From the smallest of businesses to the largest of corporations, sustainability and the environment have become a top-of-mind issue that can no longer be ignored. Consumers are becoming savvier about the degree to which brands embrace social and environmental responsibility, ultimately driving where they decide to spend their money.
If you haven’t been effective at investing in these efforts, or haven’t taken the time to ensure they are communicated to your clients, now is the perfect time to start. The solution? Utilizing the ESG (Environmental, Social, and Governance) performance framework to measure success and accountability. ESG is only going to continue to become more important for determining a variety of business initiatives. Here are a few mistakes companies make while examining their ESG strategy (or creating one) and how to improve.
You can read more about ESG here.
Mistake #1: Avoiding the Issue
ESG isn’t going away any time soon. There’s been an increased demand from consumers for companies to be more transparent about the way they create their products, as well as how they conduct business. Providing an ESG disclosure is incredibly important because it provides a snapshot of your business’s impact on environmental, social and corporate governance not only to customers but to investors and internal stakeholders, as well. According to a global survey by McKinsey, investment professionals indicate that they would be willing to pay about a ten percent median premium to acquire a company with a positive record for ESG over one with a negative record. The bottom line: your brand can’t afford to ignore ESG.
Mistake #2: Not Getting Internal Buy-In
To be truly effective, ESG needs to become part of your company’s culture, and it should be differentiated from your company’s mission statement and general values. Once you’ve come up with your ESG strategy, it should be communicated from the ground up. Like most initiatives, consistent communication about your efforts is key. Making your sustainability and social agenda live and breathe throughout all company efforts will ensure it remains a priority, and may actually encourage productivity if integrated properly.
Mistake #3: Greenwashing Rather Than Green Marketing
Greenwashing has become increasingly pronounced as demand for more environmentally and socially responsible practices has become more important to consumers. Essentially, greenwashing is a tactic whereby companies spend more time and money on promoting themselves as responsible than they do on actually minimizing the environmental impact of their brand. Although it may not be entirely malicious, it can harm your brand’s reputation if you can’t support your claims. Avoiding “fluffed-up” language and imagery, fabricated data, and irrelevant claims are great ways to differentiate greenwashing from green marketing.
Mistake #4: Improperly Tracking Metrics
Pursuing a proper ESG strategy can at times be confusing, as there isn’t really a standard for ESG goals. This can result in unidentifiable benchmarks, as well as no good way to measure progress. If nothing of substance is measured, there is a risk of not being able to turn words into actions. Conducting a materiality assessment as well as following the “SMART-model” when making goals are great ways to know where to focus your efforts and how to measure success. Additionally, if you are tracking the wrong metrics, you may run the risk of misleading your customers and losing their trust. Luckily, things seem to be moving in the right direction in terms of standardization of this reporting, which will eventually result in a more reliable way to see actionable and productive insights.
Mistake #5: Focusing On the Negative
Talking about concepts such as climate change can invoke serious anxiety and panic for many customers, leading to them feeling overwhelmed. Rather than relying on this tactic to “shock” consumers, it can be more beneficial to focus on the solutions to positively reinforce behaviors. Using the ESG model to educate your customers, let them know what role they play in the process, and leave them with ways they can help will certainly build trust and make them more likely to commit to supporting your long-term environmental and social goals.
The time is ripe for your brand to work toward a more sustainable future. If you’re feeling overwhelmed, you’re not alone! Our team of experts is here to help your business define and communicate your ESG strategy to your customers. Contact us for your free 1-hour consultation today.