As corporations around the world face mounting pressure to address and reduce greenhouse gas emissions, ESG (Environmental, Social, and Governance) measures and standards remain as one of the few ways they can report on their performance.
But measuring is one thing, while the other is communicating efforts towards ESG measures clearly and publicly to consumers and stakeholders. Palladium partner SEC Newgate recently published their second annual Global ESG Monitor, which was designed to understand community awareness and perceptions around ESG issues, including the extent to which it influences purchases and use of services, perceived performance of governments and companies on ESG, and attitudes and activism.
The report pulls together data from surveys of over 12,000 individuals across 12 countries and territories and finds that although consumers are concerned about ESG-related issues and are keen for companies to act more responsibly, they are “highly conscious about the rising cost of living and the potential impacts of ESG improvements on their own pocket.”
Meanwhile, despite the environment being listed as the most important pillar for companies to focus on, awareness of the term ‘net zero’ is extremely limited, with fewer than 1 in 5 claiming that they understand the term. Most of those surveyed note that it’s important for companies to act on ESG issues, but they also feel uninformed about those activities and performance.
What does all this mean for companies? The report notes that while organisations should continue on their path to sustainability and continue telling their stakeholders about it, they should be careful about how they communicate it, noting that many of the current buzzwords are still considered to be technical terms.
“Transparency is key, but so is language,” says Palladium Head of Communications Elizabeth Godo. “ESG reporting can be opaque, and companies are missing an opportunity to differentiate themselves – including motivating their staff, inspiring their customers, and raising the bar for their competition – if they aren’t talking about their ESG work in a way normal people can understand.”
Even though corporate action on ESG wasn’t listed as the most important issue for those surveyed currently, it isn’t just a nice-to-have; there’s an expectation that companies will continue to move the needle on sustainability. Most critically, 78% of those surveyed say that companies have a responsibility to behave like a good citizen and 62% believe companies should be penalised for lack of action on key ESG issues.
At the same time, nearly half of the respondents said that there are bigger issues than ESG to worry about in the world right now. ”We live in troubled times with a global energy crisis and cost of living crisis so it is perhaps unsurprising that this is the big focus for consumers,” explains Andrew Adie, SEC Newgate UK Head of Green and Good. “But people still care deeply about the environment and 78% of those we polled said they believe corporates have a responsibility to behave like good citizens.”
“That tells us that even today, when faced with numerous challenges and worries, the public still expect business to show leadership on ESG,” he adds. “Yet the research also shows that less than one in 10 trust what companies claim about their ESG performance. The key is to show a clear mission, to have measurable and transparent milestones for delivery of that ambition and to demonstrate impact for the environmental, social and governance goals that the organisation sets itself.”
The report notes that there’s a massive opportunity for organisations to not just clearly communicate their own efforts around ESG, but to help educate consumers and the public on what it means, why it’s important, and how it already and will continue to affect their lives. “Given most consumers are not currently actively looking for this information coupled with a perceived lack of information, there is a clear opportunity for companies to promote what they are doing in this space and gain leadership status in helping to improve overall perceptions not just for themselves but also the corporate sector more broadly.”
Despite the economic and geopolitical turbulence of the last year, people around the world still expect to see companies take action on ESG issues and they want to hear about that action. Corporations should expect that their consumers and stakeholders will continue to care about how they’re contributing to a more sustainable future, but as the report notes, these larger global issues like COVID-19 and costs of living have shifted many people’s perspectives.
And while the priority is still a more sustainable future for all, organisations should expect to take on the burden of ESG costs themselves rather than their consumers.
Read the report or contact firstname.lastname@example.org for more information.