The ESG journey has taken many turns over the last year, from a nice-to-have to a corporate strategy influencer to a political hot-button issue. Despite a growing number of bills restricting ESG business practices – there are currently at least 99 bills being discussed within Congress – up from 39 in 2022, many leaders still view ESG goals and reporting as a priority for their organization. Therefore, it’s imperative that organizations - especially those in tech - understand how to tell an authentic ESG story. Let’s dive in.
ESG stands for environmental, social, and governance. According to Deloitte, these 3 pillars are the main topic areas that companies are expected to report on with respect to business practices and performance on sustainability and ethical issues. The main goal is to identify and measure business risks and opportunities in the company's day-to-day activities in those areas. Some investors also evaluate a company’s ESG and factor them into their financial analysis to inform their investment plans.
ESG principles or frameworks play an important role in understanding and measuring how sustainably an organization is operating. More specifically, think of ESG in the following ways.
- E - Environmental factors: Outlines a company’s impact on the environment and how environmental issues like climate change or natural resources can impact the business
- S - Social factors: Shows how a business views and treats different groups of people, including business stakeholders, the community, and others
- G - Governance factors: The way in which a company manages and governs itself with regard to internal processes and policies
Why is ESG a priority for your organization
If your organization is considering making ESG a priority, make sure that you can clearly articulate why it is a priority. Typically, we find there are two main reasons why ESG is important to a company: appeasing stakeholders like customers, partners or employees, or as a part of a larger corporate strategy that supports business growth. If it’s just to appease a group of people, this blog is not for you. But if your company sees ESG as a key component of its growth strategy, your approach to ESG requires a strategic and clear communications framework to avoid being seen as a green washer – deliberately providing misinformation about the impact a company or product has on the environment.
The do’s and don’ts of ESG storytelling
Now that we have established what ESG is and why it’s a priority, it’s important to understand how best to communicate your ESG story. To tell an authentic ESG story, focus on the why, and have data and documented strategies to back up your claims. This will speak to your authenticity. Here are our tips:
Define your purpose
- Create ESG goals that inform your business strategy and tie back to your priorities and bottom line
- Build a plan that considers the impact on people – including your employees (recruiting and retaining) and local and global communities.
- Think about who are your stakeholders and what do you want each group to get from your communications. Make sure that you are open to listening and responding to feedback from those shareholders.
- Clearly articulate what your desired outcome is.
Leverage the power of data to track and show progress.
- Be ready to show where the data is coming from. Reporting data, whether internal or external, needs to have a backbone.
- Select the right metrics and ensure you can account for every figure.
Show authentic commitment to change.
- Engage your executive team. Commitment needs to be demonstrated from the top down, from hiring decisions to greenhouse emission reduction initiatives in your operations.
- Define what your company will do to meaningfully contribute to ESG and create value.
Empower your vendors to be part of the change .
- Examine your vendors and suppliers to ensure they are aligned with your ESG priorities and find out if they have their own ESG initiatives.?
- Use their ESG data points to help track and show your own progress.
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Let’s take a look at two examples of ESG storytelling - one organization got it right, while the other missed the mark with disastrous consequences.
American Express announced an ESG framework in 2020 centered on three core pillars: Promote Diversity, Equity, and Inclusion (DE&I), Advance Climate Solutions and Build Financial Confidence. In its 2021-2022 ESG Report, American Express detailed its progress towards those goals, highlighting a $1 billion spend towards advancing diversity, equity, and inclusion, its $150 million investment in developing facilities that meet green building certification, providing $265 million in community development loans and investments, as well as $17 million in grant money to support small businesses.
“Since announcing our ESG framework in 2020, we have solidified our strategy by developing a clear roadmap to translate our objectives into action and have been rapidly executing on our priorities,” said Stephen J. Squeri, Chairman and Chief Executive Officer. “I am exceptionally proud of what we have achieved to date on our ESG strategy, thanks to the dedication of our colleagues around the world who bring our company’s purpose to life. We will continue to build on our momentum to back our colleagues, customers, and communities and make a positive impact in people’s lives.”
On the other hand, some have argued that Silicon Valley Bank’s (SVB) downfall can be traced to a key failure in ESG – governance. In particular, during SVBs growth period, it did not adequately manage its own risk management procedures and lacked internal controls. While there were many factors to the problems SVB faced, being without a chief risk officer for 8 months certainly didn’t help. Even with repeated warnings from federal regulators regarding the state of their risk control, they failed to manage their interest rate risk.
According to Paul Washington, executive director of the Conference Board ESG Center, “Most corporate failures, whether it was Enron or Lehman Brothers or now Silicon Valley Bank, were in fact governance failures.
Weaving "ESG" initiatives into your brand story
There is so much information that can make this process feel very overwhelming. But the tips discussed above provide guidance on the areas to focus on to ensure you are bringing an authentic voice when crafting your ESG story. To get started, gather the right people from across your organization to make sure that you have full representation from each business unit.
Then, perform a company audit that brings together information from all areas of the business. It’s at this step that many organizations bring in a communications partner like Highwire to support the analysis and make sure that you are highlighting the right narratives to tie your ESG vision back to the business.
By starting with the business strategy and then making actual commitments that focus on real metrics that you can quantify, your organization will be well on its way to establishing authentic ESG narratives.
Storytelling is an art, and that's where Highwire shines.
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