Despite backlash, this is not the time to scale back on ESG. Here’s why.

Despite the controversy, your audiences still want simple, clear reporting on environmental, social and governance.

ESG

Amid partisan attacks on Environmental, Social and Governance investing, senior executives who are thinking about keeping quiet about ESG would be wise to remember the words of Ray Benson of Asleep at the Wheel:

“You got to dance with who brung you. Swing with who swung you. Life ain’t no forty-yard dash. Be in it for the long run. In the long run you’ll have more fun.”

Executives who have embraced ESG didn’t suddenly go “woke.” Investors, consumers and employees brought them to this party.

ESG is still a big opportunity for corporate communications, both internal and external. To take advantage of it, we need to use fact-based reporting to tell stories worthy of the news outlets that cover our companies. We should focus on financial costs and savings, not grand claims to save the environment, uplift society and conduct business responsibly.

The criticism of ESG should be a call for change. If communicators answer the call, we may look back at this stormy period and ask: Who woke up ESG? The answer may be Gov. Ron DeSantis (R-Fla.)

We have three tips for communication pros, but first let’s look at circumstances that make success possible.

What’s the good news?
Most people — including Republicans— have no opinion about ESG, according to a survey released last week by Gallup. That’s the best news for the investment criteria in weeks.

Why is that good news? Because it comes after rounds of condemnation by Republican politicians high and low: from DeSantis to a Millennial state legislator from Denver, Ind (pop. 478).

“ESG subjectively suppresses a free market,” Rep. Ethan Manning said last month after the Indiana General Assembly passed a bill sponsored by the three-term legislator that restricts the state’s investment practices.

Eight states have enacted so-called anti-ESG laws, according to “Red-State, Blue-State Divide on ESG Legislation,” a report by LexisNexis’s State Net Insights issued May 18, 2023. To some experts, these laws may be all hat and no cattle, as they say in Texas, one of the first states to enact such legislation.

This month, DeSantis signed into law his own ESG legislation, standing behind a lectern that said, “Government of laws, not woke politics.”

We’ll see how that goes now that he’s officially a candidate for the Republican nomination for president.

The opening
Gallup asked if “the movement to promote the use of environmental, social and governance, or ESG, factors in business and investing” is a positive or negative development. Despite the negative publicity, nearly 60% of those surveyed have no opinion. The rest are nearly evenly divided in their views.

When pressed, more people (48%) say retirement fund managers should only take financial factors into account when making investment decisions compared to those who say ESG factors should be considered (41%).

Educating people who haven’t made up their minds is a key challenge to communicators. Here’s three tips on what to do:

1. Tell it straight. An astounding 59% of executives admit overstating or inaccurately representing their own companies’ sustainability activities, according to the Google Cloud Sustainability Survey 2023, released in April. The survey, conducted in January, polled nearly 1,500 vice president and C-Suite level executives worldwide. The results were weighted by country.

What’s the reason for all this puffery? A lack of data. Companies that don’t measure their sustainability efforts accurately are challenged to describe their progress and overstate their efforts, 80% of executives say.

Communicators should join with other corporate departments such as Investor Relations to push their employers to enhance their ESG reporting. Meantime, they should find good stories in the data the company has now.

Widespread suspicion about ESG efforts makes traditional public relations and marketing poor tools to persuade people. That’s why we recommend brand journalism, which uses the techniques of reporting and storytelling.

2. Find the bottom line. Financial impact is one thing that makes ESG different from previous investment movements, such as corporate social responsibility and ethical investing. ESG investing “focuses on issues which have or could have a material impact on investment value,” according to “Who Cares Wins,” the landmark 2004 report by the U.N. Global Compact.

Demonstrate in every story how ESG efforts are closely tied to the success of the business. That will dispel notions that your efforts are merely to bring the company in line with certain moral standards and policy goals.

3. Make every day ESG day. Your efforts are too important to be segregated into one section of the website or an annual report running hundreds of pages. Stories about your efforts to reduce carbon emissions and embrace diversity can be compelling. Make them a regular part of your editorial calendar.

You don’t need to label those stories. Your audiences will get the point. Even a U.S. sustainability executive with London-based Legal & General Investment Management recently said he’s stopped using the catchall term ESG.

“The current political environment is forcing us to be sharper, crystal clear about what we do,” he told Bloomberg this month.

Back to basics
At bottom, ESG is a simple proposition: Make the right decisions, and the company can save money, like energy costs. Make the wrong decisions, and the company’s expenses climb, like bad corporate governance that costs shareholders.

Let’s keep it that simple.

The Letter that Johnny Walker Read,” is also one of Tom Corfman’s favorite songs by Asleep at the Wheel. He is an attorney and senior consultant with Ragan Consulting Group, where he leads the ESG practice and the Build Better Writers program.

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