There’s a certain paradox in how organizations need to approach ESG communications issues right now. On one hand, 2022 saw somewhat of a backlash against ESG as a concept. The notion that companies have obligations to employees, communities and the planet in addition to shareholders took a beating as economic uncertainty squeezed profits and politicians ramped up criticism. At the same time, more investors and regulators started taking companies to task from the opposite side, asserting that ESG initiatives are clever branding disguising lack of real action (the term “greenwashing” was big pertaining to climate and other environmental issues). So far, our sense of the media narrative is that this backlash isn’t going away in 2023, making it difficult for companies to unambiguously tout ESG as they once did.
But this doesn’t mean you’re now safe to simply ignore ESG itself or ESG communications either. In fact, the escalating issues around climate change, biodiversity, diversity and inclusion, employee wellbeing and other stakeholder matters will only grow in importance. So, how should your company communicate around ESG (or stakeholder capitalism, since the “ESG” label is itself more contested now) in 2023? Working as we do with both clients and reporters deeply involved with ESG, we advise the following actions around ESG communications this year:
Take a stand in your ESG communications– if you can back it up
Regardless of the anti-ESG backlash we’ve sometimes seen, the broad trend is for stakeholders to be increasingly aware of environmental and social issues and supportive of companies addressing them. That said, it’s important that your words can be backed up with actions. ESG communications need to be careful, deliberate and tailored to the initiatives you’re currently undertaking or are capable of executing. Don’t get accused of “greenwashing.”
Emphasize shareholder value in your ESG communications too
The big criticism of ESG – that it subordinates shareholder value to vague social and environmental goals – is often false. There’s a reason why investors have become increasingly vocal in demanding information on corporate sustainability and setting ESG goals for management; the risks on issues like climate change and workforce wellbeing have financial implications (not to mention the “G” in ESG, governance, which has always been considered a proper concern for shareholders). ESG communications should emphasize the impact of ESG initiatives on the bottom line, and how stakeholder and shareholder value are interrelated.
Leverage executive visibility and the news cycle in your ESG communications strategy
Don’t let your company’s ESG communications be limited to the annual sustainability report or periodic announcements about new recycling or energy-saving initiatives. Get your top executives responsible for sustainability efforts out in front of the media to discuss what your company is doing and how it makes an impact. We at Stern place a heavy premium on the importance of executive visibility in not only explaining company initiatives but in communicating company values – and this is crucial when it comes to ESG communications. Furthermore, 2023 could see important milestones in ESG, including the impending climate disclosure rule from the U.S. Securities and Exchange Commission, finalization of the rules on climate disclosure risks from the International Sustainability Accounting Standards Board, and ongoing shareholder proposals around a host of sustainability issues. Don’t miss out on a sure-to-be-big news cycle this year.
In acting on these recommendations, it’s crucial to have a communications partner that knows the intricate issues surrounding ESG, has key relationships in the relevant media landscape and is able to constantly follow the news cycle to capitalize on opportunities. Stern Strategy Group can meet all these needs as you plan your 2023 ESG communications strategy.