness training, security operations, incident response, security governance, third party risk management, IT security risk management, security architecture and vulnerability management. The program also includes a Cybersecurity Governance Committee, which is a cross functional team of management and associates that oversee current cybersecurity developments, projects, and future initiatives.
Risk assessments are conducted when onboarding new services, including third party vendors, applications and other technology services, significant changes to IT or security architecture, and systems handling sensitive data.
Risks identified or reported are documented as part of our risk management process following an industry standard framework with a goal of remediation or mitigation. They are reported and reviewed by Senior Leadership for approval as required. Any exceptions identified are reviewed on a recurring basis and, if material, are reported to the Board. We are not aware of any known material breaches and none were reported to the Board in the past year.
The Board recognizes the threats presented by cybersecurity incidents and is committed to the prevention, timely detection, and mitigation of the effects of any such incidents to the Company.
- The Audit Committee oversees the Company's controls related to cybersecurity.
- The Nominating and Corporate Governance Committee oversees the risk assessment related to cybersecurity.
Our focus on environmental sustainability
WE RECOGNIZE THE IMPORTANCE OF ENVIRONMENTAL MATTERS and are using the Task Force on Climate-Related Financial Disclosure (TCFD) framework for guidance on future disclosures. We are currently exploring several opportunities regarding water consumption, energy conservation, and greenhouse gas emissions through the following initiatives:
- Testing water monitoring technology and utilizing reclamation at select cemeteries
- Installing and piloting bioresomation units at two crematories
- Approved installation of solar panels at certain locations
- Began converting electricity contracts to renewable sources in 2019
- Testing electric vehicles for the development of a potential electric vehicle strategy within our fleet
We also offer green products, such as biodegradable urns and caskets, at most funeral service locations, and green burials at select cemetery locations. We are Green Burial Council Certified at Cedar Lawns Memorial Park in Washington and at our Neptune Memorial Reef, off the coast of Florida.
The Reef was designed by a marine biologist to attract and support certain marine life to build an underwater ecosystem. Located off the coast of Key Biscayne, not far from Miami, it’s permitted and certified by the Environmental Protection Agency, Florida Fish and Wildlife, Army Corps of Engineers, and the Department of Environmental Resources Management. This unique underwater final resting place accommodates individuals, families, and even pets. Please visit the website for further information: https://www.nmreef.com.
Corporate Governance Highlights
Adoption of Best Practices and
Board Composition Changes
We have a history of thoughtful consideration of shareholder feedback and monitoring corporate governance best practices. The timeline below demonstrates our governance enhancements with respect to Board structure, shareholder rights, and executive compensation. We also remain continually focused on Board composition and committed to evaluating our disclosures to promote transparency.
Created role of Lead Independent Director with enhanced authority to call special Board meetings and to preside over Board Meetings in the absence of the Chairman
Refreshed proxy statement improving readability and enhancing disclosures, including skills and experiences of Directors, and improving disclosures for aligning pay and performance
Appointed CEO Thomas Ryan as Chairman of the Board
Appointed Tony Coelho as Lead Independent Director
Adjusted Director compensation in response to shareholder feedback
The Board, in response to shareholder feedback, approved changes to the performance unit plan adding a normalized return on equity modifier to the total shareholder return metric and changing the award denomination to share units rather than cash beginning in 2018
Shareholders may call special meetings
Continued board recruitment process replacing Board member Dr. Malcolm Gillis, who passed away (October 2015) after serving on the Board for 11 years
Board recommended and shareholders approved the de-classification of our Board of Directors
Board recommended and shareholders approved elimination and reduction of certain supermajority voting requirements in our Articles of Incorporation and Bylaws
We eliminated the Umbrella Plan within our executive incentive compensation due to certain changes in the Tax Act
Added diverse perspectives and experience to our Board with the addition of Sara Martinez Tucker and Jakki Haussler to our Board
To facilitate the recruitment of the next generation of Board leaders, R.L. Waltrip decided not to seek re-election after 56 years of meaningful contributions
Long-time member, Dr. Ed Williams, passed away after faithfully serving on the Board for 27 years
We have enhanced our disclosures around Environmental, Social, and Governance (ESG)
The Board made changes to the Company's Bylaws to permit the Chair of the Nominating and Corporate Governance Committee of the Board to preside over the Board meetings in the absence of the Board Chair and Lead Director
After 36 years of outstanding service on the Board of Directors, John Mecom decided to not seek another term as a Board member
Updated the charter of the Nominating and Corporate Governance Committee of the Board reflecting its ESG oversight responsibilities
Strengthened the non-financial modifier for the Annual Performance Based incentive plan by increasing the online customer satisfaction rating threshold to 4.25.
Modified ROE threshold for the Performance Unit Plan
Cliff Morris has decided to not seek another term as a Board member in 2022.
Ellen Ochoa nominated to be the Compensation Committee Chair in 2021. Alan Buckwalter will transition off of the Compensation Committee in 2022.
