Communicating Sustainability
In addition to formal reporting on sustainability and CSR, organizations should consider how their sustainability activities can be integrated into their overall organizational communications strategies and activities and their marketing activities.? Finish Textile & Fashion ("FTF") observed that sustainability communications should be appropriate in light of the organization's nature, size, operating methods and potential risks related to sustainability, and recommended that companies focus their communications efforts on matters that were essential from the business perspective and of interest to stakeholders and include a discussion of potential operational and reputational risks.? For example, since consumers are interested in the origin of the products that are marketing and sold by the organization, communications should include transparent information on all stages of the value chain including a description of how the organization monitors the environmental and social responsibility of supply chain partners and data on compliance by those partners with the organization’s requirements.? Information on environmental and social responsibility aspects of the inputs to products should also be presented, and organizational communications are a good opportunity to describe the process followed in designing and manufacturing products including methods for managing the environmental footprint of products over their entire lifecycle of use and disposal.[1]
FTF also noted that disclosures regarding an organization’s sustainability activities extend beyond sustainability reporting and other formal corporate communications to include marketing activities and companies will naturally want to include their sustainability and CSR successes in efforts to promote its brand.? However, presentation of environmental and social responsibility in advertising and marketing materials are subject to the same fundamental principles as any other information and companies need to ensure the information is not misleading or unjustified.[2]? Regulators often issue guidelines that cover advertising practices.? One example referred to by FTF was the policies of the Finnish Competition and Consumer Authority relating to consumer rights in connection with environmental marketing, which emphasized that claims made in marketing must be backed up by evidence and that companies should avoid presenting minor environmental impacts that were insignificant in view of the organization's overall activities if other, clearly more significant environmental impacts were played down.
FTF pointed out that companies can use environmental certification and branding in their marketing activities provided they comply with the requirements and instructions of the certifying bodies.? Signaling social responsibility in marketing is more difficult.? Companies certified as to social responsibility in accordance with the Social Accountability 8000 (“SA8000”) standard are listed in a public database; however, there is currently no branding for SA8000.? Some companies do attempt to incorporate social responsibility into their marketing activities by identifying the country of origin in their product labeling and/or describing the social responsibility audit and certification procedures used in each of the production phases for the company’s products.[3]
The ISO 26000 Guidance on Social Responsibility promulgated by the International Organization for Standardization (“ISO 26000”) also emphasized the important roles that internal and external communications play in social responsibility including[4]:
Section 7.5.2 of ISO 26000 describes the necessary and appropriate characteristics of information relating to social responsibility as including completeness, understandability, accuracy and verifiability, balance, timeliness and accessibility, and noted that organizations can select from a wide range of methods for communication including meetings, public events, forums, reports, newsletters, magazines, posters, advertising (including public statements to promote some aspect of social responsibility, letters, voicemail, live performance, video, websites, podcasts (website audio broadcast), blogs (website discussion forums), product inserts and labels, media activities (e.g., press releases, interviews, editorials and articles), submissions to government bodies or public inquiries, participation in social responsibility interest groups and articles in communications instruments aimed at peer organizations.[5]?
When developing a communications strategy and program relating to social responsibility, each of the organization’s key stakeholders should be considered and plans should be made to tailor communications with stakeholders to the social responsibility issues that are of greatest concern to them.? For example, communications with employees should raise general awareness about and support for sustainability and related activities; communications with suppliers should explain the organization’s sustainability-related procurement requirements; and communications with consumers relating products (e.g., product labelling and other product information) should address their expectations regarding how the company integrates safety and sustainability into the design and production of its products.?
