ESG: Make it real
Updated: Sep 23, 2021
Underpin your ESG story with facts and details.
How your organisation delivers positive ESG outcomes while meeting financial expectations is having a greater impact on corporate reputation than ever before.
The E in ESG has been in the spotlight with the NZX launching indices measuring carbon emissions against revenue or investment to tap into growing investor demand for environmentally friendly stocks.
New Zealand has also become the first country in the world to introduce legislation requiring mandatory climate-risk reporting for the financial sector.
Initiatives like these are putting pressure on corporate executives and boards to showcase their environmental, social and governance (ESG) credentials.
In response, they are becoming bolder in highlighting their company’s sustainability agenda – an approach that is fraught with risk if the information being provided is fuzzy or inaccurate. Stakeholders, particularly millennials, can sniff out inauthenticity or inconsistency quickly.
ESG is a more precise measurement of performance than the broader term “sustainability” and the communication task facing companies is therefore to provide facts and details underpinning your ESG story and to demonstrate that it is not PR gloss.
A consideration when disclosing information is: what are the answers to questions that will be raised by the media and others?
For example, there is growing criticism of companies promoting their carbon zero status when they are buying cheap, possibly unverified, carbon credits overseas. Even buying New Zealand credits generated by pine plantations is under fire. There are significant biodiversity downsides from opting to plant monocultural pines that sequester carbon over short periods of time as opposed to native forests that sequester carbon over much longer periods but provide much needed habitat for endangered native plants and animals.
Sooner or later, the truth will catch up with those organisations practicing “greenwashing” in the name of profit.
Social and governance issues are also attracting attention with details being sought on the approach taken by employers to hiring minorities, using resources efficiently and appointing independent auditors and directors.
“Describe in detail what you have done to address any ESG matters from promoting and recruiting more women to highlighting fairness in board remuneration."
A suggested approach to developing an ESG public relations programme is to:
First, set objectives and paint a clear vision that articulates why ESG is critical to your organisation’s success.
Second, describe in detail what you have done to address any ESG matters from promoting and recruiting more women to highlighting fairness in board remuneration.
Third, be proactive. Look for opportunities to tell your ESG story rather than wait for the right question to be asked.
In building your ESG reputation it will be important to clearly articulate your approach to making sustainable decisions and to link ESG initiatives with business strategy that identifies risks and challenges as well as opportunities.
Embedding ESG into your story provides guidelines for company decisions about how to allocate capital and other resources. It will also make it easier to attract and retain high-quality employees and to motivate them by instilling a sense of purpose.
Young people, in particular, are more likely to support organisations whose core values, ethics, behaviours and beliefs align with their expectations on issues such as climate change, the disposal of plastic and waste, human rights and the role of women in the workplace.
Evidence suggests companies with a strong focus on positive ESG outcomes do better financially. In the face of rising sea levels, warmer temperatures, bigger storm events and ongoing species extermination, customers will increasingly vote with their purses by buying “green” products and services.
ESG criteria will continue to be a driving force for change and Axis PR can help you reach out to your external and internal stakeholders with a well-thought-out public relations programme.
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