#ConversationsThatMatter is a content series curated by our expert consultants and strategists to ensure brands are harnessing the power of persuasive storytelling. By dissecting the next marketing and PR catchphrases, we explore communications trends which shape conversations that can build value, inspire action, change opinion and ultimately grow reputation. As part of Volume One, which can be downloaded here, we delve in to ‘ESG’.
What is ESG?
ESG (Environmental, Social, Governance) represents a brand’s vision, core values and guides decision-making across a wide spectrum of business practices, from environmental responsibility, social issues, corporate responsibility and ethical management. ESG-led investing has grown exponentially as a result of increasing environmental concerns and the rise of socially-conscious stakeholders. The adoption of ESG as an essential element of an organisation’s strategy has grown from a voluntary act to one that is inextricable, as demand grows for ESG disclosures from official bodies and concerned stakeholders
ESG Communication Trends:
Global initiatives and annual events such as Net-Zero 2050, UN Sustainable Development Goals and the UN Climate Change Conference, boosted the ESG movement across the international community by establishing a framework of objectives to address global environmental issues.
It is estimated that to achieve the goal of limiting global warming to 1.5°C, Asia alone will have to invest at least USD66 trillion in climate investment over the course of the next three decades. As global demand for ESG is rapidly increasing, Hong Kong has stepped-up its game to make up for its shortcomings on the local ESG landscape. With ambitions of becoming Asia’s green financial hub, the Hong Kong SAR government has been actively promoting green transition.
With this in mind, corporations can and should leverage existing global, regional or even local sustainability initiatives that best align with their stakeholder’s values and business direction. They also need to emphasise their commitment to change by stating a brand’s position and goals, incorporating this into the implementation of their ESG strategy and communications programme.
The major challenges associated with green transition is a vagueness in goals and a lack of practicality in implementation. To shake away the perception of greenwashing, corporations will need to actively and constantly communicate to the public in the form of digestible content and reporting. Setting targets that are measurable and attainable as data provides credibility, shows progress and demonstrates transparency.
In recent years, various guidelines for ESG reporting have emerged to ‘standardise’ the market across industry sectors. The collaborative reporting framework constructed by the “Big 4” accounting firms provides one of the first industrial benchmarks for ESG reporting on the criteria and expectations within the broad context of Environmental, Social, and Governance.
Regulatory developments have been a key factor driving Asia’s ESG disclosure. Hong Kong and Singapore’s governments have initiated guidelines for financial industries and rated companies on climate-related and sustainability disclosures in accordance to the universal framework by Task Force on Climate-related Financial Disclosures (TCFD), establishing a standardized structure for better comparability and quality. South East Asia countries, such as Thailand, adopted the Global Reporting Initiative (GRI) reporting framework, while Malaysia has drawn up their own criteria.
Conveying the sustainability story can be challenging when a company has to take into consideration multiple stakeholder interests, while also remaining authentic and attainable under the ever-evolving sustainability regulations and frameworks.
For authenticity, the sustainability story should align with corporate culture, business strategies and vision. It is of paramount importance to know the intended stakeholders and deliver a story that resonates with them, whether that be government bodies, investors, employees or consumers. Areas of focus can be allocated into tiers of relevancy for easy comprehension, whereby the main narratives are highlighted for respective audiences in a concise manner.
Companies must also adopt a multi-channel communication strategy to promote compelling corporate narratives for greater visibility and accessibility. For example, leverage the Investor Relations website to host a dedicated ESG section, or establish a presence on social media to share real life stories and sustainable engagement showcasing authenticity and transparency. The utilisation of different channels achieves synergistic communications that simultaneously maximises the exposure of a company’s sustainability efforts.
Given the pressing urgency to tackle climate change, environmental actions have always been on the spotlight of global ESG conversations. Conversely, focus on the social elements of ESG are discussed less due to its incomparable nature and broadness in definition. The arrival of the Covid-19 pandemic spurred a stronger focus on social issues, including social inequality between wealth and poverty, gender and diversity gaps, and health and safety within the workplace. As a result, there is a growing expectation from stakeholders for businesses to demonstrate social responsibility towards their employees, supply chains and the communities they serve, through commitments on business ethics, supply chain management, diversity and inclusion, and social impact for the broader operating community.
For example, The ESG Integration Forum in the USA has put forward a proposal of requirements for human capital management disclosures, which includes company information on employee turnover, diversity and equality statistics.
Given the broad range of issues that ESG entails, recognising a strategic and long-term focus on social elements will assist businesses in generating a lasting competitive advantage through effective stakeholder engagement and establishing trust and confidence. Coupled with the growing demands for environmental preservation, investors are expected to place ESG front and centre in their corporate strategy in 2022.
The other topic explored in Volume One of #ConversationsThatMatter is the Metaverse. Click through to read the article now.