The research is clear, investing in environmental, social, and governance (ESG) programs creates short and long term business value. Not only does it benefit people and the planet, but it also positively impacts a company’s profitability. That is, if your key stakeholders know what you are doing. Most large corporations and publicly listed businesses already have an ESG strategy with key programs in place and are reporting on a regular basis. But how well are their communications resonating with key stakeholders?
Why businesses struggle with ESG comms
As businesses have embraced ESG within their corporate strategy, they have also started to talk about their efforts in the public domain. But in doing so, some brands have made the mistake – whether intentionally or accidentally – of boasting or over-emphasizing their ESG efforts, leading to accusations of ‘greenwashing.’ Government regulations are increasingly focused on preventing such dissemination of misleading or false claims, but this is still a rapidly evolving space with many opportunities for confusion.
This creates a tricky balancing act for companies – on the one hand, they want to showcase their efforts, while on the other, they need to ensure their communications are credible, as the repercussions for getting this wrong can be severe, including financial penalties for regulatory breaches, loss of consumer trust, and reputation damage. As a result, many brands with great ESG programs may choose to avoid risk by under-communicating their ESG efforts.
This manifests in two common ways. The first is where businesses still communicate their ESG programs, but deliver their story in a manner that is so boring that it has no impact on their desired audience. This is effectively ESG storytelling as a public service message, and now referred to as ‘greywashing’.
Even worse is when businesses with great ESG programs are so concerned about risk that they limit the scale of their communications to owned channels like annual reports or pages hidden on their websites. By ‘greenwhispering’, these businesses risk missing out on the opportunity to engage the growing cohort of environmentally-conscious consumers.
In both cases, failure to communicate efforts diminishes the return on investment from ESG programs and creates a significant opportunity cost. With consumers increasingly factoring ESG considerations into purchase decision making (for example, US food and grocery consumers switching at a rate of 1 in 2, rising to 7 in 10 for Millennials), it is a commercial imperative to focus on how to effectively communicate your ESG efforts.
6 Tips for communicating ESG effectively
So what can you do to ensure your business is telling its best ESG story and getting the recognition (and revenue) it deserves? Here are some essential tips:
1. Tell the right story
A good ESG strategy is built from comprehensive consultation with stakeholders, including customers, employees, and investors. Identify the issues that matter most to each group and focus your communication efforts there. For example, food and grocery businesses should address consumer concerns around environmental issues such as reducing emissions, respecting natural resources, and protecting wildlife and ecosystems. Health insurance businesses should focus more on social and governance considerations. Tailor your content for each stakeholder group to capture their attention and activate their support.
2. Talk transparently
When you start to think about ‘how’ to communicate your ESG story, one thing is critical, transparency. Not only to avoid the obvious legal ramifications of overstating any efforts made but because honesty is what people expect.
Leaders who want to inspire trust across all stakeholders (customers, employees, and investors) should embrace transparency and engage in genuine dialogue. Listen to stakeholder feedback, questions, and concerns. Use that information to refine your program delivery and performance metrics.
No business is perfect, so there’s no shame in admitting that there’s still work to be done. By sharing the challenges and limitations of your ESG initiatives, while highlighting the strides you’ve made, you can demonstrate your commitment to sustainability and responsible business practices. And that is the key to building trust, enhancing your reputation, and creating a better future for all.
3. Evoke emotion
When deploying ESG programs, investors and regulators may require technical details and frameworks, but your customers and prospects? Not so much. They’re looking for a well-crafted, authentic story that hits home. Instead of simply highlighting eco-initiatives or CSR programs, focus on the people impacted by your actions or the partners you collaborate with.
Share stories that evoke emotions and tap into the human connection that drives change. While stats have its place, personal narratives have a more profound impact on audiences. So, whether you’re courting investors, updating your employees, or winning over consumers, keep your ESG communication relatable, authentic, and compelling.
Let’s look at some examples of businesses doing this well. According to ESG brand tracking data from research technology company Glow, US consumers rank Dawn and Dove as two of the most environmentally and socially responsible brands in the US food and grocery industry.
