Communicating ESG – The gap in the market

Pressures on companies to behave ethically have gained a powerful momentum in the 21st Century.

Such considerations have been at issue for a long time: they drove the Victorian factory reforms, while Prime Minister Thatcher put environmental concerns firmly in the public arena with her famous speeches to the Royal Society and United Nations in the 1980s.

But Environmental Social and Governance (ESG) principles are now widely integrated into the processes of investors and the prevalence of the Internet/social media has multiplied the reputational risks of any companies’ unethical or irresponsible transgressions.

Press coverage of companies’ poor corporate practices in recent memory range in magnitude and breadth from the global stories of Volkswagen cheating in its emission tests and the ecological disaster resulting from BP’s Deepwater Horizon oil spill to more micro cases such as the woman who was sent home from her job as a temporary receptionist for refusing to wear high heels.

These are specific crises, of course, but given the onus now placed on companies to project a public image of fairness, transparency and responsibility, we were surprised by the findings of a research project we conducted in association with The Better Society Awards and Opinium* that revealed UK companies have been remarkably remiss in communicating their efforts with regards to ESG.

More than half (53%) of the respondents in our survey say their companies do not publicise anything about their ESG behaviour at all, while over a quarter (27%) say they have no idea whether their company is planning to improve its approach to ESG issues.

It is imperative that a company now incorporates ESG considerations into its overall strategy and explains clearly to its key stakeholders where and why such principles are relevant to its activities. Companies need to articulate their ESG goals and the key performance indicators (KPIs) they will use to measure success in meeting them. Such KPIs could and do include diversity/gender mixes in staff; reductions in work-related accidents; levels of carbon emissions; employee satisfaction and turnover; donations to charity; community sponsorships and involvement; and industry awards.

But our research shows that only a minority of UK workers believe their companies are communicating anything in relation to their ESG activities. The most popular format for doing so is internal communications, but only one in five (21%) of our respondents mentioned this was taking place. Other tactics mentioned include: annual reports (17%); press releases (11%); sponsorships (10%); and advertising (9%).

Yet transparency is high on people’s priorities. It is the area that most people believe has an important impact on their company’s reputation, with 54% of respondents expressing this view. In terms of to whom this transparency should be directed, there are some clues in our survey results regarding stakeholder priorities: most of our respondents (81%) see reputation among clients and potential clients as important, followed by the public (75%) and employees/potential employees (67%). Shareholders are quite low on the list of workers’ priorities, being cited by just 43%, although this figure does rise significantly the higher the seniority of respondents. For example, 100% of chairmen and 73% of chief executives rank shareholders as ‘important’ or ‘very important’.

Rather than being forced to conform to acceptable ESG standards, companies should recognise that embracing them is very much in their own interests. They should be communicating their activities and achievements to key stakeholders.

To achieve this, they should put in place communications programmes that might include the following:

  • Appoint a broad-based staff committee with responsibility to regularly publish an ESG plan that outlines KPIs
  • Develop social media networks among key stakeholders and use these, as well as internal communications, as platforms to announce ESG-related achievements
  • Provide regular commentary topical ESG issues where they affect the sectors in which they operate
  • Conduct thought leadership initiatives worthy of mainstream media coverage. These could include research and white papers with ESG relevance
  • Develop a platform to call for change and higher ESG standards
  • Publish ESG performance data versus ESG benchmarks
  • Seek strategic alliances with thought leaders and competitors to share best practices

There are unlimited PR opportunities for companies to highlight their thought leadership and other initiatives in relation to ESG and our research shows that there is a major shortfall in such activity in the UK.

It is a common perception that ESG is somehow a costly concession to fanciful ideals. In practice, there is an endless list of benefits in terms of working in cleaner environments, motivating employees, instilling confidence in investors and securing long-term corporate trust as well as the very financial consideration of avoiding fines and loss of customers.

Using PR to both handle crises and positively promote corporate reputations is more essential than ever and transparency in this area would be welcomed by all stakeholders.

Positive Impact: How UK Businesses are meeting their ESG challenges, July 2017

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