Transparency in ESG Communications

We could draw upon any number of surveys or recent reports to illustrate the importance of Environmental, Social, & Governance (ESG) in business today. With ESG becoming a corporate imperative, the need to communicate with transparency on a company’s initiatives and progress becomes even more critical. 

A study conducted by PwC found that 51% of business leaders said transparent ESG reporting was “extremely important” to build trust with stakeholders. However, in the eagerness to communicate their credentials, some brands have made statements that lack in credibility and the result is damaging. 

Why transparency matters

Brands that misrepresent or overstate their progress put their reputation at a significant risk. Overclaiming your brand’s sustainability achievements with misleading wording or fabricated data can lead to criticisms that undermine brand image and erode stakeholder trust—from customers to employees to influencers. For example, internal grassroots campaigns demanding transparency on a company’s ESG actions by employees are on the rise, journalists can be wary to work with brands accused of any kind of ESG “washing” and consumer activists are coming after negligent brands on social media.  

We’ve seen a surge of backlash with oil and gas companies as well as consumer brands who over-promise to attract the conscious consumer. H&M, for example, attracted criticism in recent years for its claims of a ‘conscious collection’ and use of ‘circular’ materials, among other violations. But no industry is immune. TIAA and its investment management arm, Nuveen, were recently in the news for violating their climate pledges, and even Unilever, a recognized leader in sustainability, has been called out for misrepresenting the recycling process for their sachet waste.  

Share progress and pitfalls

Key stakeholders may understand that businesses need time to build strong ESG credentials, but they’ll likely have more respect for brands that state where they are in the process versus just stating a hallow promise or “moonshot” commitment.   

A recent Adobe survey backs this up. In terms of actual purchasing factors, it showed that the top trait that influences whether consumers would buy from a company is that they’re “honest and transparent about their activities and the impact they have on the planet and society.” 

Progress is rarely linear. Don’t be shy about communicating challenges that come your way on route to achieving your ESG objectives. Being forthcoming about changes to your strategy, missed targets, or setbacks demonstrates authenticity and leadership and can help other companies learn from your experience. 

Show your methodology

Showing the methodology used to get to the targets within your sustainability report or an ESG initiative can build credibility with stakeholders, especially investors and raters and rankers. As we see an increase in ESG regulations and reporting mandates, we’ll see more companies going public with their metrics and progress, but the ones that are open with not just what they measure but how they measure will surely stand out.  

eBay is a prime example of a company who has gone the extra mile to prioritize transparency. In their 2021 report “Methodology to Calculate the Environmental and Financial Benefits of Recommerce,” they released for the first time the detailed calculations used to demonstrate the benefits of keeping products in circulation and preventing them from immediate disposal to landfill or incineration. 

Use precise language and storytelling

It’s not just about what you’re saying, but how you say it. When communicating around ESG, some brands take comfort in using common terms like ‘net zero’ ‘climate change’ and ‘carbon neutral’. Of course, they all have their place in the conversation, but overuse of them can feel redundant and even cliché to the reader. 

Instead, customize the terms, language and tone you use to suit the different audiences you’re trying to reach. When communicating with consumers, for example, you may want to lead with the real-world impact of your actions and include a compelling, human-centered story to illustrate the outcomes. For employees, it may be more about how they can get involved in your ESG activities, what relevant benefits are available and whether your corporate culture authentically maps to your corporate values and purpose. 

As with any communications, starting with the audience and defining “what’s in it for them?” can help ensure you’re resonating with that stakeholder group. And building true stories of your impact and what social or environmental problem you’re solving will increase the chances that readers will connect at a deeper level with the content.  

Multi-stakeholder collaboration

When setting out to create your ESG communications strategy, you’ll want to engage as many stakeholders as possible. Here are some tips for a collaborative approach: 

• Establish a cross-disciplinary internal core team to oversee the company’s ESG communications and set up time to meet regularly 
• Engage with external stakeholders and experts to learn more about and understand the sustainability trends and issues facing your industry 
• Forge industry partnerships, both for-profit and non-profit, and join existing coalitions or consortiums to keep each other accountable and scale your impact 
• Create cross-department KPIs—like a Sustainability Dashboard—across teams that build in shared accountability for the success of your ESG communications. 

Keep it simple

In the end, the tried-and-true rule of “less is more” applies to ESG communications. If you stick to the facts, steer away from the glossy over-statements and clearly articulate your progress over time, your brand will benefit from increased stakeholder trust and loyalty.  

Our ESG consulting services

Hotwire can help ensure you are transparent in your ESG communications. Please reach out to find out more about our ESG Communications Consulting Services. Our team of ESG marketing and communication experts can help you develop your ESG brand narrative and messaging, create your ESG communications strategy and digital campaigns, build your report launch strategy and plan, and much more. Reach out with questions or to learn more at heather.craft@hotwireglobal.com.