ESG & climate communications - from nice-to-have to business critical and what every communicator needs to know
IABC member, Mione Collins, unpacks the evolution of ESG to centre stage in 2024, the importance of ESG and sustainability knowledge for communicators, what ESG is, the role of communicators, key communication challenges, how to get ESG communications right and what’s next.
At a recent IABC NSW event, ESG and sustainability were highlighted as top communications trends for 2024 and important areas for professional communicators to upskill in. A report released this month also states that ESG is one of the top five issues defining reputation management in the Asia Pacific region. And for good reason – amid ever-increasing consumer, investor, stakeholder and regulatory pressures and scrutiny, ESG communications are becoming a higher priority for companies than ever before.
Why is ESG so important now?
When I first started communicating about ESG years ago, it was often seen as a nice to have, side project for an organisation. Fast forward to today, and ESG has evolved to front-and-centre business critical.
Part of this is because of the heavy scrutiny of organisational ESG practices by a range of stakeholders as a result of their increasing expectations of businesses. ESG is now directly linked to a company’s reputation, employee acquisition, employee engagement, customer and investor consideration and more. For example, PwC’s 2023 Global Investor ESG Survey found that an organisation’s performance against ESG metrics is a critical consideration for a large majority of investors globally.
This year, around the world, ESG reporting requirements for companies are rapidly evolving, with corporate activity due to be highly scrutinised under these. This reporting will not only affect companies, but also their supply chains, for example a strong focus on scope 3 greenhouse gas emissions (which result from of a organisation’s activities outside of its direct control).
This includes mandatory climate-related disclosure requirements for businesses looking set to be rolled out in Australia soon. As part of this, companies will have to prepare a sustainability report that includes things such as climate risks and opportunities, greenhouse gas emissions, governance and strategy. With legislation currently before parliament, this is expected to be introduced in a phased way from 1 January 2025, with Group 1 companies (large companies and heavy emitters) due to report first. Group 2 companies will then report for periods from July 2026, and Group 3 companies from July 2027.
While many larger companies will already have started ESG reporting, with these reporting changes coming, this is likely to intensify.
These changes, together with the impacts of climate change increasing, mean all communicators are set to become climate/ESG communicators in some way in the future as climate change starts to impact more and more aspects of our lives and business – another key reason these are important areas for all communicators to understand.
So what is ESG?
‘ESG’ is one of those terms that people have probably heard thrown around a lot, but might not always fully understand. ESG stands for Environmental, Social and Governance and covers a wide range of areas. A quick breakdown is:
Environmental: this covers the impact an organisation has on the environment, such as its carbon dioxide emissions, energy use and management of waste.
Social: this encompasses the impacts an organisation has on people and society, for example ethical labour practices (including human rights, workplace safety and wage equality), strategies in place to support diversity and inclusion, and community engagement.
Governance: this encompasses everything from an organisation’s board and management structure to corporate policies, compliance with internal and external standards, and its approach to auditing.
The role of communicators
Effective communication is so critical in ensuring organisations tell an authentic, transparent, honest and engaging story about their ongoing ESG journey, demonstrating their commitment to and progress against key ESG measures in an engaging, ethical and compliant way.
ESG communications can span many types of comms – from PR, change comms, internal communications, CEO communications, investor relations and more. Internal communications can play a key role in terms of helping drive a company’s ESG strategy and the changes associated with it, and even retaining employees along the way as they increasingly factor ESG issues into their decision about where they want to work.
These communications can involve a range of different teams – from marketing, HR, strategy, operations, governance, legal, procurement and more. It’s important for comms teams to work with these other teams from the get-go to inform communications, ensure the accuracy of ESG data and that all legal/regulatory aspects are understood and complied with, and that everyone’s on the same page.
As communicators, we can also add value by putting our “media hat” on to sense check communications for difficult questions journalists may ask or do a “pub test” in terms of considering concerns consumers might have.
ESG and climate communication challenges
When it comes to communicating an organisation’s ESG story, getting the messages right is critical, but it’s not always easy. Expectations from increasingly savvy – and critical – stakeholders, including regulators, may feel overwhelming and daunting. This includes consumer scepticism of ESG claims. The Australian Consumer Policy Research Centre found that at least 50 per cent of people surveyed said they were worried about green claim truthfulness.
It’s also hard to miss the ongoing headlines about greenwashing and related court cases, which have led to some businesses being fearful of communicating about their genuinely positive sustainability initiatives in case they’re perceived as greenwashing. That’s why it’s important to be aware of some of the key challenges before getting involved in ESG communications to ensure you prevent greenwashing and bluewashing, and overcome greenhushing to confidently communicate about the genuine ESG work your organisation is doing.
Climate communication challenges - hope over doom and gloom
When it comes to climate communications, Sir David Attenborough has said “saving our planet is now a communications challenge”. But if Sir Attenborough is finding it challenging to get the message across after six decades on TV and radio, what hope is there for the rest of us communicators?
With so many doom and gloom statistics and a negative media narrative around the environment, many people zone out. So how can we capture people’s attention? When it comes to communicating about the climate, climate scientist Katharine Hayhoe, who The New York Times called “one of the nation's most effective communicators on climate change,” says the key is communicating hope.