Since there is so much that any one organization might choose to communicate on with respect to sustainability, difficult decisions need to be made about what information and message are disseminated since too much communication can confuse stakeholders as much as it informs and educates them.? The UN Global Compact suggests that communications strategies by designed with a reference to materiality of issues or events to both stakeholders (as determined through engagement with stakeholders) and the business and overall sustainability of the organization itself.? When using this framework, the most attention in communications should be given to those issues that are material to both stakeholders and the business of the organization and in those instances, communications should be comprehensive and include a statement of the organization’s policies and commitments, an assessment of potential impact and a description of relevant performance indicators and measures.? As for issues that are important to its business by the organization but are not that important to stakeholders, communications may be limited to impacts.? In turn, when stakeholders have identified an issue as important, but the organization does not believe the issue is material to its business, communications may be limited, at least initially, to a description of the organization’s approach and policies with respect to the issue.[6]
While organizations need to be proactive in allocating resources to communications and developing a formal communications strategy, it should not be forgotten that communication is a tool to be used as part of the broader and more important sustainability activities and requirements of dialogue and engagement with stakeholders.? In other words, effective sustainability communications flow both ways and all of the communication methods mentioned above should include information on how recipients can provide feedback to the organization.[7] Among other things, organizations should leverage the communications process to gather important information from stakeholders regarding the adequacy and effectiveness of the content, media and the frequency and scope of communication, so that they can be improved as needed; set priorities for the content of future communication; and secure verification of reported information by stakeholders, if this approach to verification is used.[8]
The UN Global Compact endorsed the recommendations regarding communications included in ISO 26000 by calling on organizations to ensure that their communications strategies and content were based on the following characteristics[9]:
In addition, the UN Global Compact has emphasized the important of stakeholder communications as a means for documenting the organization’s performance on its material sustainability issues and providing stakeholders with useful and credible information along with evidence to support the organization’s progress toward its sustainability commitments and targets.? Sustainability communications should educate stakeholders about the relevant issues and build trust that becomes a foundation for continuing engagement and dialogue.[10]
Brand Protection
In many ways, communications regarding sustainability and CSR are a part of the organization’s overall strategy to creating and protecting its “brand”, which is the way that the organization distinguishes its products, services, and concepts from those of other organizations.? Simply put, an organization’s brand is what people first think about when they hear the brand name associated with a product or service and what comes to mind is heavily driven by the organization’s messaging in the form of marketing and other communications.? However, organizations are not in complete control of their brands, since people will also be influenced by the communications of other stakeholders, such as announcements by NGOs that products being sold by a company were manufactured by suppliers that had failed to respect and protect the human rights of their workers.? This type of news can significantly harm an organization’s reputation and the tarnish on its brand can linger for years, even after clear and strong steps have been taken to address and eliminate human rights issues in the supply chain.
Each organization needs to understand how its employees, customers and other stakeholders arrive at their perceptions of the organization’s products and services and identify those actions associated with its business model that are likely to have biggest impact on its reputation with stakeholders.? For example, while an airline’s reputation for luxury and service is certainly important, by far the biggest concern for potential travelers is the carrier’s safety record.? As such, every airline needs to pay attention to potential weaknesses in its safety programs, not only because of their legal and moral obligations to protect the lives of their passengers but also because news of safety issues will have a hugely adverse reputational impact even if there is never a situation where the airline is found to be at fault for an accident.? Hopefully, the airline does have adequate safety procedures in place, and it needs to continuously communicate with stakeholders regarding safety and the specific steps it has taken with respect to the issue such as investments in new technology and training for pilots and other personnel.
When the subject matter is “good news”, such as a strong safety record for an airline, communicating to stakeholders is a welcome activity.? However, communication is just as important, albeit far more challenging, when news is not so good and the organization finds itself engaged in dialogue with stakeholders regarding weaknesses in its environmental or social responsibility.? For example, Nike has long been one of the most iconic and widely recognized brands in the world; however, the company was often maligned by critics armed with evidence that Nike, as well as other big brand names, had relied on outsourcing of production activities to factories in which widespread labor rights abuses were occurring.? Nike saw sales of its products erode and endured efforts to tie its brand to slavery and sweat shops.? Eventually, Nike responded by investing time and effort in inspecting and auditing the factories of its supply chain partners to identify and eradicating labor rights abuses.? As a result of these activities and the communications to stakeholders regarding the problems and how they were being resolved Nike was able to rebuild, and in many ways, strengthen its brand and reputation and thrive in the face of competition from numerous firms peddling cheap knockoffs produced in abhorrent working conditions.[11]??
As for branding, the UN Global Compact described the following ways in which sustainability and CSR can influence the brand building process[12]:
Reputation Management
The activities associated with sustainability reporting are also important elements of an organization’s efforts to manage its “reputation”, an important and valuable intangible organizational asset that needs to be carefully monitored and protected.? The world has been through periods of deep financial crisis and serious questions regarding corporate ethics which have eroded public trust in business and led to serious questions regarding the operation and fairness of free markets.? Activities of businesses, particularly those which are perceived as having a negative environmental and social impact, have been exposed to greater scrutiny by social media, NGOs, and groups throughout civil society.? Expectations on business with respect to environmental and social responsibility have also escalated as governments have retreated in many areas, and companies have been tasked with demonstrating commitment to assisting with sweeping global issues such as climate change, income inequality, poverty, health, and human rights.? As a result, corporate missteps, even those that are not intentional and/or arguably well outside of their reasonable scope of influence, are likely to expose companies and their leaders to immediate and stunningly strong criticism from politicians, regulators, consumers, investors, employees, and the public at large, and the fallout can include not only short-term financial costs, but long-term damage to the company’s reputation and brand.[13]
In this environment, traditional marketing practices and tools, such as public relations campaigns, are no longer adequate and, in fact, surveys indicate that trust in corporate advertising has significantly eroded.? Organizations required to address actual or potential crises that threaten their reputation often respond ineffectively, leading to criticism that they are more interested in trying to “spin” the situation as opposed to taking the steps necessary to limit reputational damage.? Consultants from McKinsey & Company argued that action—not spin—is needed in order to build strong corporate reputations and business organizations needed to “enhance their listing skills so that they are sufficiently aware of emerging issues; to reinvigorate their understanding of, and relationships with, critical stakeholders; and to go beyond traditional PR by activating a network of supporters who can influence key constituencies”.[14]? Among other things, organizations needed to adopt more sophisticated tools for reputation management, a relatively new concept in world of corporate communications, and reorganize themselves internally to ensure there is a coordinated approach supported by cross-functional teams to gather intelligence and respond quickly to reputational threats.
