Why ESG communications are important

Why ESG communications are important – a comprehensive guide for when your company wants to engage in the right way.

Effective communication is a linchpin for ESG engagement since it is pivotal in demonstrating organisational commitment, progress, and impact. Almost half of CEOs say they are under pressure today to explain their organisation’s ESG practices and turn this into a compelling story. 

Organisations should consider how to communicate their messages to develop a more effective ESG strategy. Getting the tone right will inspire others to get involved. Organisations can also adopt an outreach strategy for addressing feedback from investors, utilising both public relations and marketing strategy. 

Being transparent and authentic is vitally essential today since customers are wary of greenwashing. So, be upfront about the processes which need development. And as with any communication, avoid jargon.

Let’s first be clear on the core principles of ESG. These include environmental factors such as the impact of your business on the planet, carbon emissions, waste management, and resource usage. The company’s relationship with its employees, customers, and community would come under social factors. Finally, governance focuses on the internal structures that guide company decision-making.

Considering communication strategies for ESG engagement requires tailoring your messaging to different audiences. This is important since each stakeholder group will have other concerns and expectations. 

For example, when communicating to investors, it is essential to demonstrate commitment to sustainable practices through regular reporting on ESG milestones and metrics since this can build investor confidence. 

On the other hand, looking at internal communication plans and whether they incorporate this will be helpful when communicating with employees. Organisations should communicate ESG goals so that employees can clearly understand their part in achieving them since employees play an essential part in implementing ESG practices. Training programs could be initiated to improve employees’ understanding of ESG even further. 

Customers can be yet another stakeholder group to consider. Products today must align with customer values. Incorporating the concerns that customers may have about the environment, for example, can help strengthen sales and marketing messaging. Customers can be educated about your organisation’s sustainable practices through product labelling or marketing campaigns and online platforms. 

Finally, the wider community is worth considering, too. Organisations should be open to dialogue and collaboration on community projects and should address any concerns about environmental impact. This will help to build trust between the company and its community.

Challenges in ESG communication include 

• Greenwashing
• Standardised reporting frameworks… or a lack thereof. 
• Data accuracy.

There has been much debate around ESG recently, and some have taken an anti-ESG stance, particularly in the US. Despite much evidence that financial performance concerns drive ESG concerns, there has been a concerted political effort to voice opposition online. Despite all this, managing risk for businesses and investors has not changed, and ESG expectations are still crucial to stakeholders. Global regulators will likely require international companies to disclose their ESG strategy regardless of the above campaigns. Hence, expectations around ESG disclosures should increase rather than decrease in the coming years. 

When a company exaggerates its environmental or social initiatives or misrepresents them in some way to create a more favourable image, this is called greenwashing. Companies need to ensure their communications align with actual performance to combat this. Third-party certification and audits can also help with credibility in this regard.

Data accuracy is another area of prime importance when building trust. Implementing robust data collection and verification processes with technology can help. 

Standardised reporting frameworks are needed, which poses a challenge when benchmarking and comparing the ESG performance of different companies. However, industry-specific initiatives such as the Global Reporting Initiative or the Sustainability Accounting Standards Board provide guidelines, but more needs to be done in this regard. However, organisations can strive to achieve these standards to enhance comparability. 

Transparent reporting is a key area when communicating to all stakeholder groups. Companies should publish such reports regularly and provide a clear understanding of all ESG initiatives. Rather than merely measuring compliance, these reports should discuss the actual impact of ESG efforts. 

Additionally, a materiality assessment can start the process of effective reporting as it identifies and prioritises the most relevant ESG issues for your organisation. This will help ensure that your reporting focuses on the issues that are of most relevance to stakeholders along with the business itself. It can also visually represent the impact of different ESG factors. 

The identification of KPIs is another crucial part of reporting. These are quantifiable metrics by which to measure and communicate progress against goals. Regularly updating these metrics in reports demonstrates ongoing commitment. 

Technology can be harnessed to disseminate information, and organisations can leverage various tools and platforms to enhance their ESG communications strategy. Your organisation’s intranet can be central to all your ESG communications. 

For example, dashboards provide a visually appealing way to present your ESG data. This allows stakeholders to explore critical metrics and view progress over time. 

Social media is another powerful tool to utilise as it can engage a broad audience. Through this, you can provide regular updates about success stories and make content more interactive. This helps build a community around your sustainable practices. How you participate in online discussions and how you address any concerns which stakeholders have raised should be considered as part of this strategy. 

The future of ESG communication is full of exciting possibilities. Companies will likely adopt more advanced technologies like AI to analyse and communicate complex data. There will also probably be a greater emphasis on stakeholder engagement with increasing collaboration toward sustainable solutions. 

So, effective ESG communication is not merely a public relations exercise. It is a strategic imperative to address the complexity of operating in the modern business landscape. 

When it comes to communications with customers, this should be an ongoing effort throughout the customer journey. 

Organisations should consider how messaging relates to the company’s brand and ensure a consistent approach. Internal communications strategy around ESG can take a lot from your external communications strategy, so working with your marketing team on this will be necessary. 

Distributed workforces and cultural differences can initially create barriers to internal ESG communications. This is why a multichannel approach should be chosen, making your content as widely available as possible. 

When it comes to your company’s response to anti-ESG sentiments, executives should keep the long game in mind and be driven by results, not rhetoric. Companies should assess to what extent such sentiments have impacted the views of their stakeholders. Despite changes in media narratives, stakeholders seem to have been more confident in their opinions. 

In writing an effective ESG communication plan, organisations should follow an approach which considers their audience, which topics to focus on, such as energy use or travel choices, key messages to tell the audience about each topic, and timeframes for the communications to go out. These can be linked with national and international campaigns such as World Earth Day. 

As with any communication, channels should be considered with a mix of channels reaching the broadest audience, and there should be an element of two-way communication and dialogue enabled where stakeholders can pose questions and receive a response.