How clear communication can save ESG

How clear communication can save ESG

In today’s corporate landscape, Environmental, Social, and Governance (ESG) reporting has evolved into a somewhat formidable undertaking.

At every opportunity, organisations continue to underscore their commitment to driving ESG initiatives for the betterment of their people and society, but a concerning trend might be emerging – a subtle revolt against the onerous task of reporting against regulatory benchmarks.

What was once seen as an ‘easy win’ for organisations seeking to boast their commitment to environmental sustainability, social responsibility, and good governance, navigating ESG reporting requirements has become more complex.

Regulators are increasingly demanding more detailed and nuanced information and prioritising different reporting standards, which can take organisations significant time and resourcing to fulfil accordingly.

Encouraged by heightened community expectations and activist investors, politicians and the media are swift to apply the blow torch to corporate leaders that fall short of the mark.

Conversely, The Australian Financial Review has reported that business leaders are also at the mercy from those who strongly oppose the concept of ESG frameworks – or what they refer to as ‘woke capitalism’ – based on ideological grounds.

According to commentary in The Financial Times, research has failed to show any relationship between ESG scores and returns.

Add this to the fear of being publicly criticised for being ‘woke’, it is no surprise that organisations are becoming cagier about promoting their ESG credentials.

A wave of boardroom resistance has gained momentum in recent months, with leaders focusing their efforts on promoting other indicators that are welcomed by the market.

As Forbes details, the c-suite are discreetly realigning their priorities to other operational areas, such as risk management, to demonstrate how they are “identifying vulnerabilities with climate change, changing demographics, quality of life issues and workplace policies and practices.”

The notion of corporate citizenship is not all forgotten

The pushback against exhaustive ESG reporting does not necessarily signify a retreat from responsible corporate behaviour, nor does it reflect a disillusionment with ESG practices. Rather, it is a call for a more pragmatic and realistic approach.

Leaders remain focused on striking a balance between meeting regulatory obligations and maintaining operational efficiency.

The Wall Street Journal suggests that the corporate world may want to discard the acronym ‘ESG’ but continues to embrace the power and opportunities of the concept. Afterall, The WSJ’s research says: “those who are integrating ESG considerations into their business are guilty of nothing more than good management.”

A recalibration in 2024 presents an opportunity for organisations to innovate and adopt a more streamlined ESG reporting framework that leads to greater transparency and a more meaningful impact on a business, its people and broader society.

Clear communication at each stakeholder touchpoint plays an obvious and important role within these processes, and while it might seem mundane and at times laborious, leaders must double down on their efforts in this area.