Businesses talking about Environmental, Social and Governance (ESG) is a lot like teenagers talking about sex. There’s a lot of talk about it, you think that everyone is doing it better than you; and unless you want to be judged on your performance, it’s better to keep schtum.
However, peer pressure is not limited to teenagers.
Businesses are under mounting pressure to define their ESG strategy when seeking investment. ESG has become a key factor in investment management companies’ decision-making. A defined ESG strategy could be the differentiating factor between you and the competition receiving investment.
In fact, the number of retail and institutional investors that apply ESG principles to at least a quarter of their portfolios jumped from 48 percent in 2017 to 75 percent in 2019, according to BNP Paribas, “The ESG Global Survey 2019,” 2019. That’s a significant incentive to create your own ESG strategy.
So what is ESG and why does it matter? ESG can often be mistaken for sustainability. However, there is a strong distinction between the two. While sustainability is a catch-all term that more often than not refers to ‘green’ initiatives. ESG is more nuanced, having become the preferred term for capital markets.
ESG has taken many forms in recent history, one of which includes the well known ‘triple bottom line’ principle. Business writer John Elkington created the three-tiered framework in 1994 to evaluate a business’s performance. Elkington’s framework evaluated a business’ performance across the three Ps: People, Planet and Profit.
The business’ impact on internal and external stakeholders. This ranges from employees and clients through to suppliers and other stakeholders impacted by the work of the business.
This speaks specifically to the environmental impact of the business. It covers everything from the carbon footprint of the business through to environmental initiatives.
What is the business’ impact on the local, national and, where applicable, global economy? This spans everything from job creation through to taxation.
Patagonia and Netflix are companies often hailed for their ESG strategies. Netflix, for its now famous culture powerpoint presentation, which laid out such groundbreaking concepts as unlimited vacation days — written by Netflix CEO Reed Hastings and then Chief Talent Officer Sheryl Sandberg. And Patagonia for its devout commitment to transparency across its supply chain and diminishing its environmental footprint.
ESG can and should be applied to the B2B space. However, there is often a hesitancy to shout about your ESG strategy — that is if you have one at all. I see it regularly in my work with clients. A knee-jerk reaction to avoid talking about sustainable topics for fear of being shot down for non-compliance.
What’s often forgotten in these instances is that no one is one-hundred percent there. ESG is an iterative process.
We advise our clients to undergo a review of their business before communicating their ESG strategy to the market. It means that all stakeholders are on the same page and communicating the same message. It also removes any hesitation our clients have about putting out an inconsistent message.
i) Understand how your company performs across the three pillars of people, planet and profit.
ii) Benchmark performance against other businesses in sector
iii) Align messaging to company values / ESG strategy (messaging + doing = alignment)
iv) Make sure messaging aligns to customer experience — transparency leads to better customer experience.
The results of this process, set the tone for how comfortably you can talk about ESG issues. More often than not if you’ve never undergone this process, you are likely to have a disconnect between what the company is doing and what it is saying. It’s, therefore, important to involve employees in this process. Their buy-in is essential. You can’t have your CEO saying one thing and marketing saying another (and employees saying something else).
Most importantly, make sure that your sustainability mission aligns to customer experience. Customers can be unforgiving if they feel they see a company doing one thing and saying another. In the age of social media, the message can spread quickly and widely. It is important for the business to own the narrative — whether good or bad.
We recently worked with a client on an ESG-centred campaign. At the heart of the project, sat a detailed piece of research, investigating the sustainability of their industry through three dimensions: people, planet and profit. We held a webinar for each. The webinars sat alongside an interactive tool that allowed users to benchmark themselves against the report’s findings. The three-pronged campaign covered off the stats, the context and where the prospect sat in the mix.
Through the project, the client created an open forum to discuss the issues facing multiple industries regarding ESG. Most importantly, they didn’t shy away from discussing areas in which their business is still learning — transparency being an attribute customers value highly. By addressing the issues directly, they were able to reframe the narrative around ESG for many sectors and were able to start owning it themselves.
Businesses need to get comfortable with shining a light on sustainability without feeling pressure to be perfect themselves.
It’s easy to lose sight of the reason sustainability is important to business success. It’s about the long-term sustainability of the business — reconciling profit and purpose.
If this means talking about difficult issues and being judged on your ‘performance’, then it’s a shrewd move and one more businesses should be willing to make.
Want to find out more about how to own your ESG narrative? Call us on 020 3877 3800 or email us at contact@alan-agency.com to speak to one of our specialists about how we can help you build a content strategy aligned to your business goals.
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