These brands are recognized by consumers as leading the way to a more socially and environmentally responsible future and both employ effective storytelling to capture the hearts and minds of their audience. Dove’s ‘real beauty’ initiatives seek to bolster self-esteem by addressing social issues using authentic consumer stories. Dawn’s environmental content and tools activate support for wildlife charity partners.
4. Focus on progress, not aspirations
It’s not enough to simply set lofty goals for the distant future – you need a concrete plan to get there. That means balancing short-term wins with more aggressive science-based targets that provide a realistic path forward.
Of course, there’s a fine line between sharing your progress and coming off as boastful. That’s why it’s important to stay humble and acknowledge that no one has all the answers just yet.
Show that your journey towards a more sustainable future is ongoing, and that’s something to be proud of. By striking a balance between attainable goals and ambitious targets, you can create an ESG story that’s grounded in reality. And by sharing your journey with others, you can inspire them to join you on the path toward a better tomorrow.
One brand that does an excellent job of communicating its progress is the ethical chocolate brand, Tony’s Chocolonely. Tony’s proves that even annual reports can be interesting if you just put a little love into dramatizing your ESG progress.
5. Show up where it matters
There are endless options when it comes to sharing your company’s story. But with so many media choices available, knowing where to put your energy and your dollars can be challenging.
Recent research from Glow shows that consumers tend to receive their ESG information from news coverage, advertising, and social media. These are vital channels through which you need to ensure you get your message out en masse. However, when asked where they would prefer to learn about a company’s ESG programs, product packaging and brand websites become more important.
Packaging is key because it provides relevant data to support conscious choices at the point of purchase. Its importance is underpinned by recent research by NIQ with consultancy McKinsey, which found a clear link between sustainability messaging on-pack and sales returns. And while it can be challenging (or downright impossible) to tell your whole ESG story on-pack, tools like QR codes make it easier to quickly deliver rich stories to consumers hungry for more information.
Your website is another valuable asset, but location is key. Instead of requiring people to dig, put your actions front and center so they are easy to find.
Another consideration is your channel mix. Different consumer groups consume various media. For example, Gen Z and Millennials are significantly more likely to source ESG information from social media than older generations. Social media is a crucial source of news and media discovery for these younger cohorts. Interestingly, Gen Z consumers are less likely than other age groups to look for ESG information on product packaging.
On the other hand, Boomers are less likely to seek ESG information on social media and instead prefer more traditional news outlets. Whatever your channel mix, ensure you leverage your ‘owned’ assets to tell your sustainability story and use marketing campaigns to broaden your reach beyond your current fans.
By understanding where your target market gets their ESG information, you can strategically showcase your efforts in the places and formats that resonate most with them. This will help save marketing dollars and ensure you connect with the right people in a more meaningful way.
6. Test before you invest
It is always prudent to validate a new idea before you launch it to ensure the investment will deliver the desired returns. The same applies to new ESG programs and marketing activities. A small investment in upfront research will provide confidence and reduce risk. New programs should be tested with all key stakeholders to ensure they align with demands, while communications should be optimized to ensure they cut through the noise and deliver the intended message.
7. Avoid the (measurement) gap
Whatever your ESG strategy, it is critical to put systematic, regular measurements in place to monitor progress against your identified goals. Most businesses do this by aligning reporting with the United Nations Sustainable Development Goals and using standard reporting guidelines like GRI. However, a significant measurement gap often exists in assessing consumer response to corporate and brand ESG activity.
Since consumers vote for brands with their wallets, failing to measure how consumers feel about your ESG performance could mean leaving money on the table. Without it, you won’t know how well your efforts are understood and appreciated by consumers, you can’t optimize your programs and marketing activities to align with their priorities, and you won’t see the magnitude of risk or opportunity driven by switching behavior.
The growing trend of businesses investing in ESG is a promising step towards creating a more sustainable world for ourselves and future generations. To continue the momentum, it is critical to focus on effectively communicating progress, transparently and authentically, while also measuring the impact those messages are having on stakeholders. In doing so, businesses can reap the commercial rewards of their efforts and encourage others to join in on building a better world for all.