Boardrooms around the country are filled with conversations about ESG initiatives. What they are; how to implement them; and whether or not they are effective. If they haven’t yet, they’d better start now. According to a PWC study, 88% of investors believe companies that prioritize ESG initiatives represent better opportunities for long-term returns than companies that don’t.
ESG – or environmental, social and governance criteria– is a natural evolution of what is more commonly called corporate social responsibility. In fact, it is another mainstay of a business strategy that measures a business’s positive impact on society. ESG takes it a step further by embedding these values in the heart of an organization’s business agenda with supporting policies, sustainability performance targets, and other KPIs. In essence, it takes what should be happening in every company and makes management and other personnel accountable for their actions.
However, the key to integrating ESG into the company culture — and connecting the dots to constituents — is how the company is communicating the chosen ESG path. That’s where public relations comes in.
Why It Matters
While ten years ago ESG was barely discussed, today, consumers will go out of their way to work with companies that are actively supporting sustainable products, services and ideals. As a result, ESG metrics have quickly become the norm.
These initiatives hold companies accountable to driving change and providing evidence that the business is living up to its declared values. With a robust ESG strategy in place, businesses can boost company growth, attract talented employees, reduce company costs and facilitate a sense of trust among consumers and other stakeholders.
Therefore, it comes as no surprise that new business prospects and potential employees seek out companies that demonstrate value systems that align with their own. Bolstered by an effective communications campaign, ESG compliance helps to solidify trust and maintains a sense of transparency between the brand and its consumers.
Given this increase in conscious consumerism. ESG has just as much—if not more—of an impact on a business’s financial bottom line than ever before and, this is where communications becomes the key.
Where PR Comes In
The meteoric rise of the environmental, social and governance (ESG) movement over the past decade provides PR practitioners with a significant opportunity to emphasize the value of public relations as a critical business strategy. Communication is vital to the success of an ESG effort. Today, companies need effective practitioners who are well-versed in the movement that can clearly communicate effectively to multiple audiences. Naturally, this will drive attitude and behavior change.
As rapidly as ESG is growing in popularity, there is still much debate on how to quantify its value– after all, how does one officially measure “corporate good?” As more PR firms begin to tout ESG as a specialty, professionals should be able to translate the value of each component of ESG into tangible KPIs, complete with standardized methodologies to track them. For example:
- Environmental impact can be determined by how many resources your business needs on an annual basis and determines the impact your company has on the environment. This can include things like your business’s carbon footprint, water usage, and energy consumption.
- Social criteria can be measured by looking at how your company interacts with local communities. It also assesses your company’s internal policies in relation to diversity, including labor policies.
- Governance is measured by your company’s internal practices that determine your decision-making processes and legal compliance.
How ESG Impacts the Bottom Line
The ESG movement has evolved significantly over the past decade. It will no doubt continue to grow as consumers and stakeholders embrace the ESG mindset. As a result, a company’s ESG score will become a defining factor for many as we move forward. For those firms that want to remain on the cutting edge of their market, integrating ESG into the fabric of the company – and prioritizing it as a valuable component of the overall business strategy — will set the stage for success.