Examining the “E” in ESG

Examining ESG

 
Environmental, Social and Governance (ESG) means one thing to BlackRock CEO Larry Fink and something totally different to Florida Gov. Ron DeSantis.

Why it matters: 86% of consumers don’t know what ESG means, and this ambiguous acronym is the latest communications conundrum.

The big picture: I asked Axios chief financial correspondent Felix Salmon to explain ESG in the most basic terms.

• “E is the responsibility to the planet, G is the responsibility to shareholders, and S is the responsibility to employees, vendors and customers.”
• It’s a corporate catchall that is hard to quantify and even harder to communicate.

Driving the news: A new study by the Conference Board suggests that investor focus on ESG is accelerating, and corporate leaders are leaning in.

• Yet, many still struggle to explain it, reports Fortune.
• As one executive put it, “We need to communicate this in a simpler way and get rid of all the acronyms.”

For today, let’s focus on the “E.”

By the numbers: According to a new Penta report, the responsibilities of communicators are increasing “as customers incorporate ESG and DEI into their purchasing decisions,” and when communicated well, these initiatives can be great for business.

• If an organization can clearly communicate its ESG progress, people are more willing to pay a premium for their products and services (87%), invest (83%) and work for them (83%), a new Oracle-Harvard global study
• Pewfound that millennials and Gen Z are particularly invested in environmental accountability, but they are skeptical of greenwashing.
• “To reach young people, ESG initiatives must be communicated in a truthful, authentic and impactful way,” says DeNora Getachew, CEO of DoSomething.org. “They want to truly understand how companies are adapting their policies and procedures to become more ethical and sustainable.”

Zoom in: “As communicators, we must inform, achieve consensus around the complexities of the problems, and advance the solutions,” says Dan Doherty, North American practice lead, global corporate affairs at BCW. “It’s a monumental time for our industry, because we have the opportunity to shape the world in a positive way.”

• Brands like Patagonia, Microsoftand Mars have successfully tied environmental initiatives to company values and purpose — and they’ve communicated effectively by setting goals, providing tangible results that show impact and acknowledging setbacks.

What we’re watching: According to Doherty, while we’re still grappling with ESG explainers, Europeans have adopted another term: “circularity.”

• This closed-loop strategy reuses, recycles and repurposes as much as possible to create zero waste — and companies likeNike have already put it into action.

 
– The dot connectors

ESG remains a priority, but businesses are struggling to fill sustainability-related jobs. Because of this, communication leaders are often left filling in the blanks — and in some cases, absorbing the entire portfolio.

State of play: Taking on these issues often leads to a title change, such as chief corporate affairs officer or chief impact officer.

• Some — like BetterUp’s Prince Harry and Cerebral’s Simone Biles— serve as advisers, while others — like McDonald’s Jon Banner and Walmart’s Dan Bartlett — are corporate dot connectors, who ensure all narratives and initiatives align with the overall business strategy.

What they’re saying: “CEOs are being asked to take positions on really thorny societal issues, and they are increasingly looking for a single leader on their team for guidance,” says Bradley Akubuiro, a partner at Bully Pulpit Interactive.

Plus, ESG can have major political implications.

• As Axios’ Alayna Treenereports, “House Republicans plan to make an assault on ESG a central part of their legislative and investigative agenda if they take back the majority in November’s midterms.”
• With this in mind, “the right person for the role needs to [grasp] the politico-economic ecosystem — plus understand both realistically and aspirationally who their company is and what value it adds,” says Akubuiro.

The bottom line: As stakeholder needs and expectations continue to evolve and grow, so too do the opportunities for strategic communicators.

Πηγή: axios.com