Savvy business leaders know that environmental, social, and governance (ESG) factors are key to understanding how a company will fair in today’s rapidly changing world.
The concept of ESG was born out of the need to evaluate businesses through a new lens, one that accounts for issues such as climate change, social inequity, resource constraints, and technological innovation.
As businesses look to attract capital, leaders need to be prepared to address their strategy through an ESG lens. In February 2021, Bloomberg Intelligence found that ESG assets may account for one-third of total assets under management globally by 2025, equal to $53 trillion. More than a niche or trend, as the world funds a green recovery, eyes will be on ESG to help assess risks.
While your company’s ESG strategy should not begin with a marketing strategy, marketers do have a key role to play. Equipped with the knowledge of the industry conversation, competitive strengths, and skillful communication, you are a valuable team member when uncovering your ESG story. Through ESG, your team will identify potential weaknesses and learn what the company is currently doing – and how it can do better – to readdress them as strategic opportunities for value creation.
In this article, I’ll focus on how to uncover your story to craft your first ESG report. Then, in future articles, I’ll expand further on developing your ESG communication strategy. To get a baseline understanding of ESG, I recommend reading ESG 101 from MSCI and becoming familiar with the Sustainability Accounting Standards Board’s (SASB) sustainability-related disclosures to start.
Secure Executive Support, Build a Diverse Team
Support from your CEO and CFO is the make or break of addressing ESG.
First, ESG touches every part of the business. You need a team of leaders with diverse and relevant expertise, and you’ll need to speak with an array of internal experts. Your CEO and CFO can open doors for you to secure both. If this initiative doesn’t come from the top, other leaders may hesitate to share sensitive information and dedicate their time.
A powerhouse ESG team would include decision-makers from Risk Management, Compliance, Research and Development (R&D), Human Resources (HR), Business Development, and Sustainability. Together, this team can access insights related to investor relations, legal, compliance, human resources, communications, marketing, operations, and C-Suite.
Second, another power an ESG lens brings is uncovering material risks to the business and providing opportunities to address them. The company can then show their stakeholders, and future investors, how they are leading their industry. With a leadership team on board, you will have a CEO who can confidently explain the issues your company is best suited to handle with a plan in place and knowledge of what needs to happen.
Companies that do not understand the value of an ESG lens or are unprepared to admit to their weaknesses and swiftly address them risk disappointing (to say it lightly) important stakeholders, and scaring off potential investors.
This INK article has five great ways to hone your skills for presenting to the C-suite.
Give Yourself Time for a Meaningful Process
ESG identification and reporting take time. Your team will need to define clear roles, review internal resources, speak with relevant stakeholders, and draft and review (and then draft and review a few more times). To set expectations, create a realistic timeline and budget right at the beginning.
For your first ESG report, timelines can range from three to nine months, depending on company size and team bandwidth. The time investment is high, but the reward for creating a meaningful strategy is even higher.
Establish Material ESG Issues and Prioritize
To make your ESG program meaningful for the long-term, you’ll want to identify the material issues and prioritize.
Determining material issues often boils down to these two questions:
1) Is it likely that this issue will impact the business significantly in terms of growth, cost, or risk?
2) Do my stakeholders expect that I act on this?
To identify your ESG priorities, begin with an array of potential ESG topics – SASB Standards are a good place to start. Then, engage with your internal experts to answer the questions above. Your customer-facing teams, including business development and customer acquisition teams, are an often-overlooked secret weapon when uncovering value drivers. They can also help you to leverage your customer expertise in how you prioritize and position ESG topics. And don’t forget: marketing knows stakeholder values and needs like no other.
Identify ESG Goals
Once your team is aware of the company’s material ESG issues, it’s time to set the goal post.
For example, a tech company, identifying that a lack of diversity is affecting its ability to retain talent, may set a goal to have women in 40% of leadership roles by 2025 to promote their development in the company. A clean energy company, identifying forced labor and global supply chain congestion as a material risk, may aim to increase the useful life of a wind turbine by 15% by 2030. For a social media company, recognizing increasing distrust and attention on content regulation may immediately create teams to deploy AI to detect deep fakes and debunked claims.
Setting ESG goals is meant to challenge your company to perform better. And remember – ESG was born out of the need to address increasingly skeptical stakeholders. Be critical and focus on meeting a handful of KPIs. Overpromising and underdelivering can do the exact opposite of what you set out to do.
Learn From Your Entire Organization
With information on value drivers, begin to peel back the layers on how your organization tackles these themes. Much like your marketing strategy, telling your ESG story is about putting all the pieces together to tell a complete sustainability story that speaks to stakeholders and differentiates you from competitors.
Having experience working in a large, multinational company, I have found that 95% of it was finding the right person to ask to solve doubts. Many keys to your ESG strategy may very well already be in place, so it is up to you to know how to source the right information from the right people at the right time. You’ll need to go from question-asker to question master.
Make the Report Tailored and Meaningful
An ESG report is your company’s chance to communicate how its sustainability strategy relates to its business goals and financial success – use it.
A renewable energy company may have a program for kids to learn about wind energy. It is great to promote how this is an excellent investment in education. It is equally important and transparent to highlight how this is an opportunity for critical community relations development in an industry that relies on local support to secure land deals.
Communicate Beyond Your ESG Report
As a person who has written a white paper or two, I’d love to feel that all of our stakeholders took value from our long-form efforts. The reality is, there is a lot of information out there, and as a communicator, you are charged with making information accessible, digestible, and contextualize for various audiences.
Use your other channels such as your blog, social media, earned and paid media to share your net-zero goals with customers and other stakeholders. Company newsletters for employees effectively communicate your DE&I and talent development initiatives and other internal communications channels.
Well-aligned and Ready to Act
Companies in the tech and energy industries have some of the highest visibility in ESG, which means high rewards for companies that get it right and increased risks for those who don’t act.
With an informed, authentic, and compelling ESG report in hand, your business will confidently march forward, well-aligned on exactly where you are headed.