ESG, or Environmental, Social and Governance, refers to doing business in a fairer, more sustainable and more responsible way. It creates a set of standards for a company’s behaviour which spans everything from reducing pollution and resource use to creating a safer, more inclusive, equality focused workplace.
When considering ESG, there’s always more that can be done as this major commercial sea-change is a journey most astute organisations are embarking upon rather than simply a destination. In a broader sense, it’s a company-initiated strategy focusing on the bigger picture of caring for people and the planet, not just the financial bottom line. So, we have highlighted a few key ESG outcomes which positively influence commercial success and as a net result, create internal and external brand value for those game-changing, innovative and ambitious organisations willing to embrace change.
How can it benefit your Brand?
A strong ESG proposition can create brand value; therefore, the C-Suite are prioritising Environmental, Social and Governance issues at board level. Below are some ways that impact the everyday and how communicating your ESG strategy will benefit your brand:
ESG helps you understand your company and brand DNA
One of the hidden values of an ESG directive is that it forces a company to examine itself on a structural and cultural level. Although such scrutiny can be a bit daunting, this transparency allows the company to transform into a leaner, purpose driven business with a more robust belief system, authentic culture and commercially aligned brand purpose.
During our recent Q4 (2023) Elevate Digital Brand Benchmark study, we identified that 34% of investment and finance related brands included had, in some shape or form, adapted their brand narrative, web content and user experience to include ESG – with the most progressive brands making it their core brand proposition front and centre.
Being open, accountable, and transparent as a company means you have more control and influence on the narrative surrounding these core tenets. And as more and more companies shift to ESG reporting as standard, they also need to reconcile questions about their brand strategy and how this influences and shapes both purpose and perception. The critical questions raised during ESG discovery often lead to more significant questions about the company: Who are we and what is the answer to ‘why’ from stakeholders? Does the mission, vision, and values align with our business goals? What can we improve to authentically deliver our brand promise?
Dusted creative Director Paul Marten added,
‘A fundamental aspect of what we do at Dusted is translating business strategy into a sense of purpose the business can really believe in, get behind, and authentically deliver as a collective organisation…’
ESG is attractive to clients, lenders and investors
Attracting the positive affirmation of clients, lenders and investors is one of the most significant advantages of having an ESG program, with all groups increasingly adding ESG performance as a criterion in determining which companies to work with and invest in. Small to mid-sized companies also have an ever present need to secure loans or raise capital to fund future growth and remain competitive within their market, which means they need to recognise ESG.
It continues to attain greater importance among lenders, investors and venture capitalists as a standard practice due-diligence screening tool for potential investments. So, whatever you are doing ESG wise needs to be communicated authentically, clearly and consistently across all of your brand and IR touchpoints, backed-up by trusted data where possible.
Bloomberg recently stated in a study (Oct 22) that on average, 60% of EU investment institutions have ESG behaviour and verified data on their radar as prerequisite metrics when making investment decisions.
ESG attracts and retains talent
Many job seekers are looking for more than just a cheque. They want to enjoy their jobs, feel appreciated and make a positive impact. Working for a company with clear ESG ambitions and benchmarks is one of the top factors for employees’ job satisfaction, along with evidence that the company puts its goals into practice.
Millennials and Gen Z workers are expected to make up nearly three-quarters of the workforce by the decade’s end. These generations put a greater emphasis on environmental and social concerns, hoping for more from their employers. They care deeply that the companies they work for, as well as the businesses they engage, embrace values that are aligned with their own. Considering this, a company that also emphasises ESG values and demonstrates pragmatic actions will be a more attractive proposition to global talent than one that doesn’t. Employees who are passionate about the organisation and feel valued will drive goodwill, advocate referrals and create loyalty that strengthens the company’s brand from within and improves overall productivity. Employer branding then comes into its own and builds on this collective essence you truly earn as a business.
ESG helps create efficiencies
By understanding your ESG program, small to mid-sized companies can now track and communicate key qual and quant metrics like energy consumption, water consumption, waste shipping/treatment costs, raw material usage, social engagement, investment impact amongst others. This tracking ability is a prerequisite for companies to plan programs to improve efficiency, leading to reduced energy and water usage and waste transport costs.
In addition to improving cost management, ESG programs allow for operational efficiency, less exposure to fines/penalties, better risk management and improved innovations.
A strong ESG proposition helps companies tap new markets and expand into existing ones. When governing authorities trust corporate actors, they are more likely to award them access, approvals and licenses that afford fresh growth opportunities. Actions which are beneficial for the environment are also very often good for a business’s bottom line. The same can be said for social inclusion, diversity and equality and adopting an open and transparent governance structure.
ESG builds a stronger, more resilient corporate brand
A firm’s values and how it communicates them form the central core of its business brand. ESG reporting helps a company evidence those values and help guide the evolution often creating a strategic ‘North star’ for the leadership team. ESG is also an important communication channel, offering transparency to stakeholders providing authenticity and brand accountability.
Having an ESG program helps boost brand recognition and promotes brand loyalty with today’s consumers and in B2B supply chains, both increasingly aware of the power of ethical spending. They care more than ever what a company does to support sustainability and wider long term environmental and societal issues. It was harder to track and be consistent regarding ESG data in the past, with lack of resource and non-standard practices. However, today ESG data management is a mature and improving tech sector with SaaS vendors consolidating information on highly sophisticated platforms, such as tracking greenhouse gas emissions (GHG), energy data, automated data utility management, waste management and many other metrics.
No company’s ESG journey will be the same, but it’s still wise to benchmark yourself against the competition in your sector. That’s one area in which Dusted can help. Our Elevate performance benchmark programme and data platform analyses 11 category metrics with over 50 data points feeding into the results across brand and digital drivers. This single digital brand view provides an indicator of a firm’s performance against their close competitors.
Given how vital ESG is to a company’s brand, there are key factors split out within our ‘Responsibility’ metrics along with ‘Digital sustainability’ and UX ESG trends and patterns. Again it indicates where you stand versus others in your sector, what they are doing and what you can improve to create competitive advantage.
Whether your organisation’s ESG journey is an idea for 2023; a new initiative about to start; or firmly embedded and needs reinvigorating across your branded comms, Elevate can help you assess where you are, who is creating a competitive advantage and how. Dusted can answer the question ‘Where next?’.
Why not get in touch and find out more?