What should we call this thing we do?
Shelton Stat of the Week
58% of Americans say they understand the term “sustainable.”
— Eco Pulse®, 2022
On September 29, CNBC ran an article with results from a survey they conducted with CFOs. These were the “key points” at the top of the article:
- Top corporations have embraced ESG publicly as core to their shareholder and stakeholder policies, but behind the scenes, executives exhibit less support for the rising influence of the investing philosophy.
- Only 25% of CFOs surveyed by CNBC say they support the Securities and Exchange Commission’s climate disclosure proposal.
- Meanwhile, CFOs are more likely than not to say they support the moves by Texas and Florida to ban pension funds from investing based on ESG factors.
While it can look like the backlash is political – as noted above, several Republican governors have gone so far as to ban ESG investing in state pension funds – it’s not just elected officials pushing back, as the CNBC article affirms. In the past couple of months, we’ve heard things like this from some of our clients: “the next time you talk to our executives, let’s not call all of this ESG…it’s just such a hot-button term.”
So, there’s this growing sentiment that if we call it something different, we can extinguish the animus that accompanies it. Maybe that helps us get part of the way towards taking ESG out of the “woke” bucket, but probably not all the way. Rebranding can help create a bit of a mental shift when common words become uncomfortable or feel divisive; for instance, changing “global warming” to the more accurate, inclusive and hard to deny phrase “climate change.” But people catch on, and it rarely eliminates hostility entirely. And that’s because there are complex systems in place that deeply shape people and their perspectives, whether cultural, political, religious, familial, academic, or all of the above. And just changing words isn’t always enough to change minds.
The reality is two-fold:
- Many executives running large companies had a Gordon Gekko/Milton Friedman mental model impressed upon them in business school, and it’s tough to rethink that, especially when rethinking it means making investments in actions that don’t immediately make money. And, indeed, Wall Street is NOT saying, “We’ll keep investing in your company as long as you’re socially and environmentally responsible; we don’t really care if you make money.” No, investors want the whole triple bottom line, and achieving it is really hard and really scary. We have decades of precedent for what works to drive profits; we’re all still figuring out how to lead with purpose and make money at it.
- That said, the idea of expecting companies to conform to a framework that measures performance related to treatment of people, the planet and corporate governance is here to stay. We’ve reached the tipping point where most of us don’t want to invest in, work for or buy from companies that are obviously not treating people or the planet right. Investors – and consumers and employees – expect companies to live by the Golden Rule AND measure and manage it on a consistent basis.
So that gets us back to the question: “what do we call this thing?” Here’s our current POV:
- If yours is a publicly traded company, you should have an ESG program and publish an ESG report. You can’t say you have it if you don’t, but that’s where you should be heading. And you should have actions and words that demonstrate performance, forward motion and results in the areas indicated in the chart below from our colleagues at ERM. Until you have your full house in order you can call it sustainability…but one person’s “sustainability” is different than the next person’s. For some “sustainability” connotes environment only; for others it means people and planet. So, if you’re going to use “sustainability,” be clear what you mean by it.
- If yours is a privately held company, you have a lot more leeway. You’re not being measured by the ratings companies and Wall Street isn’t holding you to a standard and expecting to see your framework (though your customers might be). You can refer to what you’re doing as Citizenship, Corporate Responsibility (though we think the “R word” subtly says you’re doing this because you have to) or simply Impact.
- When you’re talking to consumers – and even employees or your executive team – the words that are least politicized, that least connote “expensive” and are most understood are actually, “eco-friendly,” “green” and “sustainable.” See the two charts below for a glimpse into what “plays,” and stay tuned for our latest edition of Buzz on Buzzwords, out in February.
BlackRock’s proxy votes reveal a nuanced stance
— Pensions & Investments
BlackRock has been an early ESG adopter, often pushing the investment industry towards more ESG adoption. With controversy over ESG on the rise, BlackRock has also come under fire. This Pensions & Investments explores the recent BlackRock proxy vote and what it means for the investment firm.
What the midterm results mean for ESG investing
— E & E News
As the political controversy over ESG grows, the midterm results play an important role in determining the US’s ESG strategy going forward. This E & E News article discusses how much control politicians have over financial institutions’ ESG strategy.
What Is Home? – Why security is joining comfort as one of the strongest drivers for home upgrades
It’s even affected how we think about safety and security! (Hint: it’s not primarily about security systems.) Businesses in the residential building sector that don’t understand these changes risk losing touch with their key audiences.
Our latest free report explores the new intersection of comfort, safety and health at home — and the implications for your brand’s messaging strategy.
Don’t miss this opportunity to deepen your emotional connection with consumers. After all, “home is where the heart is.”
Corporate Sustainability, Energy & Environmental Marketing