Our best practices include:
- Majority voting standard in Director elections
- Annual Board and Committee evaluation process
- Board orientation and education program
- No shareholder rights plan or “poison pill”
- Shareholder (10%) ability to call special meetings
- Anti-hedging and anti-pledging policies applicable to all Directors and Officers
- Stock ownership and retention guidelines for Directors and Officers
Corporate Governance Highlights
Shareholder and Proxy Advisor Outreach
The Board continues to place a high priority on listening to and considering the views of our shareholders. We accomplish this through a robust outreach and engagement program. A comprehensive shareholder outreach program is an essential component of maintaining our strong corporate governance practices. We regularly communicate with a large portion of shareholders throughout the year. We also have a formal process of outreach to our top shareholders prior to our annual meeting to address highlights or changes to our corporate governance practices, including discussion of our executive compensation programs. In addition, certain of our directors have participated in direct shareholder engagement when requested and deemed appropriate. The results of these conversations are summarized and discussed with both the SCI Board and our management. As part of our normal procedures, we also engage with proxy advisors who represent the interests of certain shareholders. We continue to have open dialogue with Glass Lewis and Institutional Shareholder Services and use their constructive feedback to continuously enhance our disclosures.
In early 2020, we engaged with shareholders representing approximately 55% of the Company’s common stock prior to our Annual Shareholder Meeting. Through our ongoing shareholder outreach efforts, we better understand the viewpoints of our shareholders as well as gain opportunities to communicate how our decisions align with our strategic goals.
Overall, investors’ sentiment was positive with respect to our enhanced ESG focus and disclosures, our corporate governance practices, and our executive compensation programs. While shareholders appreciated that Board tenure had been significantly reduced in recent years, they encouraged us to continue the progress we have made with Board recruitment as well as diversity. We have embarked on a search for a new director (to replace Cliff Morris who will not seek re-election in 2022), which will reduce Board tenure in 2023 to approximately 15 years with the appointment of a new replacement Director.
We received positive feedback with respect to our management of ESG matters, but were encouraged to continue our journey towards adopting a framework that would highlight key performance indicators. As mentioned in the ESG Oversight section of this Proxy, we have begun to refer to the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD) as a guide for reporting relevant ESG matters. We are working to ensure that we measure what matters to our company and drive value for all of our stakeholders.
Priorities in Response to COVID-19 Pandemic
Given the timing of our formal outreach in April and May 2020, an area of particular focus during our engagements with investors was how the Company was managing the business successfully through the challenges created by COVID-19. Our priority throughout the year was to keep shareholders informed of how the pandemic was affecting our business and our people and how we were responding to various challenges.
COVID-19 Pandemic Response
Our pandemic-related decision-making and response evolved as the effects of the pandemic grew. In the initial stages, a COVID-19 Task Force (Task Force) was formed. The Task Force was chaired by Sumner J. Waring, III, Senior Vice-President and Chief Operations Officer and included associates from Operations, Human Resources, Health, Safety, and Environmental Compliance Services, Corporate Communications, Legal and Supply Chain Management. The goal of the Task Force was to facilitate an agile response to the pandemic and its impacts on our associates, customers, communities, and our business as a whole. The Task Force considered the best way to serve our client families, ensure safe working conditions, provide personal protective equipment for our associates, provide responsive and supportive human resources policies, and to bring peace of mind to our associates related to job security.
As the threat of pandemic-related effects grew in mid-March, the Office of the Chairman (OTC) began to meet each day to facilitate a timely decision-making and communication process to guide the Company through the COVID-19 crisis. The OTC continued to meet bi-weekly in June and has met weekly since July. During the height of the pandemic, the OTC considered and provided feedback to questions raised by field operations, the Task Force, and home office departments to ensure fast and appropriate responses were taken to address identified challenges. All Company officers met each Monday to keep communication constant and consistent. Although the OTC and Task Force provided guidance to field operations, local management, better understanding the needs of their associates, customers and communities, made final decisions about the best operating actions to take in response to COVID-19 related challenges. As the result of the process described above, the Company identified the priorities and facilitated the actions, which we have detailed in our COVID-19 response below.
SCI remains deeply committed to the health and well-being of our associates, our customers, and our communities. In order to maintain a safe environment for all, we implemented the following measures:
- Developed and adopted the Dignity Memorial Health & Safety Standards, a comprehensive, 32-page health and safety guide that complies with the highest standards provided by The Centers for Disease Control and Prevention (CDC). This guide outlines actions to be taken to reduce the risk of exposure and further spread of COVID-19 including:
- Engaging suppliers from around the globe to ensure that our frontline associates had adequate stock of personal protective equipment (PPE).
- Adding a Wellness Champion at businesses to assist in ensuring compliance with state and local guidelines, maintaining an adequate supply of cleaning materials and personal protective equipment (PPE), enforcing social distancing practices, and implementing a rigorous sanitizing schedule.
