How to Share an Effective ESG Narrative with Metrics

At a time when distrust of institutions runs rampant, the conversation about corporate environmental, social, and governance (ESG) increasingly focuses on performance metrics. Skeptical audiences ranging from investors to employees are challenging businesses to provide credible metrics as proof of their ESG commitments. This is all good. But numbers don’t tell the entire story. They tell you the what – not the why. And as my colleague Al Loehnis blogged, even the most well-meaning businesses are struggling to keep up with a patchwork quilt of performance standards they must report against. And that’s not so good. So, what is the solution? Well, how about a little TLC? Not tender loving care – but transparency, leadership, and connectivity. 

Transparency, leadership, and connectivity comprise the three pillars of an ESG narrative that draws on metrics to tell a more powerful story rather than share metrics for the sake of sharing metrics. TLC is a way of understanding how to communicate ESG everywhere a business interacts with its stakeholders – foremost on their corporate websites but also through social and paid media. The elements are: 

• Transparency: communicating transparently about the most material issues you face, your plans to address them, and your performance against the targets you set. Being transparent means doing so continuously via your website, not just in your annual report. 
• Leadership: a compelling sustainability narrative needs leadership from the top and leadership by example. Your website and wider digital presence provide the platform for amplifying the voices of your leaders and bringing to life the initiatives that are driving sustainable change in your organisation.  
• Connectivity: your sustainability goals can only be achieved when the strategic approach is a fully integrated part of your wider business strategy. And it can only happen by working with others within a company’s stakeholder ecosystem, including your suppliers. Demonstrating how you are building those connections and integrating your approach are essential to successful communications.  

TLC provides a way of sharing both the what and why. Let’s look a bit more closely at each element. 

Transparency 

Many businesses and their audiences view transparency as a matter of sharing ESG performance metrics, but it’s more than that. Transparency is about clarity of strategy and commitments. Recently IDX benchmarked more than 1,000 corporate websites from the US, UK, Europe and the rest of the world using a proprietary scorecard. We found that 74 percent of the FTSE 100 share an overarching sustainability strategy, but only 36 percent quantify their commitments. Here we see an obvious disconnect, and fixing that disconnect should be a priority as businesses figure out what performance metrics to focus on. 

Materiality is also a key component of transparency. Materiality consists of a discussion of the issues such as climate change that might affect your business. Most companies do a materiality analysis every two years, but only 30  percent of the FTSE publish their materiality assessment.  

To be truly transparent, businesses need to also: 

• Make data accessible and customized to different audiences. Unilever does an exceptional job giving its audience easy access to ESG performance data via downloadable files – a standard for other businesses to follow.  
• Publish evidence of their ESG commitments, such as case studies, throughout the year. Consider ESG reporting to be a steady stream of content. 
• Customize data for different audiences. For instance, some companies such as Marks & Spencer have incredibly detailed pages describing how they responsibly source raw materials for audiences (such as NGOs) that want to see the details. But the company also publishes smaller, more easily digestible quick summaries for other audiences that simply want an overview. 

Leadership 

Leadership comes from the top, and that means  company CEOs discussing on their websites and on their socials their commitment to sustainability. But only 44 percent of the FTSE 100 feature a CEO introduction to ESG on their site – a huge opportunity for improvement. But many businesses have gotten savvy about making their CEO the voice of their ESG efforts, notably Patagonia CEO Ryan Gellert. Marks & Spencer CEO Steve Rowe discusses in a nine-minute video the company’s commitment to being fully net zero by 2040 – an extraordinary example of a CEO taking a deep dive into an ESG topic. He shows very credibly how the company works with various suppliers to achieve its goals. In doing so, he humanizes the company’s narrative. 

There’s another element of leadership that is not thought about as much: corporate leadership. Businesses lead when they share their ESG journey so that other businesses can learn from them. Even better, businesses act like leaders when they: 

• Share tools. For instance, Novartis has developed a tool kit where other companies that want to learn how to do a materiality assessment can learn how. It’s akin to open sourcing an approach to a materiality assessment.  
• Contributing to society in a tangible way. Consider how Microsoft and Google provide large amounts of free online learning to boost social mobility – such as helping people with underprivileged backgrounds learn and adapt to the modern workforce as this example shows. This is about more than contributing financially.  
• Innovating. Several businesses such as IBM, IKEA, and PayPal conduct hackathons to solve sustainability challenges. They lean into their websites to promote these hackathons and to encourage academics to join and in and crowdscource ideas. Then they report the outcomes freely so that their communities can learn. For instance, IKEA publishes add-ons that people with disabilities can attach to their existing Ikea furniture to make the furniture work better for them. The initiative, ThisAbles, is partly the result of a hackathon that IKEA hosted in its Tel Aviv store. 

