ESG (environment, social, governance) has to be considered when looking at almost every PR brief. For many companies it will be central for all proposals, or at least they may want it to be part of their plans.
For any agency looking to take on an ESG brief this is the first question we need to answer – is ESG the right approach for the company? This may seem very obvious but is often the point which is overlooked. The client has asked for ESG communications and we just follow their request and find a way to deliver on the brief.
In my experience this is where things can go wrong.
If we look at the origins of ESG we have to go back to 2004 and the publication of the United Nations report ‘Who Cares Wins’, (Global Compact Initiative – Who Cares Wins. Connecting Financial Markets to a Changing World) which is generally seen as the first high level endorsement of the ESG concept.
This is very important as ESG was very clearly linked to financial markets, and by implication firms working in or related to those markets, with the emphasis being on the ‘G’ governance element.
We often get firms who are not public, or involved in financial work, asking for us to look at or write their ESG strategy. This is all well and good, but is this the right approach for them, or would their actions in this area be better positioned as CSR (Corporate Social Responsibility) or as environmental initiatives.
I read a comment from another communications firm which said that more and more companies are ‘adopting ESG as a framework for explaining their corporate responsibility goals and progress’. Our advice is that unless your business is already structured to meet ESG reporting, it takes a lot of resource and work to make this happen.
ESG requires data on environmental factors to show the impact on the planet which includes carbon emissions, waste management, and resource usage. You also have to report on the company’s relationship with its employees, customers, and community to show how you are addressing social factors and finally, governance looks at the internal structures that guide company decision-making, and the transparency of the reporting of these decisions.
If as a firm these elements are not baked into the way you operate then there will be a problem in how you report against them.
ESG has to be embedded into the culture of a company, and this does not happen overnight. There needs to be a methodology for recording and reporting your ESG impact. This should include, at the lowest level, aligning with a recognised sustainability impact reporting standard. And, this should have data going back over a significant period of time.
If the firm has ESG embedded and they have a story to tell we look at communications, which are:
- Data led – using the information that the reporting standards provide. In a sector which can be seen as aspirational rather than actual, the more hard data that can be used the stronger the positioning which can be delivered.
- Narrative based – all elements of ESG, even Governance, are best positioned through telling the stories of the people involved, the benefits delivered, and the actions taken. ESG needs faces that make the results real.
- Talking change – there needs to be the ability to benchmark the data against what has happened before and future delivery. This means that there is nowhere to hide! As soon as firms start ESG reporting they have to maintain the process.
- Honest – ESG is not the place for vague statements and inaccurate reporting. If this happens firms will either not get coverage or will be called out.
If firms fail in any of the communication areas, they can get accused of ‘ESG or Green Washing’. This immediately turns what the executive hoped would be a positive area of communications into a potential crisis scenario. Companies accused of green-washing face a very difficult time and a lot of hard work to rebuild their reputations.
This is why we always start the process by making sure that aligning to ESG is the right approach for a company. If it is, and the company has invested in ESG and this is aligned to the business, then there are great opportunities to use ESG messaging to support financial results and show the strength of the strategy
Going back to the reason why ESG was developed as a reporting standard, it was to show investors the ethical positioning and transparency of companies – to identify companies who care.
If ESG is being used to misrepresent the work of a company and it is just ESG-washing the approach fails. There is an increasingly large number of investors who are becoming disillusioned with ESG because of the lack of regulation and no clear standards These investors are questioning the true benefits of their investment in this sector.
So, I will end with the comment from Larry Fink of BlackRock
“I don’t use the word ESG anymore, because it’s been entirely weaponised … by the far left and weaponised by the far right.”
If we are communicating ESG we need to make sure we are not just creating ESG-washing and becoming part of the problem. Many firms can and should communicate on their CSR and environmental work but will need time to develop an ESG programme which can be effectively communicated.
Effective ESG communications are rewarding, beneficial and for some companies’ game changing. We love working in this area but are always pragmatic about what can be achieved.
By Habib Bacha
Habib Bacha is founder of Credo Communications LLC – Media Consulting Company
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