According to McKinsey, one of the first steps in effective reputation management is one of the essential steps in the sustainability reporting process: developing a deep understanding of the reputational issues that matter most to the organization’s stakeholders and the degree to which the organization’s products, services, operations, supply chains and other activities impact those issues.? This process should begin with documenting, cataloging, and assessing the current sustainability efforts of the organization and benchmarking them against competitors and industry standards.? In so doing, the organization begins to objectively quantify its reputational risks, prioritize those risks, and implement measures for mitigating and reducing those risks.? In addition to this type of analysis, organizations need to focus on the perceptions and expectations of key stakeholders, since reputation is often built on perceptions as well as data.? Sales and growth are influenced by the perceptions and attitudes of stakeholders regarding the company and its sustainability performance and this means that organizations need to identify centers of influence among their stakeholder communities.? This generally includes not only traditional stakeholders such as consumers, employees, shareholders, and regulators, but also NGOs and the media.[15]
Stakeholder understanding and communications have become complicated by the expanded array of tools that stakeholders have to collect information and disseminate their opinions and concerns.? Another issue for organizations is that each stakeholder group has its own unique viewpoint on business and the role that the group should be playing in tasking businesses to adhere to their social contracts.? Shareholders are obviously interested in how reputational issues will impact long-term growth prospects for their companies and regulators will be reacting to public opinion on the appropriate laws and regulatory policies for businesses and markets.? The McKinsey consultants counseled companies to implement methodologies to assist them in understanding the position and concerns of various stakeholders on reputational issues.? Among other things, organizations need to identify the key issues for each stakeholder group, anticipate the key questions that stakeholders will ask, the actions that the organization can take, and the questions that the organization can ask.? This process for each of the various stakeholder groups can be illustrated as follows[16]:
While it is useful to refer to the list of stakeholder groups outlined above, the reality is that there are different sub-groups within each of them and a wide range of attitudes and concerns that must be considered by businesses when developing strategies for stakeholder engagement and communications.? The McKinsey consultants provided an illustration of the attitudinal segments among consumers that a business might need to consider.? For example, organizations will, hopefully, have positive relationships with consumers who are believers in the system and the organization, educated and well-off, and for these customers the strategy of the organization should be continuing to build the relationship and encouraging the customers to be positive influencers on behalf of the organization.? At the same time, organizations need to be mindful of consumer segments that are skeptical and/or distrustful about business, uninvolved or who must yet form opinions.? Even though these segments tend to have relatively low levels of influence, they need to be closely tracked and steps should be taken to improve their knowledge about and perceptions of the organization.? The segmentation example also identified the importance of mothers who value choice for their families and noted the opportunity to turn their positive perceptions of the organization into a valuable reputational asset by building a stronger relationship and reinforcing the organization’s strengths and values.[17]??
