Corporate approaches towards environmental, social, and governance (ESG) management are changing. It’s becoming more complicated, more integrated, less about box-ticking, more about value creation. And it remains at the top of the agenda for investors and management teams alike.
As businesses update their ESG strategies, they’re also taking a closer look at how they communicate those strategies to investors, customers, job seekers, and employees, all of whom are looking towards corporations to play a more meaningful role in society. As they do so, they’re increasingly focused on how well they measure their progress in fulfilling their commitment to ESG.
And measurement is critical, especially at a time when critical audiences such as the increasingly influential millennial and gen Z populations express distrust of businesses. The antidote to distrust is transparency: not just saying a business is committed to being a better corporate citizen, but showing it through credible, consistent and comparable data.
But there’s a problem: businesses are struggling to do that. Investis Digital recently analysed the websites of 100 leading publicly trading corporations around the world.
The company found that only 35 percent of the 100 global firms published a clear statement of compliance with prevailing governance codes. Only 38 percent quantify their progress toward meeting United Nations Sustainable Development Goals.
At least part of the problem lies in the unbridled expansion of different ESG reporting frameworks, standards and guidelines. EY’s The Future of Sustainability Reporting Standards reports that the number of ESG regulations and standards globally has nearly doubled in the last five years. There are more than 600 ESG reporting provisions globally. Many have differing interpretations of sustainability.
“ESG standards should keep businesses accountable for doing their part to ensure a sustainable future for the planet and to benchmark their progress against their peers,” according to Al Loehnis, director of strategic development, UK and Europe, Investis Digital. “But the proliferation of different standards can have the opposite effect: when the goalposts keep moving and the rules keep changing, it can be hard to follow the game.”
Loehnis noted that the maze of standards are often misaligned with investors’ information needs. “At Investis Digital, we often hear clients complain of a disconnect between the things they are required to report on and the substance of the discussions around ESG subjects which they have with their investors.”
Efforts to align sustainability standards by some of the key reporting organisations have been underway for some time - in September 2020, the CDP, CDSB, GRI, IIRC, and SASB co-published their shared vision and do offer hope for a more joined-up future. But global harmonisation remains a distant prospect.
How should companies navigate this maze? The starting point for effective communications is to look outside the maze, according to Loehnis. “The first question a company should ask is not ‘which reporting standards should we follow?’ he says, but ‘how do we create value for our different stakeholders and what are the associated trade-offs?’”
On 24 March 2022, Loehnis will chair a panel of ESG and communications experts from Vodafone, Bupa, and Anthesis Group, to discuss the subject in a webinar hosted jointly with PRWeek. The panel will address critical ESG communications issues including:
How to integrate sustainability in your organisation’s strategy.
Balancing the demands of different stakeholders to act responsibly.
How best to represent your approach and actions in your communications.
How to navigate the changing landscape of ESG regulations and reporting frameworks.
To learn more about the panel and register, please click here.
