December 19, 2023
How to Communicate About ESG in the Face of Fiscal, Regulatory, and Political Scrutiny
With anti-ESG rhetoric on the rise — and as greenwashing accusations abound — communicating effectively about environmental, social, and governance issues is more challenging than ever.
One piece of the puzzle is the tension between whether a firm is more responsible to its stakeholders or to its shareholders. On one hand, some argue that firms should balance the interests of a company’s stakeholders — employees, customers, and even the environment — against the need to drive bottom line growth. By contrast, those in favor of shareholder primacy assert that firms should prioritize increasing profits above all else.
Complicating the issue further, the SEC is preparing to release stricter climate impact disclosure requirements for all publicly traded companies. And of course, ESG-related issues will undoubtedly become points of contention and political posturing in the leadup to the 2024 elections.
Given these very real pressures and the risks they present, how should executive leaders at professional services firms respond?
It may be tempting to stay silent. But if you want to be seen as an authority in your industry, you must be someone who is both trusted and heeded. The best way to earn that status is to contribute to a smarter conversation around the issues that matter most to your audience. Here’s what it takes to do that in regard to ESG.
Be Authentic About Your Firm’s Approach to ESG
It should go without saying that a key part of communicating effectively is to do so from a place of authenticity. After all, one reason organizations come under fire is that their public statements about ESG don’t match up with their organization’s mission, vision, and values — or with their actions.
To that end, consider your position on ESG through the lens of who you are as a business and what you’re trying to accomplish. It can be helpful to explore questions like:
- Do our ESG-related points of view align with the way we run our business? Are we doing what we say we’re going to do?
- Are we able to make tangible progress on our ESG commitments — and are we reporting on that progress on a regular basis? Even when the numbers or narrative aren’t as positive as we’d like?
- How might the ESG work we’re doing strengthen and de-risk our business for the long run? Could our ESG commitments contribute to a healthier bottom line?
How Your Commitment to ESG Can Contribute to Business Success
Let’s take a closer look at that last question in particular — and at the false equivalency that’s inherently present in the “stakeholder vs. shareholder” debate. There’s an assumption that deepening your firm’s commitment to ESG will automatically detract from profitability. But the opposite is often true. In fact, making business decisions through the lens of environmental, social, and governance concerns may play an instrumental role in your company’s long-term success.
My colleague Steve DiMattia puts it this way: “Companies with weak ESG performance often find themselves in situations that can lead to a decline in valuation. If a company is cutting corners on safety protocols, harming the environment, or exploiting its workers, there’s a much greater likelihood it’ll eventually be sued, fined, or otherwise penalized, which can negatively impact its stock price.”
Therefore, making an authentic commitment to the causes that matter most to your firm — and talking about those commitments in terms of how they’ll make your company stronger — is an excellent way to frame your ESG narrative.
Embrace Transparent Communication (Even if You Know You’ll Get Backlash)
In a polarized society like ours, there are good reasons to shy away from topics that are known to spark backlash. And there are certainly people who may decry whatever you have to say about ESG. But if your ESG efforts are truly a core part of driving your business forward, communicating transparently is non-negotiable.
The good news is many clients and stakeholders are increasingly seeking ESG-aligned partners. Since they want smart counsel on ESG issues and are looking for partners who walk the talk, it’s only logical to talk about your ESG offerings and commitments with confidence.
As socially conscious Gen Zers age and become business leaders in their own right, it will become even more paramount for your firm to establish unique positions of authority about ESG. Demonstrating an authentic and transparent position on the issues that matter most to these emerging stakeholders is an essential part of building trust and winning their future business.
That doesn’t mean you have to talk about ESG-related issues all the time. Nor do you have to publish an official CSR (corporate social responsibility) report each and every year. Rather, look for naturally recurring opportunities to shine light on the progress you’ve made toward your ESG goals. Let your audience know what’s gone well and what steps you still need to take to get where you want to go. And if you’re a publicly traded company, tell a good and true story about how ESG affects your earnings.
Still uncertain about whether it’s wise to communicate openly and transparently about your firm’s ESG efforts? Perhaps this will assuage your fears. According to The Financial Times, anti-ESG funds are failing to attract investors and assets. Polls show voters aren’t swayed by attacks on sustainable investing options, either. These articles illustrate that, in many cases, the anti-ESG bark is far worse than its bite.
Tailor Your ESG Messaging to Your Primary Stakeholders
Although you’ll need to be mindful of crafting your ESG communications in ways that align with regulatory demands, it’s also important to remember that regulators are not your primary audience. Your clients and employees are.
So rather than worry about coming under fire for communicating about ESG, consider who your audience is and what they care about. What do they need to hear from you? What messages will resonate with them? And how can you tell your ESG story in a way that furthers their commitment to and enthusiasm for your firm?
For example, we recently worked with a law firm to create a communications platform to reach key stakeholders at a time when the firm was under enormous pressure from special interest groups and anti-ESG lawmakers to abandon its ESG endeavors. This platform enabled the firm to amplify the ESG-related counsel it offers clients and provide insight into how it helps firms navigate the very issues and challenges it was also facing.
Reaching your audience with the messages that matter to them should be the primary goal of all your executive communications strategies.
Don’t Be Afraid To Speak Out About the Issues That Matter to Your Firm
It takes courage to speak your firm’s truth in the face of almost certain criticism and backlash. And since anything you do say is subject to fiscal, regulatory, and political scrutiny, it’s absolutely essential to communicate your messages judiciously and effectively.
Greentarget can help.
Our consultants know how to objectively assess whether or not your ESG efforts are truly an authentic representation of your firm’s values and actions. We can help you craft succinct and precise messages about why you’re doing what you’re doing. And we’d love to work with you to develop unique perspectives and positions of authority that translate into added value for your clients and other priority stakeholders.
So when you’re ready to cut through the ESG-related noise and advance a smarter, more thoughtful narrative, let’s talk.
About the Executive Positioning Practice
Exemplifying Greentarget’s commitment to being a trusted advisor to clients, Greentarget’s Executive Positioning team provides c-suite executives (managing partners, CEOs, executive committees, and boards) with insights to anticipate, understand and respond to important global and social developments, analyzing key issues that can impact reputation and compel leaders to communicate.