ITL #465 ESG comms: a vast opportunity awaits1 year ago
Although ESG offers huge opportunities, businesses often put the cart before the horse by proclaiming better sustainability performance than their competitors without the data to back up such claims. By Lis Anderson.
When I first started my career in PR and communications there were only a handful of journals and publications that catered for those with an interest in sustainable products and the environment. It was considered a niche sector where clients would want to promote their environmentally friendly products and trying to get the message out to a broader audience took work.
There was an underlying notion that action should be taken to reduce consumption and lower our carbon footprints, but there was no urgency to do so. And if we weren’t doing it then our friends and neighbours probably weren’t either. So how would we as individuals ever bring about change?
Now we live in a world where the drive to change can no longer be ignored; diversity is being valued and the term ‘responsible’ is everywhere. The snowball of change is in full effect. It is no longer a niche and is all over our mainstream press and in every business title.
After all, we all have an impact on the environment and the people around us, down to our everyday behaviours and actions. The issue has extra support because it has an emotional impact – it’s struck a chord – we’re now driven by the belief that we as individuals can make a big difference and there is weight behind the cause.
It is also a business imperative. A recent survey by EY found that 25% of CEOs in the US see strengthening their ESG performance as the “primary goal” in pursuing M&A activities this year. Fortune noted that this survey is the first time that ESG shows up as a significant driver of deals.
Greenwashing widely recognised
But the truth is companies have been falling over themselves to shout about their ESG credentials. Often businesses are putting the cart before the horse – proclaiming environmental benefits or boasting better sustainability than their competitors before they have the underlying data. Regulators are becoming bolder in cracking down on such behaviours which can amount to greenwashing, with moves such as the UK’s Green Claims Code, which was launched in September 2021.
It’s a big move in the right direction. Both for the climate and for the communications industry. After all, consumers and business customers have become much savvier about ‘greenwashing’ meaning that companies today can no longer simply pay lip service to the issue.
But to say and do nothing at all is also negligent. We’re heading to a point when people are simply not going to buy from a company unless it can demonstrate its ESG credentials – as many as 75% of millennials now say that they are willing to pay more for a company’s products if they deem them to be sustainable. So, it’s time to find a balance. But treading this fine line takes skill and expertise. What areas should organisations be wary of?
A united effort
The same snowball effect that placed ESG at the top of the corporate agenda needs to filter down throughout the organisation. It’s not just about communicating your ‘why’ to the outside world, you also need to do the groundwork inside your organisation too. Just recently a survey by Hanbury Strategy and Stack Data Strategy in the UK found that a third of Brits see ESG as a “distraction” for business; two-thirds think CEOs should instead use their voice to talk about improving customer service and employee conditions rather than wider social issues (with the exception being climate change which they agreed needed focus).
The issue here is most likely because the ‘why’ isn’t necessarily clear for everyone. There is also a risk that ESG and ‘Purpose’ are seen as corporate jargon and as such are dismissed by companies’ key audiences. Another prominent example is Unilever where the argument for profits against purpose played out. Commenting on why the brand’s stock was a bottom-five performer in the portfolio, fund manager Terry Smith said, “Unilever seems to be labouring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business.”
This quote highlights the change in mindset we need from companies like Unilever; the opportunity lies in moving beyond a focus on purely sustainable credentials, and towards incorporating all elements of ESG into the fundamentals of the business itself.
The answer to this challenging shift lies in more effective communication and employee engagement. We’re still in the early phases but a tidal wave of change is needed. We’re seeing sustainability committees and ‘green teams’ being introduced, but how many employees would know what the purpose of their role is? Companies may be starting to tick boxes but just how effective this is remains to be seen.
The perception of your employees is important, and their values need to be considered. For example, McKinsey & Company is currently facing pressure from employees to take climate change more seriously. HR losses are damaging both for future talent attraction and for company reputation.
Therefore, before shouting about ESG efforts externally, companies need to be thinking about leading change throughout their whole operation. ESG is not a standalone initiative – it should filter through the entire organisation from the charities they support to the relationship they have with suppliers and through HR teams as well as the community. Not forgetting in every product launch and business expansion.
There is a real opportunity for the communications industry to lead change within organisations to communicate ESG initiatives internally, including about why they’re necessary, both for the planet and for profit and business health. Business leaders will need guidance from communications professionals on making governance language less mundane and understanding the value for employee engagement. There should be a line in all media training that comes back to ESG and supports leaders to promote the key messages externally when it’s appropriate.
There will of course be cultural sensitivities to take into consideration depending on where you are communicating. Awareness of ESG will differ as will stakeholder expectation around each component. International PR campaigns need to take into account that the conversation around ESG will be different in each geography.
The complexity is that although developing economies may be more directly affected by climate change, they depend on the finances that industry can provide. There will be a difference in the understanding and relationship with governments and businesses around the world. And knowing how to handle international PR campaigns won’t be a matter for big corporates exclusively, there is a real need to cast the lens wide on this global issue.
In summary, the need for each company to define their ESG strategy and be able to confidently stand behind it has never been stronger. And that’s not just the C-suite or board – it needs to filter through the entire company. Employees should have their say and have their values met by business leaders – and retention rates should be closely monitored.
Research by Congizant found that three quarters of business leaders in Europe and the US said they believe that the lack of certainty of returns on investment is the biggest inhibitor to their environmental sustainability goals. While returns are an obvious factor to consider, it may take a while to see them. But doing nothing may hit company performance much quicker. The challenge is to not find it all too daunting to make a start, you don’t have to shout the loudest – being consistent and authentic in action and communications is the best place to begin.
Lis Anderson is an experienced PR consultancy Director and MD with over 20 years in B2B marketing communications. Agency side she has held board level positions at a number of leading PR agencies before launching AMBITIOUS. A CIPR fellow, Lis is also an industry adviser and council member to a number of colleges – connecting employers and future employees.mail the author
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