- Providing and mandating the use of masks for all associates and guests.
- Providing hand-sanitizing stations in areas where families and guests gather.
- Maintaining social distancing in chapels and lobbies, and redirecting guests to separate entrances and exits to minimize the number of people in the facility.
- Sanitizing arrangement conference rooms, chapels and chairs between each arrangement and service.
- Placing signage throughout funeral homes and cemeteries to remind guests of handwashing, mask requirement, and social distancing standards.
- Sharing resources with associates so that they stay informed and understand the impacts of COVID-19 on their personal and professional lives.
- Adhering to the limitations on gathering restrictions as mandated by respective local jurisdictions.
- Developed and adopted modified operations procedures and practices based on guidance provided by the CDC including protocols on decedent care and handling personal effects.
The health and safety of SCI associates remains a top priority. Because of this, the Company has provided expanded benefits and implemented additional measures including:
- Providing paid time off to associates who test positive for COVID-19 or need to care for a loved one or family member with COVID-19.
- Encouraging home office and certain field administrative associates to work remotely, if possible.
- Avoiding Company layoffs, mandatory furloughs or reductions in workforce as a result of the impact of COVID-19.
- Ensuring non-executive associates did not have to take a pay cut.
- Ensuring associates not only maintained their benefits, but also received their annual merit increases and promotions.
- Awarding over $10 million in “hero bonuses” and other bonuses to associates in recognition of their courageous efforts and dedication to continue serving families.
- Communicating the Company’s Employee Assistance Program (EAP), which provides associates with 24/7 access to a licensed counselor at no cost.
- Limiting and rescheduling non-essential business travel.
- Sending hundreds of associate volunteers from across the Company to assist colleagues in serving families and communities in impacted areas of the country, including New York City, New Jersey, Miami, Phoenix, Southern California, Houston, Denver, Seattle, Dallas, Fort Worth and El Paso.
- Working with the International Cemetery, Cremation & Funeral Association (ICCFA) to successfully lobby the National Academies of Sciences, Engineering, and Medicine (NASEM) to help ensure funeral industry professionals are classified as healthcare personnel so that our frontline associates have priority to receive the COVID-19 vaccine.
Since the onset of the COVID-19 pandemic in North America, SCI associates implemented creative solutions to continue serving families with care and compassion. Some of these actions include:
- Investing in technology to provide complimentary livestreaming of services, which has allowed family and friends to attend virtual services to express their condolences.
- Offering families the option of a Celebration of Remembrance at a later date, which allows family and friends to gather in celebrating the life of their loved one on a special date - such as a birthday or anniversary.
- Instituting payment options to help customers weather the financial impacts of COVID-19.
- Providing virtual arrangements and cemetery property tours for clients who prefer to avoid an in-person meeting.
- Developing on-demand preneed seminar presentations for customers to view from the comfort of their own homes.
- Developing and adopting guidelines for virtual witnessed cremations, allowing families to be present with their loved ones utilizing technology in lieu of in-person viewing.
- Extending visitation and service hours to allow family and friends to come in limited groups to pay their respects to the family. After each group departs, our teams disinfect public areas before allowing the next group of visitors to enter and participate in the visitation.
- Offering drive-through visitation services at the funeral home or church so loved ones can offer condolences from their car.
- Using radio transmitters to allow guests to attend a graveside service without leaving their car.
- Organizing processions through neighborhoods so family and friends can socially distance and line the street to celebrate the life of their loved one.
- Providing mobile refrigeration units to areas most impacted by COVID-19 to ensure decedents entrusted into the company’s care are treated with dignity and respect.
- Developing content for Dignity Memorial websites in June 2020 to help families navigate through the restrictions imposed due to COVID-19:
- Our Health & Safety Standards
- 10 Things to Think About for a Funeral Service After COVID Lockdown
- How to Have a Traditional Funeral Months Later
- How to Remember a Loved One at a Funeral After COVID-19
- Funeral Etiquette for Livestreamed Funerals
- An online guide was added to our websites to assist families with arranging remote meetings.
- Implementing new catering standards that meet or exceed health standards, including requiring the use of masks and gloves by all servers, providing hand sanitizing stations in reception rooms and offering pre-packaged and home delivery options, and smaller guest size menus to promote social distancing and food safety.
SCI responded to the needs of communities we serve in multiple ways, including:
- Funding a $6 million contribution to the SCI Foundation for future community giving efforts.
- Making charitable contributions to food banks in various communities most impacted by COVID-19 and hosting collection drives at funeral home locations across the Company to support local food pantry programs and homeless shelters.
- Contributing to the Veterans of Foreign Wars Foundation’s (VFW’s) Unmet Needs program, which provided qualifying military and veteran families impacted by the effects of COVID-19 with financial assistance for basic needs, including groceries, medical bills, and electric bills.
- Supporting small businesses, such as local catering partners and restaurants.
- Supporting our associates in their volunteer efforts across the country.