ESG takes business – and comms – to another level

From employees to investors to consumers, all key stakeholders expect businesses to lead on societal issues. A group of comms leaders recently convened to discuss how brands are stepping up to do so – and why it’s so important.

ESG. Three increasingly important letters to brands and their communicators because these are three increasingly important letters to consumers, investors, employees and all key stakeholders. (Photo: Getty Images)
ESG. Three increasingly important letters to brands and their communicators because these are three increasingly important letters to consumers, investors, employees and all key stakeholders. (Photo: Getty Images)

PARTICIPANTS

-Joe Cohen, chief marketing and comms officer, AXIS
-Manny Goncalves, CCO, BNY Mellon
-Bill Hughes, CCO, Pitney Bowes
-Kelly McGinnis, SVP and CCO, Levi Strauss & Co
-Torod Neptune, SVP and CCO, Medtronic
-Jim O'Leary, U.S. chief operating officer, corporate affairs practice chair, Edelman
-Bill Reihl, head of global earned media marketing, GSK
-Alan Sexton, CCO, Prudential Financial

The “trifecta of the pandemic, the social justice movement and geopolitical uncertainty” – in the words of Jim O'Leary, U.S. chief operating officer, corporate affairs practice chair at Edelman – have made it more important than ever for companies take a stand on key social issues.

The senior comms leaders who joined him at this roundtable all agreed that an increased focus on ESG (Environmental, Social and Corporate Governance) metrics represent an opportunity for marketing and communications to take their functions to the next level.

“Now is the moment for arbiters of our craft to nail our seat at the table permanently,” asserts Torod Neptune, SVP and CCO at Medtronic. “I don't think we've had many opportunities to do that in the way that the last year and a half has given us.”

He adds that there’s been a shift to “organizational leadership versus leaning in on the marketing machine.”

“Consumers and citizens are looking for leadership and the pandemic underlined the lack of faith in government,” notes Alan Sexton, CCO at Prudential Financial. “The level of trust in most large institutions dropped precipitously over the past decades. It's become evident how interconnected we are and, of course, businesses are part of that ecosystem.”

Bill Reihl, head of global earned media marketing at GSK, accentuates the point about how consumers “expect us to have a larger brand purpose and to deliver on that.”

Ahead of the game

That shift in public expectations is an opportunity for business to play a role in social change. Of course, some companies were early adopters of that function.

During the Civil War, Levi Strauss himself led a coalition of San Francisco businesses that urged establishments to close on Election Day so that people could more easily vote.

In 2018, the company started a partnership with Patagonia and PayPal that encouraged employers to give staff time off to vote. By 2020, over 2000 companies made that pledge.

“We've been doing this kind of work since the 1800s,” reports Kelly McGinnis, SVP and CCO of Levi Strauss & Co. “The stuff we do today has been part of our DNA and driven by our values for a long time.”

Whether it’s gay marriage or gun-violence prevention, McGinnis underscores the company’s belief that it has a duty to speak out on issues that are in conflict with its values. More than that, though, it has a responsibility to open the door for other companies to follow suit.

Roundtable participants were (clockwise from top left): O’Leary, Cohen, Goncalves, Hughes, Sexton, Reihl, Neptune and McGinnis.

Employees lead the way

Consumers and employees are increasingly using ESG as a differentiator for where they want to work.

“Our employees are searching for a voice at the CEO and senior-management levels,” explains Pitney Bowes CCO Bill Hughes. “It has become a requirement, not because it's in fashion. It feels like the right thing to do.”

“A younger generation is holding their employers accountable to meet certain ESG standards that align with their morals and beliefs,” adds Manny Goncalves, CCO at BNY Mellon. “And they're also holding the same level of expectation for the investments they're making. It's not just about share price or ROI anymore. It's about how this investment aligns with their core values on a personal level.”

Joe Cohen, chief marketing and comms officer at AXIS, recalls BlackRock CEO Larry Fink’s 2018 letter as a game-changer. In that famous note, Fink took the purpose conversation to another level by noting that his company was changing the thresholds for where it invested. That created a sea change in the entire investment community. Investors began to – and are now more than ever – increasingly using ESG as a filtration device for their investments.

It’s important that when deciding which issues to weigh in on, brands choose issues that make sense for their company and define a way they can contribute to change, continues Cohen. “At AXIS, we do catastrophe risk, so we've taken a stance on climate change since it impacts our business.”

Comfort with tough choices

Acting on social issues as a business is more complicated in an environment in which societal and political divisiveness is at an all-time high. When companies and leaders take a stance on issues, they risk alienating a segment of the population.

“You must be willing to lose that business,” says Goncalves. “If you're a global company, it's absolutely essential that the position you're taking is aligned with every jurisdiction in which you do business.”

McGinnis adds that Levi Strauss strives to be on the right side of history. “We hold ourselves to that standard when we make those choices and we feel very proud of what we've done.”

Companies that will win going forward are those who can make the pivot from thinking of ESG as something they need to manage to seeing it as an opportunity for competitive advantage – a business imperative alongside the moral one.

Pitney Bowes’ declaration of its intent to be carbon net neutral by 2040, for example, was driven by ESG.

“It’s given us permission to put a stake in the ground,” notes Hughes. In an effort to be transparent, he says the company will be publishing its numbers.

“We're starting to see companies leaning more towards transparency and focusing less on the downside of publishing the numbers,” observes Goncalves. “Let's face it – on any one of these ESG issues, progress is progress. If you support transparency and you are sharing your data, you're in a position of strength.”

Helping yourself by helping society

It’s also important to realize that what’s good for society is often also beneficial to business in the long-term.

“When it comes to ESG, there are huge step-up opportunities for marketing and communications functions to become more proactive externally and internally,” explains Cohen. “Beyond the moral obligation to be on the right side of history to combat climate change, we [recognized this] was good for us since we have a burgeoning renewable energy business. It was the right thing to do. It would resonate with most of our key audiences. And there was the added benefit of a business opportunity to grow renewable energy.”

And AXIS had consistent, transparent conversations with advocacy groups about key issues to establish leadership and meet expectations of good corporate citizenship. “We are improving our disclosures and have become a leader within our own sector by not being afraid to be decisive,” he continues.

Reihl agrees. “Brands should be brave enough to step into the melee, even if they don't have all the answers or they can't solve it.”


Thanks to Edelman for sponsoring this event.

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