Communicate sustainability measures to investors without ESG
What you will learn from this article:
Why ESG has become a communications risk and how companies can reframe it as a business strategy rooted in transparency and performance.
How to build investor confidence by connecting sustainability initiatives directly to enterprise risk management and long-term growth.
Practical steps communicators can take to simplify messaging, focus on measurable impact, and strengthen shareholder engagement.
While corporate DEI programs have received the lion’s share of activist and government scrutiny over the last year, deeper scrutiny of corporate ESG programs, commitments and disclosure appears to be the next frontier in the ongoing effort to influence and reshape corporate behavior.
When evaluating investor perceptions of corporate sustainability initiatives, the headlines can paint a picture that at first glance seems contradictory, or at least confusing. On one hand, proposals submitted by shareholders under Rule 14a-8 calling for greater disclosure on environmental and social topics—the E and S of ESG—were significantly down again this year as large institutional investors signaled skepticism of proposals deemed overly prescriptive. Yet shareholders have consistently rejected anti-DEI and anti-ESG proposals by overwhelming margins. At the same time, the federal government has co-opted antitrust and competition enforcement into anti-DEI and anti-ESG enforcement. Amid this volatility, what are public companies to do?
Now more than ever, companies must ensure their sustainability communications strategy is calibrated to address the specific contours and complexity of their business while reflecting the perspectives of their shareholders. Authenticity and transparency are key. Investors will support sustainability initiatives—and many view such programs as imperative in today’s marketplace—but these programs must directly connect to overall enterprise risk management, reputation protection and the company’s ability to execute its growth strategy while delivering returns. The messaging challenge is to articulate a compelling case for how sustainability measures benefit the company’s operations in the near term while also driving long-term strategy, vision and value creation.
How can this be done? First, ditch the letters E, S and G. In today’s hyperpolarized environment, this acronym has become a distraction from what should be viewed as strategic initiatives to protect and grow the business. Second, identify the areas of focus that matter most to the organization, determine the metrics to report against (and how they will be calculated), and explain the rationale. Third, engage with shareholders directly. Do not assume investors understand the company’s strategy, what is important to it or how success is being measured. Communicators must tell them—and tell them repeatedly.
In today’s environment, a clear and concise narrative summarizing the sustainability strategy, success metrics, potential swing factors and business impact to shareholders is an essential component of any investor engagement and communications plan.
