ESG is much more than a mere PR exercise, but communicators have a key role to play.
ESG has become the gold standard of business leadership, especially for public corporations.
In a December 2020 global study, 88% of global public firms, 79% of venture and private equity-backed enterprises, and 67% of privately owned organizations have ESG activities.
Unlike the “corporate social responsibility” concept, ESG allows corporations to record their environmental, social, and governance impacts.
Hong Kong requires publicly traded corporations to report ESG. Does ESG only apply to public companies? Is ESG reporting enough to communicate companies’ ESG objectives to a diverse stakeholder community?
1. ESG storytelling is relevant to companies of any size
As customers become more environmentally conscious, the proper ESG story delivers brand relevance and marketability. CGS found that two-thirds of buyers would pay 25% more for green items.
According to Cone Communications, 92% of consumers have a strong opinion of a company and 88% have brand loyalty, indicating improved marketability.
ESG-valued organizations are more likely to attract and retain top personnel. Mercer’s 2020 Global Talent Trends report found that one in three employees choose a company that values all stakeholders.
ESG storytelling connects corporates, consumers, and employees emotionally by demonstrating the company’s values that correspond with stakeholders’ ethical consumption ideals and its long-term commitment to creating value for them.
2. ESG is more than just a label
Broadridge Financial Solutions predicts that ESG assets might reach $30 trillion by 2030 as ESG investment grows worldwide. Given the ESG space’s hot money, concerns are increasing about businesses using the label to attract investors. The non-profit InfluenceMap cautioned that over half of ESG-labeled investment vehicles exaggerated.
ESG reporting typically uses industry-specific terminology and technical data that stakeholders cannot understand. Technical data from specialists is sometimes misconstrued and useless unwittingly. In an Asian Financial Forum 2022 study, one-third of respondents named unclear ESG norms the biggest obstacle to ESG decision-making.
ESG storytelling may explain ESG objectives across disciplines. Many ways exist to tell ESG stories. Even lofty goals like sustainable development can be debated and researched in a simple multiplayer card game, the 2030 SDGs Game.
ESG storytelling is similar to business storytelling. Communicators can integrate ESG elements into corporate narrative, be honest about organizations’ ESG practices, and truly explain their company operations’ ESG impacts.
3. A price to pay without authentic ESG storytelling
Successful ESG activities can help companies retain a positive public image, but greenwashing can hurt.
BNY Mellon was fined $1.5 million for misleading ESG investing information. According to a media report, JBS, a Brazilian meatpacking corporation, could lose significant consumers and investment capital after being exposed for producing more carbon emissions than ESG activities.
Companies that failed to implement ESG practices faced public criticism and PR issues. In 2017, Cone Communications reported that roughly 80% of customers would stop buying from companies that violated their values. Huge financial losses may result.
ESG storytelling clarifies consumer concerns. According to the same Cone Communications report, companies can resolve greenwashing suspicions, maintain corporate integrity, and gain the trust of almost 90% of consumers by providing a precise, specific, and detailed account of their ESG responses supported by statistical data and tangible evidence.
ESG is more than just PR, but communicators must create a narrative that brings companies’ ESG initiatives to life, creates emotional bonding with stakeholders based on values, and prevents brand-killing issues and crises.
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Tran Dung/Ates Global
Source: Entrepreneur
