Determining how to communicate about corporate environmental, social, and governance (ESG) performance can be challenging for executives and communications teams. But it is increasingly unavoidable. To earn credibility and build trust, companies must engage with a wide variety of stakeholders about the effectiveness of their sustainability objectives and outcomes.
The importance of building an effective ESG communication strategy is underscored by evidence from Edelman’s 2022 Trust Barometer. The annual research report revealed that 88% of institutional investors subject ESG issues to the same level of scrutiny as operational and financial considerations.1 It also showed that 64% of respondents base their investments on a company’s beliefs and values, and that 60% consider corporate beliefs and values when choosing a place to work.2
This blog provides insights into the best practices for strategic ESG communications, with five lessons from three top performing companies in Sustainalytics’ universe.
Key Lesson One: Take an ‘Always-on’ Approach to Communicating About ESG
Sustainability reports are perhaps the most popular tool companies and organizations leverage to report on their ESG impacts. According to a recent Sustainalytics survey, annual CSR or ESG reporting is the most frequent use for ESG ratings by companies, with 28% of companies disclosing their ratings in such reports.3 In addition to disclosing ESG ratings, annual reports are also a good opportunity to communicate both high-level ESG objectives and disclose more granular details about key results and regulatory compliance.
Although many organizations opt for issuing a single annual report, some forward-thinking companies are turning to an “always-on” model. E.SUN Financial Holding Co., Ltd., a Taiwanese-based bank that earned a Sustainalytics Top-Rated Badge for the banking industry, leverages a variety of communication channels to report on its ESG initiatives and achievements continuously throughout the year.
“We disclose all news on our official website, our intranet and some social media channels,” said Joseph N.C Huang, Chairman of E.SUN Financial Holding Co., Ltd. “So, the general public – all of our shareholders actually – can continually get updates on our ESG initiatives.”
Sustainability reports also offer an opportunity to bring your ESG story to life. Beyond just numbers, they are a chance to highlight the impact of your work and bring the people your initiatives are affecting into focus.
Key Lesson Two: Make Transparency a Priority
There is no trust without transparency, so it’s important to keep honest, clear communication at the center of your ESG communication strategy. Whether you have a track record of successful ESG initiatives, glaring weaknesses, or a mix of both, staying open and authentic is the best way to build genuine, long-lasting relationships with your stakeholders. Holaluz Clidom SA, a Spain-based energy transition company, attributes their success as a Sustainalytics Top-Rated Badge earner to their open and honest approach to communication.
“We strongly believe that over-communicating what we are doing is key to maximizing our impact for our stakeholders,” said Carlota Pi, Co-founder and Executive President of Holaluz Clidom SA. “We were born with ESG in our DNA, and it is reflected in our commercial reports, corporate reports, internal communications, and financial reports, ensuring that our potential and existing stakeholders understand our approach.”
Providing a clear view of where your company currently stands in its ESG journey demonstrates commitment to your customers and investors and can help motivate your internal teams to improve.
Key Lesson Three: Approach Investor Conferences Through an ESG Lens
Communicating with investors about your ESG performance can be a daunting task. ESG performance has become an increasingly important set of metrics for investors, to inform their investment decisions. A growing segment of investors are looking more closely at ESG to create long-term shareholder value. As you build your ESG communication strategy, it's critical to create a plan for engaging with investors and shaping your ESG messaging to meet their expectations. Huang says that holding conferences and events for their investors has been a key part of E.SUN Financial Holding Co., Ltd.'s communication strategy.
“Some of our investors take a long-term view in investing in our business and they see our ESG performance as long-term value,” said Huang. “Every quarter, we hold an investor conference. Besides our financial performance, we report how we offer ‘sustainability as a service,’ which refers to how we link our financial expertise with ESG within financial products and services. In addition, we showcase the recognition E.SUN has received, to let investors know about our ESG performance.”
Continual communication through investor conferences allows you to better understand investors’ ESG expectations, how they perceive your ESG performance, and what areas you need to improve to meet their expectations.
Key Lesson Four: Participate in ESG Exchanges
ESG exchanges are events where companies gather with industry peers, or even clients, to showcase their ESG performance and share lessons about building an effective strategy for sustainability. E. SUN Financial Holding Co. Ltd. has leveraged this tactic to connect with its clients.
“We organize ESG exchanges to meet directly with our corporate customers,” said Huang. “We listen to their needs and difficulties with ESG issues, give our suggestions of transition pathways to sustainability depending on their business circumstances, and provide financial products as our ESG total solution. In addition, we detail our ESG progress and share information about what we learn from ESG evaluations and initiatives, such as Sustainalytics, SBTi, RE100, and DJSI.”
These exchanges are a great way to hear new perspectives and gather new lessons to inform your ESG strategy.
Key Lesson Five: Leverage Awards as an ESG Performance Indicator
Awards, like Sustainalytics’ Top-Rated Badges, allow companies to communicate the strength of their ESG performance to a variety of key stakeholders. Recognition from impartial, third-party organizations is a quick way to signal to investors that your company manages its material ESG issues well. Awards are also an excellent tool for motivating employees and celebrating their contributions. ASR Nederland N.V., a Netherlands-based insurance provider, leverages its Top-Rated Badge from Sustainalytics for a variety of communication channels.
“Our Sustainalytics rating has become part of the story that we communicate to the outside world,” said Barth Scholten, ESG Investor Relations Officer at ASR Nederland N.V. “Being #1 in Sustainalytics’ assessment is a great way to start any investor meeting. This external recognition also means a lot to our employees. It validates our sustainable strategy and goals, which also helps in attracting new talent who are drawn to a sustainable employer.”
Progressive companies can leverage awards to demonstrate their strong ESG performance for capital raising activates, marketing and promotional purposes, and internal and external benchmarking, among other use cases.
Whether you are just starting on your ESG journey or already have a detailed strategy, implementing these lessons from some of the top performing companies in Sustainalytics’ universe can help you tell an ESG story that resonates with your investors, consumers, and employees.
1. Edelman. 2022. Edelman Trust Barometer 2022. www.edelman.com/sites/g/files/aatuss191/files/2022-01/2022%20Edelman%20Trust%20Barometer%20Global%20Report_Final.pdf
3. Morningstar Sustainalytics. 2022. The Morningstar Sustainalytics Corporate ESG Survey Report 2022: CSR and Sustainability in Transition. bit.ly/ESGSurveyReport2022
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