She says preaching doom doesn’t work and that to inspire people to take climate action, we need to give them hope and relate to them in their own world. This way we can help them see how they can make a difference and inform them about solutions that are already making a positive impact.
Greenwashing, greenhushing and bluewashing
It can feel hard to get ESG communications right amongst the triple trends of greenwashing, greenhushing and bluewashing. Most people have heard of greenwashing, making false or misleading claims about the environmental benefits of products or services, or the sustainability credentials of your business. But have you heard of ‘greenhushing’ and ‘bluewashing’?
Greenhushing refers to companies avoiding communicating about their environmental performance out of fear and bluewashing is companies claiming to having a greater positive social impact than they actually do.
How to get it right
The good news is there are some pretty simple guiding principles that can help you communicate ESG well and avoid the risk of unintentionally committing greenwashing, greenhushing and bluewashing.
It all starts with the ESG strategy
The number one factor in getting ESG communications right is an organisation having an ESG strategy and a commitment to ESG goals, and taking genuine action to deliver on these.Integration into communication strategies
An effective ESG communications strategy, which ties into your overall company communications strategy and broader company strategy, rather than it being an afterthought or something that’s done as a box-ticking exercise, is an important next step. This will help key stakeholders engage with your company’s ESG story and inspire action, as well as protecting and growing your company’s reputation and performance.Tell an engaging ESG story
While there are important considerations to take into account for ESG communications, for example ensuring the reporting of key metrics and using accurate data - just like in other communications - in order to engage your audience and get cut-through, ESG communications need to tell a story. You can share with your audience why ESG issues are important to your organisation, how this ESG focus benefits the arena your organisation operates within and how it ultimately drives organisational performance and customer/stakeholder outcomes.Walk the talk – be genuine and data backed
The story you tell matters – it needs to go beyond the superficial and be about actions, not just promises. This means including proof points and data that show the true impact your organisation is making when it comes to ESG. Consumers and other stakeholders can spot a marketing and communications team job of “making it look green” or “pretty” a mile away these days, and there are serious consequences of doing this.Be transparent
Transparency is crucial. Being upfront about your organisation’s ESG commitments and performance is essential to building trust with stakeholders, for example recognising where the organisation hasn’t yet met targets or, if it is at start of its ESG journey, ensuring your communications reflect this.Understand ACCC and ASIC guidelines on greenwashing
When it comes to greenwashing, the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) have released helpful guidance to ensure businesses provide clear, accurate and trustworthy information about their environmental performance.
ACCC’s eight principles for trustworthy environmental claims are similar to some of the principles I’ve mentioned above and are broadly also applicable to all ESG communications. They are:Principle 1: Make accurate and truthful claims
Principle 2: Have evidence to back up your claims
Principle 3: Do not hide or omit important information
Principle 4: Explain any conditions or qualifications on your claims
Principle 5: Avoid broad and unqualified claims
Principle 6: Use clear and easy-to-understand language
Principle 7: Visual elements should not give the wrong impression
Principle 8: Be direct and open about your sustainability transition.ASIC’s how to avoid greenwashing guide (for financial products and investment strategies) says some of the questions to consider when preparing communications and disclosures about sustainability related products include:
Is your product true to label?
Have you used vague terminology?
Are your headline claims potentially misleading
Have you explained how you use metrics related to sustainability?
These are also helpful to think about for other ESG communications. Reading the ASIC and ACCC guides in full is a great place to start in terms of understanding more about greenwashing and how to avoid it.
Where to from here? The future of ESG communications
While there’s still a lot that’s unknown about the future of ESG, including the roll out of mandatory reporting and frameworks, it’s clear that the focus on ESG will continue to intensify over the coming years and strategic communication will play a key role in this.
While currently much of the focus of ESG is on the ‘E’, a current trend is that the ‘S’ is gaining more prominence. A 2024 survey by a law firm, Herbert Smith Freehills, found climate-related concerns topped the issues that companies identified as the subject of ESG reviews, but 'S' issues were growing in importance. It showed human rights and modern slavery were the top S considerations.
Australian Financial Review journalist, Anthony Macdonald, sums this trend up in his column by saying, “What is really torching shareholder value, damaging brands and getting CEOs sacked or retired early has much more to do the ‘S’ and the ‘G’.” There seems to be a lot of truth in this, especially in light of recent CEO scandals and company crises, and it will be a key trend to stay on top of as communicators to inform both our ESG and crisis communications strategies. This will help us to determine how best to support our organisations and advise and prepare CEOs and senior leaders to protect and grow our organisation’s reputation in terms of ESG and beyond.
Where to find out more
ESG is a complex and quickly evolving area - this blog is just a brief snapshot of some of the key things to know. Some great places to find out more are:
A guide to ESG terms for communicators
Important info: This blog is based on my experience in ESG communications and is designed to provide general information only and inspiration for other communicators. I’m a communicator not a lawyer or policy/ regulatory expert, so this is not intended to provide you with advice or take into account your objectives, situation or needs. Always chat to your company’s legal and regulatory team about what’s appropriate for your company and circumstances and seek professional advice. While I believe that the information is correct, no warranty of accuracy, reliability, or completeness is given, except for liability under statute which can’t be excluded.