The McKinsey consultants admonished companies that while communications are essential to effective reputation management, at the end of the day it is the actual deeds and actions of organizations that have the great impact on stakeholder perceptions.? A related notion is transparency, the regular practice of organizations to fully share sufficient information, good and bad, about the environmental and social impacts of their operations with stakeholders.? Stakeholders are demanding information about crucial business issues including the content and design of products, manufacturing processes, treatment of employees and relationships with supply chain partners (and working conditions inside those partners), and they do not want the information to be served up solely as public relations hype.? Transparency, in the form of sustainability reporting and other communications, can help convince stakeholders that the organization is moving in the right direction or highlight gaps between stakeholder expectations and performance that need to be addressed by the organization.? Transparency can take many different forms including disclosure of data collected during trials for new products and public collaborations with competitors and other organizations to produce reports on issues that relate not only to the organization but to the entire sector in which it operates.? Transparency should be mandatory during any period of reputational crisis; however, even when things are going well organizations should communicate fully on their actions to build a reservoir of goodwill among stakeholders that can be tapped into later when issues do arise.[18]
The benefits to the business of sustainability and sustainability reporting and communications differ from one organization to the next and must be assessed on a case-by-case basis.? While formalized sustainability reporting is important, organizations can deploy transparency regarding their environmental and sociality responsibility in different ways both internally and externally depending on the size of their businesses, the sectors in which they operate and, most importantly, the unique requirements of their specific set of stakeholders.? For example, according to a European Union publication[19]:
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Be Wary of Greenwashing
Communicating regarding sustainability, like sustainability reporting, is a new and rapidly emerging area, one in which organizations are constantly learning new terminology and trying to understand the expectations of their stakeholders.? At the same time, regulators and activists have focused their attention on misleading sustainability claims, commonly referred to as “greenwashing”, arguing that communications of businesses touting the sustainability of their products and operations fail to paint a full and truthful picture.? Skepticism abounds, with surveys showing that around two-thirds of executives in the US and globally concede that their companies engage in greenwashing, almost 90% of Gen Z consumers saying they do no not trust the ESG claims of brands, and 42% of corporate environmental claims made online are likely deceptive or false.[20]
One response has been the growth in mandatory audit requirements for sustainability reports issued by larger companies in the EU and other jurisdictions, and organizations of all sizes, including startups and established small businesses, have sought third party certification of their products and operations (e.g., B Corp Certification, Energy Star, Fair Trade etc.) and established internal processes to demonstrate adherence to internationally recognized sustainability standards (e.g., ISO 14001 for environmental management).? Professionals involved in the preparation of sustainability reports and marketing and communications materials have learned to steer clear of vague or misleading language such as “eco-friendly,” “green,” or “natural” or nature-related symbols such as leaves or trees without providing specific context and require that any assertions regarding positive sustainability impact of products or services be accompanied by specific and verifiable data and other evidence.[21]? Consumers and other stakeholders do want to buy from and work with sustainable organizations; however, organizations need to train their employees about sustainability so that they are knowledgeable and credible when communicating with stakeholders and mindful of the serious long-term damage that claims of greenwashing can have to the organization’s brand and reputation.
This article is an excerpt from my new book on Preparing a Sustainability Report .?
Notes?
[1] Finnish Textile & Fashion Corporate Responsibility Manual (Helsinki: Finnish Textile & Fashion, 2016), 58.
[2] Id. at 59.
[3] Companies certified as to social responsibility in accordance with the SA8000 standard are listed in a public database; however, there is currently no branding for SA8000.? Some companies do attempt to incorporate social responsibility into their marketing activities by identifying the country of origin in their product labeling.? Id.
[4] ISO 26000 Guidance on Social Responsibility (Geneva: International Organization for Standardization, 2010) , 77.? On the core subjects of social responsibility covered in ISO 26000, see ?A. Gutterman, Core Subjects of Corporate Social Responsibility (Oakland CA: Sustainable Entrepreneurship Project, 2021) .?
[5] Id. at 77-78.
[6] UN Global Compact: Training of Trainers Course Guidance Manual (New York: UN Global Compact) , 53.? For further discussion of the UN Global Compact, see A. Gutterman, Sustainability Standards and Instruments: A Guide for Sustainable Entrepreneurs 2nd Edition (Oakland CA: Sustainable Entrepreneurship Project, 2024) .
[7] ISO 26000 Guidance on Social Responsibility (Geneva: International Organization for Standardization, 2010) , 77-78.
[8] Id. at 79.
[9] UN Global Compact: Training of Trainers Course Guidance Manual (New York: UN Global Compact) , 51.
[10] Id. at 56.
[11] Id. at 43-44.
[12] Id. at 48.
[13] S. Bonini, D. Court and A. Marchi, “Rebuilding Corporate Reputations”, McKinsey Quarterly (June 2009) .? For fuller discussion of the advice of the McKinsey consultants regarding reputation management, see A. Gutterman, CSR Communications (Oakland CA: Sustainable Entrepreneurship Project, 2020) .
[14] Id. at 2.
[15] Id. at 5-6.
[16] Id. at 7.
[17] Id. at 8.
[18] Id. at 9.
[20] 20+ Shocking Greenwashing Statistics, Zippia (November 14, 2023) .? See also Greenwashing growing in frequency and complexity: report, ESG Dive (October 11, 2023) (18% percent of companies—and 31% of public companies—who have engaged in greenwashing since 2018 also participated in social washing, or making misleading social claims, in 2023).
[21] Efforts, such as the EU taxonomy for sustainable activities , often referred to as the “green taxonomy”, have been launched in the context of the European Green Deal to reduce greenwashing by clarifying which economic activities are environmentally sustainable, setting clear and consistent criteria for what qualifies as sustainable activity, and providing a framework for stakeholders to make informed decisions regarding the sustainability of organizations and their products.