ESG
What can an ESG communications strategy do for your organization?
The term ESG has been getting lots of press recently. Shelton Group has regularly been asked about ESG and what it can mean for sustainability and business. Here we’ll address the basics of ESG and why your organization needs an ESG communications strategy.
What is ESG?
In its most basic form, ESG is a grading framework originally used by investors to systematically evaluate the environmental, social and governance (ESG) risk represented in each of the largest publicly traded companies. More recently, ESG has evolved to be a guiding business philosophy and strategy for companies to manage increasingly important stakeholder values and company performance on issues from diversity and inclusion to environmental impact.
Here are the areas companies need to consider and incorporate into both their commitments and communications efforts:
Environment. This starts at the corporate/operations level:
- What are your company’s environmental impacts (energy use/GHG emissions, water use and waste)?
- What goals/policies/procedures has your company put in place to manage and reduce those impacts?
- What risks or opportunities do those impacts represent to your company?
Environmental performance extends to products as well:
- Are your products being designed with minimal environmental impact in mind?
- What are your products being made from – what materials are being used and where are they sourced from?
- What happens to your products at the end of their useful life – can they be recycled, refurbished, taken back and put to some other use?
- What are the environmental impacts related to both the creation and end of life of your products?
Society. It’s easiest to think of this from the inside out:
- Corporate initiatives – what are your commitments and track record around diversity & inclusion, freedom of association, work-life balance, paying a living wage and equal pay, human rights, talent attraction & retention, and training & development?
- Community and philanthropy – how do you support the communities where you operate, what organizations do you donate to, how is your financial support aligned with your overall support of the UN’s Sustainable Development Goals (SDGs), and how are you tracking your impact?
- Supply chain – what social and environmental standards do you mandate for suppliers and hold them accountable to? How are you auditing them? Are any of your materials being sourced from controversial sources?
- Safety – what recalls or crises have you had and what’s your approach to managing these? What ongoing testing are you doing to ensure your products and services are safe for your workers as they create them and your customers/consumers as they use them?
Governance. This starts with understanding the material issues for your organization as it relates to people and the planet and extends to how those issues are being managed at the highest levels of your company. Governance is also about how your company is ethically managed, including:
- Requirements of your board and executive team (as well as compensation)
- How your shares are structured
- What policies you work to influence and political contributions you make
- How you manage privacy issues and protections – IT security, compliance procedures, protection for whistleblowers
- Responsible marketing practices
Why does ESG
matter?
You can think of it as a framework that brings a triple-bottom line approach or stakeholder capitalism approach to life. ESG should never be seen as a compliance exercise. It’s a business strategy. An insurance policy for business resiliency. And as our friend Joel Makower so eloquently put it: it’s a proxy for good management. That makes it a short cut for investors – whether that be fund managers on Wall Street or any source of capital, from venture capitalists to private equity – to know your company is a good bet. It’s also what the market expects.
As part of our ongoing polling of Americans we’ve pointed out the trends: Americans want to align themselves with good companies, as they buy products and choose where to work. That’s even more true as of 2020, as we reckon with all the social and environmental disparities laid bare by COVID-19, the economic collapse, and the painfully perpetual inequities of race in America.
Of course, you can’t have an ESG communications strategy without actually adopting ESG as a framework for how you’ll run your organization. You must commit to higher standards across the board, measure your impact on people and the planet, identify the gaps and opportunities, set goals and manage workplans to achieve them. And the goals should be meaningful.
You should also work to align your sustainability and social responsibility under one tent/reporting structure. In the past, “sustainability” has meant “environmental sustainability” and was about doing less bad – reducing environmental impact, staying in compliance with laws, not getting in trouble with stakeholders and being seen as a bad actor.
Meanwhile, “corporate social responsibility (CSR)” has been about doing good things – giving back to communities, supporting causes, creating events to engage employees in efforts for the greater good. Sometimes CSR included diversity and inclusion initiatives and sensitivity training, sometimes not. The ESG framework formalizes all that and gives your organization the opportunity to align and put yourself forward as a Good Company.
- Identify your environmental impacts (Scope 1, 2 and 3 GHG emissions) and supply chain impacts
- Identify what matters most to your stakeholders
- Commit to rigorous impact goals with real investments/skin in the game (i.e. , paying a living wage, net positive environmental impacts)
- Commit to a bold overarching environmental or social purpose that you can be known for and that aligns with stakeholder care-abouts
- Bake your ESG commitments into your systems and process, aligned with your systems and process, aligned with your goals and bold commitment
- Develop a memorable rallying cry and communications platform
- Bring to life with your key stakeholders via ongoing content and communications
- Populate existing communications streams with sustainability content
- In some cases, create new communications streams (when you have a sustainability related issue to overcome or position to advocate for) and stand-alone content you can build from (like a CSR report)
- 1. Commit to a bold environmental or social purpose that aligns with your brand and material impacts that you can be known for
- 2. Develop a memorable communications platform: Listen – Analyze – Create – Implement
- 3. Align the platform with your brand look and feel
- 4. Bring it to life with your key stakeholders
We can help you understand the ESG world – what commitments are we talking about, exactly? What needs to be measured? What needs to be documented and incorporated into your policies and operations?
We can also help you deeply understand your market opportunities and threats related to ESG – what’s perceived and expected of your company and your brands? That work informs important business decisions at the strategic, forward-looking level.
Once those decisions are made, then we craft the communications strategy and the overarching story. Here’s how it all comes together:
