ESG – what is it and why should we care?

ESG is a term derived from the investment sector. It stands for Environment, Social and Governance. It is used to screen investment opportunities, determine business impact and encourage companies to act responsibly.

However, ESG has morphed into a catch-all term covering CSR (corporate social responsibility) and is used by organisations as the basis to promote credentials in these areas by brand, communications and marketing teams.

Companies spending more on advertising claims than acting are rightly being called out as proponents of greenwashing in the environment space. Toxic company cultures and poor workplace behaviours are increasingly being publicised by disgruntled employees. There is no doubt that our industry leaders should be comfortable in the spotlight of scrutiny for decisions and behaviours.

As with many hot topic issues ESG has become subject to tokenism with companies making claims about their ESG behaviours found to be at best exaggerated, at worst outright lies and attempts to mislead.

ESG fails

What can we learn from companies who have fallen foul of ESG claims which don’t match real life? No one said it was easy, however, turning the other cheek and being passive about dubious practices is not an excuse. Historic behaviours by individuals and organisations are being brought to bear under today’s standards. ?

VW

Perhaps one of the most infamous ESG debacles was in 2015 with the scandal around Volkswagen’s emissions testing and the resulting environmental impact. The company was outed as having created proprietary software which could detect when a car was undergoing an emissions test to create a temporary reduction. This led to misleading public claims about its cars, not to mention the impact of the emissions themselves.

BrewDog

More of a ‘social’ fail. BrewDog brought its B Corp status into question when the senior management team was exposed as encouraging a toxic work culture. The beverage firm’s handling of this publicly was anything but humble. The lack of responsibility or an immediate apology, sparked a reaction from consumers and customers alike. The long term fall out and damage to the reputation and commercial results are still being felt today with B Lab UK stripping the firm of its B Corp status in December last year. The jury is still out on how the brand is really dealing with this.

Fast Fashion

The love affair with fast fashion is not over despite more attention on supply chains, for example, the use of ‘sweat shops’ in developing countries where staff rights do not come up to scratch compared with expected standards under European or US legislation. Many fashion brands such as ASOS, Adidas and Lululemon to name but a few, have fallen foul of a this in recent years.

The stories on the use of environmentally damaging materials and manufacturing processes, payments and working conditions for people making garments as well as the growth of clothing landfills have shown this industry has a long way to go to really improve ESG outcomes.?Sustainable and ethical fashion? There’s a long way to go yet.

What you can do on your own

If these major global corporates are getting it wrong it would be easy to think that as individuals or smaller businesses we don’t have the power to elicit change. Here’s a few things we can all do:

-???????Consider who you buy from. Do your research and see what you can find online and check out company credentials to increase ethical sourcing and purchasing

-???????Find ways to engage with companies and make your opinion known if you do not agree with something (be respectful and constructive of course). Social media is a great way to get noticed

-???????Look for alternatives. Your money and loyalty has more value than you realise – especially in this world where cost of living increases mean your every pound counts.

Responsible ESG communications

If you work in brand and marketing communications and have the task of considering how to communicate your company’s ESG credentials responsibly, here is a checklist you can use as a framework

1.?????Benchmark: Audit

You’ve got to know the starting point. Look under the hood and really see what’s going on across the business; a SWOT analysis is great place to start.

2.?????Evidence

Gather tangible data and materials about company practices, policies, behaviours, CSR and have a look what competitors are also doing. This will help create a best practice plan and roadmap for improvements.

3.?????Engage

Involve people – spread the load and set up action groups or working teams which can take ownership of progressing tasks and developing and implementing initiatives. Consider connecting with experts and people outside your business or industry to expand your own knowledge and experience.

4.?????Commit to the concept of marginal gains

No company gets it all right, all the time. It’s a constant commitment and circumstances and the world we live and work in is changing apace. Be realistic about what is achievable. Set SMART targets and remember, doing one thing, doing it well and getting a result is better than starting ten things which don’t get finished.

5.?????Integrity-first

This is prised in all walks of life and work, but essential when working in comms and the ESG space. Don’t fall foul of overt, unsubstantiated claims which could get you and your firm into hot water.

6.?????Measure: Evaluate and Refine

Keep reviewing data and building up an evidence bank to enable robust evaluation which stands up to scrutiny. ?Don’t be afraid to adapt and change behaviours and initiatives.

For more thoughts, advice and insight visit: www.purplefish.agency