The rise of ESG: What does it mean for brand communicators?

Authored by Sukanya Chakraborty, Chief Communications Officer, VFS Global.

Investors’ and consumers’ attention has recently been focused on companies’ ESG components, making sustainable investing go beyond being just a buzzword. According to a report by Mckinsey, over one-quarter of assets under management globally are now being invested in line with the premise that environmental, social, and governance (ESG) factors can materially affect a company’s performance and value. With sustainable investing becoming mainstream, there is greater alignment between consumer, employee, and shareholder values. Having said this, there is still a long way to go before brands realise the full potential of a solid ESG strategy and how it will affect the message that it sends out to the consumers and the market. Many times, brands do not fully takeinto account ESG’ effects on economic value creation and competition, as a result, they miss out on a significant value driver.

Therefore, to successfully convey their plans and goals, companies need a comprehensive communication framework. Additionally, an effective ESG communication plan will help stakeholders better understand the long-term effects of their investments. For instance, at VFS Global we went live with the Integrated report in June, capturing the organisation’s sustainability strategy based on five distinguished pillars – Contributing to Sustainable Economic Growth, Delivering Good Governance, Nurturing our Colleagues, Protecting our Environment, and Supporting our Communities. Each of these pillars is aligned to the organisation’s business strategy, the United Nations (UN) Sustainable Development Goals, and national priorities.

How to develop an effective ESG framework

Developing a course of action for the ESG framework ought to start with understanding the target audience. In a world as vulnerable as ours, focus areas and challenges do see a change, in sync with evolving social conceptions and demographics. Therefore, to create an ESG framework, it is crucial to comprehend the value systems of the company's target market. Communication professionals must also proactively convey the organisation's ESG objectives, and the steps being taken to achieve them to help stakeholders understand the relevance of the framework for the company. The best way to do so is by determining the statistics that the target audience wants to see and establishing a framework that aligns with the company’s purpose and values. Be open to various metrics that inform your ESG story to stakeholders while also making sure they are material, comparable, and reliable.

A perfect example is the tech giant – Apple, the brand has announced in its Environmental Progress Report (2022) that 20% of all substances utilised in Apple merchandise in 2021 had been recycled. Apple has performed this by introducing licensed recycled gold into its merchandise and enhancing its efforts by using alternative materials. Similarly, Godrej has successfully increased its renewable energy portfolio to 30 per cent, achieved 37 per cent reduction in specific greenhouse gas emissions, diverted 99.5 per cent waste from landfill and reduced specific water consumption by 32 per cent.

In the past two years, the virtual world has strengthened the relationship between the target audience and their favourite brands, all thanks to influential storytelling and impactful ESG messaging. It shows how a brand can efficiently connect with its audience by combining the two.

Unique Routes for Unique strategies

Communication professionals in today’s digital age need to be aware of the plethora of channels available and adopt a multichannel approach. The secret behind successful messaging is to look at the importance of each channel individually and see if it fits with your overall communications strategy. Most brands have mixed audiences; some people still read magazines and others who prefer everything online. Hence, a multichannel communication approach can certainly deliver the company’s ESG messaging without losing out on any key stakeholders.

Additionally, brands must involve their workforce to actively participate in sustainable behaviour. For your story to be authentic, sustainability and ESG must become the purpose of any organisation. Owning the experience is one of the best ways to engage and encourage employees to develop their ESG and sustainability campaigns at their regional workplaces and collaborate on successful initiatives. A bottom-up, decentralised strategy can be very effective.

Overall, the key lesson for organisations is to not let the challenges of communicating on ESG intimidate them. Finding the topic that matters to the business and employees as well as being transparent and engaging with the outside world is essential. As we move forward, brands need to work towards moving the needle from storytelling to story doing.

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