In the multiple recaps of best/most read articles from leading business journals that I received as 2021 came to a somber close, one word stood out – sustainability. Along with it, the environmental, social, and governance (ESG) indicators were most mentioned.
It is not as though these words did not exist before. The year 2021 however bought in a sharp focus on the need to build on these indicators. What lead to this movement is the visible impact of climate change across the world and investors clamoring for details on what companies are doing to mitigate this global challenge. One may also attribute it to the growing public consciousness during COP26 and the chorus for companies to have a clear sense of purpose and measure the outcome as they progress in that journey.
Globally, many multinationals have been proactive in defining the purpose of their organization. In India as well, in May 2021, the Securities and Exchange Board of India (SEBI) came out with disclosure requirements under business responsibility and sustainability reporting, covering ESG perspectives, which will be applicable on the top 1,000 listed entities by market capitalization. The new report — Business Responsibility and Sustainability Report (BRSR) replaces the existing Business Responsibility Report (BRR). “The BRSR is a notable departure from the existing business responsibility report and a significant step towards bringing sustainability reporting at par with financial reporting,” SEBI said in the circular.
This expands the whole scope of the reporting, which will now include a large number of parameters beyond the usual ones of air pollution index, GHG, water conservation, etc. For instance, companies will have to disclose the gender and social diversity of employees, including measures for differently-abled employees and workers, and much more. For consumers, they have to make disclosures on product labeling, product recall, and complaints in respect of data privacy and cybersecurity. According to Anand Mahindra, Chairman, Mahindra & Mahindra Group, “Stock markets are beginning to prize companies that are purpose-driven. Social impact is becoming increasingly important to investors.”
The spotlight but naturally turns to communicators on how they tell the ESG story to their stakeholders. It is little wonder then that SPECTRA 2021 too placed this hot topic in its agenda. There was Tony Langham, Chief Executive & Co-founder, Lansons, who spoke about “The Role of ESG in Building Reputation.” Says Tony, ESG is central to organizations and fundamental to reputation. Communicators being the guardian of reputation should therefore have their ears and eyes to the ground and work closely with businesses to ensure the right narrative is out there.
Fundamentals of communications like authenticity, fact-based, leader-led, transparency, and listening to shareholders and stakeholders remain sacrosanct when it comes to ESG reporting. The biggest change probably is the added index of measurement, which is very strong here vis-à-vis measuring the outcome of PR and/or any branding activity.
Strong, impact-driven, measurable ESG indicators have the potential to be game-changers for any organization. Indicators like carbon neutrality, water conservation, and others are gaining importance. Investors are going to value a company by measuring the above. This calls for a tight knight relationship of communicators with business leaders so as to understand the nuances of ESG as well as guide the leaders on the implications whilst reporting the same.
ESG communications call for regular consistent updates. Progress has to be shared in a transparent manner and in a lucid style. Every progress report has to be metrics-driven. The challenge is in breaking down complex ESG indicators into layman language so that it is understood by the consumers as well. The other equally integral piece in ESG communications is making employees aware of the overall strategy and making them your brand ambassador. Employee sense of pride for her/his company which is purpose-driven and ESG complaint can go a long way in shaping the reputation and brand of the company.
Time for communicators and agencies to now have ESG and sustainability integrated into the overall bouquet of services.
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