Leadership is about going above and beyond – not just managing. 

Moving forward, companies will be under more pressure to teach others. Why? Because companies truly committed to net zero realize they are not going to do it alone.  

Connectivity  

For companies and society to achieve its sustainability goals we must work together – connecting the activities within companies, between companies, and across companies, governments, and populations. 

For companies, that starts with aligning corporate strategy and ESG strategy using their purpose as the North Star to bring the two together. Vodafone and Pearson are great examples of companies that have done just that and do a good job of explaining how their purpose guides everything they do on their websites.  

Every IRO out there will know that their investors are increasingly interested in climate change and the risks and opportunities it creates for their business. According to PWC, reducing scope 1 & 2 emissions ranks as investors’ highest ESG priority. Most of the FTSE 100 have a dedicated climate or carbon page – but only half of the FTSE 250 do. This situation will change as investors increase the pressure to manage the impact and risks of climate change. 

Increasingly they are also interested in a company’s scope 3 emissions, the emissions from a company’s supply chain, which for many dominate their carbon footprint.  Of course, for companies to reduce their scope 3 emissions, they must work with, set standards for, and collate metrics from across their value chain.  An obvious need for connectivity between companies to work together.   

But connectivity means more than prioritizing scope 3 emissions – it’s also about how a business transparently shares its sourcing journey. Consider VF Corporation, which publishes an interactive map that makes it possible for analysts and consumers alike to obtain information about every business involved in the production of a pair of trainers or insulated jacket from raw material to manufacture and distribution. For every business they provide not just a name and address but information on workforce composition, working conditions and worker welfare programs.  

But interest in supply chains, particularly amongst investors, doesn’t end there. The global pandemic, the grounding of the Ever Given, a global chip shortage halting car manufacture, and the fallout from the horrific war in Ukraine have all highlighted the fragility and global extent of the supply chains businesses rely on.  Furthermore, as supply chains come under increasing pressure from climate change we can expect investors to increasingly focus on supply chain risks. 

It’s clear that supply chains are going to come under increasing scrutiny as companies look to reduce their environmental impact, increase their social impact and reduce their risk exposure.  As such connectivity will become an even more important pillar of the ESG narrative. 

Concluding Thoughts 

Hopefully you’ll agree that a bit of TLC is vital for companies to deliver on and communicate around, their sustainability goals.  It’s tempting to think of ESG solely in terms of risks and threats to businesses, the environment, and society. But in future, we’re going to see more of the conversation increasingly focus on the growing opportunities the ’green economy’ offers.   

You need look no further than the remarkable growth of Tesla, the most valuable car manufacturer in the world whose success, despite low volumes, is the envy of its sector.  Or consider the growth of the plant-based meat industry, which seemingly sprouted up from out of nowhere as a result of our collective concern about the environmental threats posed by the meat industry.  

There’s a mentality shift going on from risk and resiliency to reward. It’s going to take some time for that shift to take effect, but it’s happening now.  

Learn More During PR Week   

On March 24th, we’re going to discuss this issue with a panel of ESG industry leaders at an event we are hosting in conjunction with PR Week, “Build a sustainable future through the power of comms.”    

The panel of ESG and communications experts from Vodafone, Bupa, and Anthesis Group will address key communications issues including:  

• How to integrate sustainability in your organisation’s strategy.​  
• Balancing the demands of different stakeholders to act responsibly​  
• How best to represent your approach and actions in your communications​  
• How to navigate the changing landscape of ESG regulations and reporting frameworks.​  

To learn more about the panel, please register here.  

Meanwhile, if you need a little TLC – or would just like to talk about sustainability and ESG communications – let us know!  To learn more about our ESG & Sustainability solutions, click here.