Communicating ESG action in a way which connects with customers and shareholders is more important than ever
By Simon Turner
Let’s consider three pieces of data and try to make sense of them:
68% of US CEOs admitted that their companies are guilty of greenwashing
80% of CEOs rated their firms above average on environmental sustainability
74% of CEOs were hopeful sustainability can drive business transformations
With more consumers and shareholders aware of the extent of greenwashing across the corporate world, the need for effective ESG communication has never been higher. In particular, there’s been a marked shift away from the acceptance of vague or misleading ESG and sustainability claims. In the face of these market developments, the art of communicating corporate ESG action to customers and shareholders opens powerful opportunities to build competitive advantage. Let’s consider how.
Greenwashing and its younger cousin, Greenblushing
Let’s start by highlighting what’s not working.
As many people have become aware, greenwashing is the practice of companies presenting themselves as more environmentally progressive and sustainable than they actually are in order to curry favour with shareholders and customers alike. The term originated when environmentalist Jay Westerveld claimed a hotel was encouraging customers to reuse their towels to help protect the environment when they were really just cutting costs to improve their profitability. Recent studies highlight how widespread the greenwashing epidemic has become. So it’s a significant problem, arguably the main barrier to a successful ESG communication strategy.
Unfortunately, misleading ESG communication doesn’t stop at greenwashing. As consumers and shareholders are increasingly reacting against greenwashing, some companies are going in the other direction by understating or not communicating their environmental actions. This reticence to communicate has come to be known as greenblushing and, like its older cousin, it’s a significant barrier to effective ESG communication.
Why communicate your ESG actions
As a starting point to mastering the art of ESG communication, it’s worth considering why exactly your company is communicating your ESG actions to shareholders and customers in the first place. Clearly, the main reason most companies aim to communicate their ESG actions is to help win more business with customers, or to enhance their market value in the financial markets.
However, it’s important to understand that this is a two-way street. Many shareholders are demanding more accurate and detailed ESG information because it helps them make better investment decisions aligned with their financial and ESG goals. Many customers are also calling for more accurate and detailed sustainability information because they want to buy products which align with their personal values.
At its heart, ESG communication is about matching companies, products, and services with customers and investors who value sustainability. That generally translates into better financial outcomes, which explains why so many companies feel pressure to greenwash. But stakeholders want to feel they are being educated about a company’s ESG journey, not being subjected to marketing in disguise.
It’s also important that all ESG and sustainability claims are relevant and traceable, including clear statistics along with third party certifications and links. In other words, supporting evidence is necessary in all cases. Gone are the days when it was acceptable for companies to skew ESG information to present themselves in a more positive light divorced from, or exaggerating, reality.
Connecting with the power of story
Presenting a company’s ESG journey in a clear and factual way is a key part of a successful ESG communication strategy. But we all know that facts by themselves can be boring and hard to connect with. For many, sustainability is an emotive subject inextricably connected with the future of the planet and our communal lives on it.
As a result, the final part of a leading ESG communication strategy is to interweave ESG facts and data with real stories. These stories provide the all-important connection and context for customers and shareholders to a company’s ESG journey. For sure, interweaving stories without crossing the line into making ESG communication seem a blatant marketing strategy is a delicate balancing act. The key is to tell fact-based stories which showcase a company’s values and thus back up their ESG actions, rather than stories which come across as sales pitches. For example, a story about the installation of solar panels on a company’s manufacturing facilities is likely to make that ESG action more real for customers and stakeholders. On the other hand, a claim about how the company has become a sustainability leader because of its solar energy usage may be seen as an exaggeration, and thus greenwashing.
Better business outcomes are the goal
So the bottom line is: don’t blush and don’t bluff. The art of ESG communication comes down to a company’s ability to present their ESG information and journey in a factual way which connects emotionally and rationally with customers and stakeholders by showcasing real, human, values-driven stories. The upside of developing a well-balanced ESG communication strategy is the translation of positive ESG actions into stronger business outcomes deriving from improved ESG performance. But the wrong communication strategy could prove counter-productive, so developing and fine-tuning your ESG communication strategy while making sure to tell only positive yet authentic stories becomes a high priority.
At Global Imprint, we’re here to help you make sense of the ever-evolving ESG landscape. Reach out to our team to set up an introductory call or complete our ESG Readiness Survey to get your ESG baseline.