Despite world temperatures rising and extreme weather instances growing, many governments and politicians are taking the unfortunate step of rowing back on their ESG (environmental, social, and governance) commitments. This past autumn, Rishi Sunak announced a watering down of the UK’s net-zero pledges, while the recent COP28 saw huge debate about how far countries must go in their commitments to phasing out fossil fuels. At the same time, states such as Florida in the US are pulling back on social equality promises, particularly around LGBTQ+ and women’s rights.
While governments are seen easing off on their promises, brands seeking to protect their reputation in the marketplace should resist following suit. The interconnected world of business, economics, and politics can seem a complicated landscape, but it’s crucial that brands keep their heads above the mess.
Think about this: Only 38% of respondents surveyed globally for the 2023 Edelman Trust Barometer believe in their government’s vision for the future. Meanwhile, there was an overwhelming consensus that CEOs need to take a stand on important issues.
The contradiction–and opportunity–is clear. Brands are built by people, so even in our technology-driven world, there will still be people curating ideas, products, and services, along with making crucial decisions about how a brand goes to market. To call those best decision makers coworkers, brands need to demonstrate that they aren’t just serious about supporting ESG targets, they’re serious about putting them into action.
The first step? Setting out intent and commitment. For many organizations, this can be done under the pillars of people (employees/clients), partners (i.e., companies in the supply chain), and planet (environmental aspects). The next step involves undertaking a qual and quant assessment of the current situation under each pillar. This–combined with a time-bound target such as achieving net zero by 2050–creates a roadmap with relevant goals.
It’s vital to remember that this is not an activity that has a start or end point. It’s continuous and evolving. So, without moving the ultimate target, goals must adapt as the organization progresses.
Brand reputation amidst the anti-ESG movement
An anti-ESG movement is at play around the world, led in no small part by politicians grandstanding for short-term votes and a reaction against perceived liberal thinking: the “anti-woke” movement. However, let’s be honest, democratic leaders have a few years to do meaningful work before they’re out on the campaign trail. They’ve become performers first, thinkers second.
Compare that to CEOs, where the average tenure was 7.2 years in 2022 (albeit a dropping metric if you look at the past ten years). CEOs can and should outlast the shifting sands of politics. It’s why they need to think of the big picture and act accordingly. There are long-term existential threats to business–a functioning planet is needed to survive–and they are deemed responsible.
Commitment to long-term visions contribute not only to immediate reputation management but also to sustained brand value and customer loyalty, as well as attracting top talent. In February of 2023, Paul Polman (the ex-CEO of Unilever) warned of employees quitting–either quietly or with their feet–if brands did not live up to their ESG commitments. Our own research shows that a significant 88% of employees claim to know what a brand’s stated purpose is.
The takeaway? Employees are watching carefully, so start by living up to your promises.
Commitment can come through exploring new ways of engaging employees on these matters–initiatives such as forums, surveys, mentorship programs, or volunteer opportunities that align with the company’s ESG goals. The strategy doesn’t need to be perfect straight away, but clear and consistent communication will foster trust and empower employees to make meaningful contributions. Not to mention it reassures them that their company is committed to a better future.
Brands mustn’t be afraid to publish their targets and, vitally, their progress because it shows accountability. Most brands will have an ESG segment within their annual reports, but they shouldn’t be too concerned about missing targets–so long as they can show they are working to rectify the situation. Honesty combined with action reflects well on an organization. Every mature person understands this is hard to get right, so sharing learnings, as well as intent, is part of the journey.
What do employee-led ESG strategies look like?
There are, of course, some very real issues driving a lack of transparency in this area. Some companies are resisting setting and sharing ESG plans–both externally and internally–for fear of failure. Not only in terms of missing their targets, but also in terms of falling prey to onerous legislation or accusations of greenwashing.
But it’s a trap because, ultimately, businesses are driven by their people.
If CEOs want to recruit and retain the best employees, then they have no choice but to lead with their ESG efforts. Why? The numbers are overwhelmingly clear. One IBM study concluded that almost three out of four employees find employers with sustainability programs more attractive. Meanwhile, a whopping four out of five look forward to contributing to their employer’s climate or ESG targets.
And workers are willing to vote with their feet. A 2023 KPMG study found that one in five workers say they’ve turned down a job because of a brand’s ESG credentials, while two in five say they’ll quit if an employer fails them in integrity, ethics, or environmental performance. This is where governance plays an essential role: It’s a strong benchmark for employees to know how well their organization is run. Things like amount of tax paid and other metrics are nods toward their company’s social responsibility commitments.
Many people mistakenly believe that this “sensitivity” is all due to changing demographics and the values of younger members of the workforce. However, according to the recruitment firm Resource Solutions, two in five over 55’s say they’ve snubbed an employer who wasn’t taking their ESG commitments seriously–which shows, once again, why governance is so important.
At board level, ESG has to be a key topic; it has to be part of every board meeting, so that the organization remains accountable at the highest level. ESG should be integrated across any and every aspect of a business, from policies to daily practices, and this will only happen if everyone is clear on what they need to do, why they need to do it, and how.
Luckily, many brands have begun training themselves to think differently and are much more open to diverse views and talents. They recognize that it makes them far more competitive when pulling in talent from all walks of life, and that corporate reputation is better protected when horizons are expanded and employees are not only heard but listened to.
Cover source: everettovrk