State of Green Business
The formula for telling sustainability stories that stick
Stories are everything — in corporate sustainability as in life. Facts and numbers help explain the world as it is, but narratives give it meaning. We turn to tales for teaching, selling products and services, and motivating the masses into action. From the fires of prehistory to the depths of the digital age, a good story can change the world.
Yet, corporate sustainability professionals aren’t fully wielding the power of narrative to engage investors and other stakeholders on environmental, social and governance (ESG) issues. And it’s costing them.
ESG forms the crux of the increasingly connected worlds of finance and sustainability. With mounting evidence of the positive relationship between ESG performance and improved risk mitigation and long-term financial value, institutional investors are calling on companies to better communicate their sustainability story.
But it’s still the "Wild West" of ESG communication — and corporate sustainability professionals have no clear path to follow. What they need is a guide for successful sustainability storytelling.
"The Formula for Communicating ESG," a new white paper developed by the thinkPARALLAX team, provides a practical guide for planning and executing an effective communications strategy to achieve higher ESG ratings. This includes having a solid foundation, strong sustainability report and effective supporting communications.
Establish a solid foundation
The tallest towers require the strongest foundations. If your organization wants to tell an authentic, compelling sustainability story, you better be sure there’s substance. Think like a journalist to uncover the why, who, what and how as it relates to your company’s ESG issues.
Develop a brand narrative, complete with purpose, vision, mission and values. Identify who is affected by or can affect your business. Understand which issues are material to your company. Determine how your company plans to manage material ESG issues to guide goal-setting and inform a comprehensive strategy for achieving them.
The next step is to bring it all together with a comprehensive sustainability communication framework. This should be aspirational and designed to inspire both internal and external stakeholders, while also demonstrating how your organization is walking the talk on purpose. Investors and ratings analysts can use this to connect corporate initiatives and actions to the overarching strategy and management of ESG issues.
Kimberly-Clark, for example, explicitly connects the dots between its sustainability strategy and the success of its business at large. The company states: "In 2022, Kimberly-Clark will have been in business for 150 years — and as we pave the way for another 150 years, sustainability must be at the heart of our business strategy." The communication framework articulately demonstrates how its business operations and priorities will lead to its aspirational 2022 sustainability goals and push them further towards their vision. It is no coincidence that the company has stellar ESG ratings.
Give your sustainability report some love
The sustainability report isn’t dead, as some might claim. In 2018, some 86 percent of the S&P 500 companies produced a sustainability report, according to the Governance & Accountability Institute — a 20-point rise from 2014.
When developing an effective sustainability report, be sure to keep the following in mind: commitment; transparency; progress; credibility; and accessibility. Demonstrate your company’s commitment to sustainability by leading with your foundation, displaying leadership alignment and integrating where relevant the United Nations Sustainable Development Goals to show how your activities map back to broader global sustainability efforts.
Embrace transparency to get ahead of potential risks by reporting on material ESG challenges your company is working to improve upon. By bearing your blemishes, you can show progress in an authentic way which impresses investors and rating agencies.
HP Inc., for example, in its 2017 Sustainable Impact Report (PDF) showcases progress towards meeting sustainability goals through its framework of Planet, People and Community. For each goal, the company highlights 2017 progress and includes links to more supportive and increased metrics within the report. This reflects progress, allowing viewers to get as granular as they like. In reporting on its progress to enable better learning outcomes for 100 million people by 2025, HP shows that it is only 14.5 percent of the way there.
Address investor skepticism of the voluntary and non-standardized nature of ESG disclosure by seeking third-party assurance via reporting frameworks such as The Global Reporting Initiative’s Standards, The Sustainability Accounting Board’s Standards and The International Integrated Reporting Council’s Integrated Reporting Framework . Third-party assurance of material ESG data should be a key part of your company's communications strategy, shining through the report itself, on your corporate website and anywhere you believe it can create credibility.
Sharing is caring, as they say, and the last thing you want is for your beloved sustainability report to sit collecting the proverbial dust. While the traditional tactic is to post a customizable PDF online, companies are finding innovative new ways to communicate their reporting such as through microsites, interactive PDFs and other methods of digital integration. Regardless of medium, the information must be organized and accessible for investors, ratings analysts and others to easily navigate through appropriate information.
Commit to ongoing communication
With most sustainability reports coming out but once a year, your team needs to find creative ways to engage investors and other stakeholders on sustainability year-round. One tactic is complementing your existing advertising mix with ESG-related ads and messaging. Microsoft, for example, highlighted its work around the Xbox Adaptive Controller for gamers with disabilities in a 2019 Super Bowl commercial.
Another powerful tactic is a comprehensive thought leadership program that involves delivering your sustainability story via blogs, op-eds, social media and speaking engagements. Having your executives co-author these pieces with NGO partners lends additional credibility.
Take Cisco, which intertwines stories related to ESG initiatives with new product reveals and other company information within the blog that lives on the homepage of the corporate site. Likewise, in this age of dwindling attention spans, videos are a great way to engage and educate audiences on complex ESG issues.
Institutional investors also are mining your corporate website for ESG information. The main website is a great medium for showing commitment to ESG and priming visitors to think of your company as a sustainable brand. First impressions are everything.
Unilever, always the golden child of sustainability, does an excellent job of communicating sustainability on its corporate homepage and throughout the website. By leveraging the concept theme of "Brands with Purpose," Unilever more effectively connects and shares its ESG initiatives and how they impact the business as a whole.
Engage external influencers
Sustainability storytelling doesn’t take place in a vacuum. Public sentiment influences investor views about corporate sustainability activities, according to Harvard Business School, and both the price paid for corporate sustainability and the investment returns of portfolios that consider ESG data. Third-party sources validate your company’s ESG efforts and also heighten the credibility of your communications.
Earned media is a tool all corporate sustainability professionals should work to master by partnering with corporate communications teams. In all likelihood, what you’re doing on the sustainability front is among the most interesting activities your company is engaged in. Putting ESG initiatives at the forefront of your public relations strategy will help you advance overall marketing goals while making sure investors are noticing. State Street Global Advisors’ Fearless Girl campaign, for example, resulted in over 1 billion Twitter impressions within the first 12 hours and was featured on countless media outlets — including the Wall Street Journal and CNN.
External reviews through outlets such as Glassdoor enable investors and rating agencies to capture an unbiased view from within the company. Foster a culture of transparency and don’t be shy about asking your employees to share their candid review of the company. Salesforce touts an engaged and strong culture, which is supported by its Glassdoor reviews.
NGOs also publicly disclose data related to ESG issues and companies’ performance in managing them. Partnering with NGOs that share your overarching sustainability goals adds credibility, increases exposure and allows you to make a bigger impact.
A proactive awards program focused on securing third-party recognition for your sustainability and social impact work also creates clout investors notice.
Nothing can defeat a good story
During the recent series finale of "Game of Thrones," the character Tyrion Lannister says: "What unites people? Armies? Gold? Flags? No. It’s stories. There's nothing in the world more powerful than a good story. Nothing can stop it. No enemy can defeat it."
Sustainability is one of the most important stories your company can tell. Growing demands from investors and other key stakeholders for transparency on ESG performance and disclosure means prioritizing this communication is no longer optional — it’s imperative for success. While achieving the highest score from rating agencies should be a top priority, you only can do so by taking a comprehensive approach to sustainability communications.