Environmental, social and governance (ESG) issues, including sustainability and corporate citizenship, have become business necessities in our rapidly changing world.
By Wendy Gerber, Executive Director, Strategy at Siegel+Gale
The pandemic has shown us the intersectionality of our lives, our health and our planet. As companies look to build their brands, leading with purpose and embedding ESG into your company’s DNA is key to driving growth, consumer and employee engagement and navigating the transition to net-zero.
The most successful brands combine dynamic customer experiences with an ESG focus that’s simple and clear to engage customers and employees, manage risk, maximize opportunity and drive long-term value.
In our increasingly complex world—dealing with a pandemic, climate change, hyper-partisanship and tragic war, customers look for brands that are consumer-centric, authentic and focused on more than their bottom line. Developing and telling your ESG story with transparency and simplicity is a powerful differentiator.
The importance of ESG is increasing due to new global regulatory requirements, an evolving ESG reporting landscape and shifting stakeholder expectations, including pressure from investors looking for ESG disclosures to guide their investment decisions.
In 2020, a KPMG survey of sustainability reporting found that, of the top 100 companies across 52 countries, 40% of firms acknowledged climate change in financial disclosures, a 15% increase since 2017.
The pressure’s now on to increase the pace. The Securities and Exchange Commission (SEC) recently proposed a set of new rules that would require most U.S. public companies to disclose climate-related information.
These climate disclosure requirements incentivize companies to focus on ESG reporting to control risk. But forward-thinking leaders know reporting should be viewed as more than a compliance exercise. Brands focusing on strong ESG practices drive innovation, value and brand loyalty. They also build employee recruitment and retention.
Investment firms are increasingly using ESG metrics to screen stocks and bonds issued by companies, building an impetus for strong ESG practices and reporting. Currently, $40 trillion in ESG assets are held worldwide. Bloomberg Intelligence estimates that, by 2025, this could increase to $53 trillion, or one-third of global investments. ESG funds grew by $285 billion in 2020 alone, a 96% increase over 2019.
From Siegel+Gale’s work advising global corporations on branding and ESG, we’ve developed ten important tips to integrate ESG practices into business strategy.
10 Tips to Drive Sustainable Brand Growth:
1. Integrate purpose and ESG into your core business strategy to make a positive impact on your employees, community, society-at-large and our planet. An integrated ESG strategy requires a “top down – bottom up – trickle out” approach with CEO, Board and C-suite engagement combined with grass-roots employee engagement and collaboration across supply chains.
2. Achieve measurable goals and transparently report on progress, by developing best practices in data collection and creating a comprehensive report, based on clear metrics that tells your story in a simple, compelling way.
3. Harness the power of purpose to innovate and create strong brand
experiences to drive sustainable growth. Leverage ESG to drive disruptive innovation—enhancing sustainable operations and caring for employees and the communities in which you do business. Customers want to buy from brands that lead with purpose. Employees want to work for companies they believe in. It’s a virtuous cycle.
4. Develop strong ESG policies and practices and embed sustainability, corporate social responsibility (CSR), and diversity, equity, inclusion, and belonging (DEIB) into your corporation’s DNA.
5. Walk the talk—live your values by linking employees’ day-to-day work to a larger, shared purpose and encouraging employee engagement around climate and social issues.
All your initiatives--whether training your teams, program development, letters from your CEO or community initiatives — should be transparent, authentic and impactful—not merely a check-the-box exercise. Your company must walk the talk.
6. Engage and mobilize stakeholders across the entire value chain around collective action, including suppliers, distributors, employees, consumers, investors and communities in which you operate.
7. Take a stand with policymakers—lend your voice for human rights stewardship and environmental sustainability and use your proxy power as an investor to drive positive change.
8. Leverage technology and innovation and foster creativity and an intrapreneurial mindset to lower your carbon footprint, recycle materials, increase the efficiency of manufacturing processes and reduce waste and consumption of energy and water.
9. Collaborate across companies, stakeholders and industry sectors to make a difference and drive positive change. Strong brands recognize they need to work together to drive innovation and maximize impact. Collaboration across businesses and industry sectors is key to accomplishing ESG goals.
10. Create circular business models, including circular supply chains, circular products and circular customer journeys. Moving towards a more circular economy reduces waste, protects resources, increases competitiveness, stimulates innovation and boosts economic growth.
Integrating strong ESG practices into your company’s DNA is key to driving innovation and creating positive impact. Focusing on people and planet, as well as profit, to engage diverse stakeholders with transparency and simplicity is a powerful differentiator to build your brand, long-term value and your impact on the world.