COMMENT: Carol Goodstein explains how storytelling backed by data can be a vital tool in communicating a company's purpose to different audiences
Health risks, supply chain disruptions, gender rights and equity, climate change – the Covid-19 pandemic has lent new urgency to ESG (environmental, social and governance) factors, highlighting, in particular, the social aspects and linking environmental risks to broader societal challenges.
The good news? Bolstered by champions including BlackRock’s CEO Larry Fink, investors are more engaged than ever before.
The bad news? While investors are demanding quantitative data, if companies fail to address the growing scrutiny of their operations and social stances by non-number crunching audiences – the consumers, colleagues and communities who prefer to support businesses whose purpose aligns with their own – and provide them with qualitative context and content, they risk losing the trust and loyalty of those stakeholders to competitors.
Businesses have an opportunity to use their reports so that their reason for being and doing aligns with the concerns of their stakeholder audiences
The best news? Businesses everywhere have an opportunity to use their reports to position themselves so that their reason for being and doing aligns with the concerns of their various stakeholder audiences. In other words, beyond the myopic and granular data collection, companies can engage internal and external audiences and, most importantly, capture and retain their trust, by giving them a reason to care.
A few years ago, engagement was sustained by so-called sustainability storytelling, which offered colour and context to otherwise arid CSR and ESG reports. The problem was that after being all the rage, storytelling came to be seen as flabby or even fictional. And, at its most blatantly self-promotional, “greenwashing”.
Data and story, however, need not be at odds. In fact, when properly woven together, they lend credibility to strong ESG reporting and serve to reinforce a company’s purpose, mission and aspirations. By using data to support their stories, companies have an opportunity to engage all stakeholders – not only investors and analysts – around their ESG efforts. That means focusing not just on the metrics themselves but on their meaning – as the business writer Simon Sinek often says, on their “why”. Sinek writes: “People don’t buy what you do; they buy why you do it. What you do simply proves what you believe.”
Take a close look at nearly any ESG report. Chances are, it’s filled with data categorised by pillars that align with the UN Sustainable Development Goals. And that’s all well and good. But rather than simply measuring risk management against these goals, what about creating the context for why?
It’s not because your company believes that the world needs to be a better place – although that’s certainly part of it – but because the world is facing critical, urgent and even alarming challenges. By making operational changes and using ESG data to inform your sustainability strategy, you’re becoming part of the solution that aligns with stakeholder concerns. That’s why.
While today, some 90% of companies in the S&P 500 produce corporate sustainability reports, all of which are compiled at great cost and effort, most of the public debate around ESG reporting focuses not on sustainability strategy or even risk management but on choice of framework – Global Reporting Initiative, the Task Force on Climate-related Disclosures or Sustainability Accounting Standards Board – and data harmonisation. Companies are compiling so much data that not even their investor audiences can easily access the most relevant nuggets.
We found that when CEOs did well at communicating corporate purpose, stock prices and trade volume rose
Meanwhile, these companies have the opportunity to make ESG quantitative data not only more accessible to investors but to maximise their return on investment in their ESG reports by using them to demonstrate to their stakeholders that their corporate approach to sustainability is more than merely a check-the-box accounting exercise, that it is fully embedded throughout business operations and company ethos – "baked in and not bolted on" as Marc Pritchard, Procter & Gamble’s chief brand officer puts it.
While it’s widely accepted that sustainability is a driver of innovation, the means by which it is communicated should also be innovative, creative and reflect a brand’s commitment to cutting-edge solutions. Not only is providing context compelling, it can be profitable. As Harvard Business School’s George Serafeim, an internationally recognised authority on ESG investing, wrote: “We found that when CEOs did well at communicating corporate purpose, stock prices and trade volume rose in the following days. The implication is that investors find value in information about purpose.”
Unfortunately for most firms, the ESG reporting process is a siloed exercise that generally falls somewhere within the company’s sustainability, operations and management team. But when communications is considered from the start, the outcome can look quite different than an accounting exercise.
We found that when CEOs did well at communicating corporate purpose, stock prices and trade volume rose. From a practical perspective, that means including strategic communications from the start of the ESG reporting process and not as a Johnny-come-lately. So when the discussion of the materiality assessment kicks off, the communicators on the team can strategically consider the various audiences, map information to meet their needs and interests, and plan to contextualise that information through stories and content. They can even be involved in the stakeholder interview process.
The key is to use the data to tell and support persuasive stories where the protagonists may be the consumers, employees, communities or the company itself. In other words, the data is not the end in itself but a means to an end – to build trust, not only among citizens, communities, consumers and employees but even among investors.
In Target’s CSR report, Amanda Nusz, vice president of corporate responsibility, writes passionately about the quest for real engagement: “We’re on a journey to reimagine not just how our products and service are designed, but what their impact is while they’re being used by our guests, and how we can provide our guests with end-of-use solutions so that they can feel good about what they’re buying. As well as being sustainably designed and made, our products must be inclusive and affordable and reflect our guests’ expectations.”
The key here is to give people a reason to feel good. Stories, not numbers, evoke feelings, trust and support. ESG data proves that stories not only are true but ring true.
Carol Goodstein has developed effective strategies and award-winning campaigns and content for brands including Lipton, IKEA and Staples. After serving as the long-term Director of Communications & Marketing for the Rainforest Alliance, she currently advises leading businesses and nonprofits on positioning their sustainability achievements and aspirations.
SDGs purpose ESG Harvard Business School Procter & Gamble reporting GRI TCFDs