The integral value of ESG in brand strategy

Posted by - Change-StormingTM

The intention, ambition and energy behind ESG must sit at the very heart of a brand’s purpose, values, operating principles and communications – in other words, make your ESG strategy an integral part of your brand strategy, and vice versa.”

As we move into a new decade and political chapter, one issue remains at the forefront of every industry and agenda – ESG (Environmental, Social and Governance).

BlackRock, Microsoft and Nestlé have led the way so far this year with new visions, pledges and promises to prioritise, standardise and invest in sustainability. Alongside the World Economic Forum in Davos, these moves have ensured climate positive action and ambition have been headline news and have provided a platform for these businesses to set benchmarks and lay down the gauntlet for their competitors.

Last year Apple, strengthened its social impact with a $2.5billlion commitment to the housing crisis in California; Patagonia closed all its stores to allow its employees to make their own impact on climate marches; and the likes of KPMG, Sainsbury’s, Mahindra Group and Barratt Developments all signed up to The Valuable 500 – a group of companies pledging to put disability on their board agendas. Also at Davos, Goldman Sachs issued an ultimatum that it will no longer take a company public in the U.S. and Europe if it lacks a director who is either female or diverse, which follows the Business Roundtable 2019 pledge to shift from shareholder primacy to the benefit of all stakeholders.

The impact of ESG on brands

The notions of balancing profit and purpose and of a triple bottom line, where environmental and social impact are held in the same regard as profit, provide an opportunity for a win-win and an exponential step in the right direction for everyone. Initial support and recognition for the recent pledges has been encouraging and, if they follow through on their words, the positive impact intended for the planet and its people will no doubt spill over to a positive impact on the brands themselves and their profitability, not to mention their ability to retain top-talent internally.

The top performing sustainable companies, for instance certified B-Corps and those recognised by the World Benchmarking Alliance, are set to shape the future and exemplify the importance of ESG across every facet of business. At this point in the sustainability journey, we have come to expect the world’s biggest companies and brands to step up and do their proportionate part for social and environmental impact. But the opportunity for businesses of all sizes and sectors to make their own mark is at its pinnacle.

For those looking to integrate ESG factors more closely into the way they operate, it will be imperative that their commitment infiltrates every part of their organisation, ethos and people in order for the overarching brand reputation to benefit in the long-term. The intention, ambition and energy behind ESG must sit at the very heart of a brand’s purpose, values, operating principles and communications – in other words, make your ESG strategy an integral part of your brand strategy, and vice versa.

As Larry Fink, Chairman and CEO of BlackRock, stated in his letter to CEOs “Climate change has become a defining factor in companies’ long-term prospects… awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance”.

Matthew McCarthy, Chief Executive of Ben & Jerry’s – a brand well known for its social commitment – thinks that “if you don’t make it clear what you’re doing to make the world a better place and to tackle a specific social or climate issue, you’re probably in more trouble than you know.”

In the 2019 Global ESG Real Estate Investment Survey, Michael Brooks, CEO of REALPAC, stated an ESG strategy is “the right thing for all corporations to do for their brand, their communities, and their continuing social license.”

And according to the Global Sustainable Investment Alliance, these shifts are being reflect in the value of assets managed under ESG criteria. In the US, Europe, Canada, Australia, New Zealand and Japan these increased from $22.9trn in 2016 to $30.7trn at the beginning of 2018.

Working with companies committed to ESG

A number of our clients are fully committed to making a positive social impact and climate change. Ethical Property has been at the forefront of companies recognising the importance of a triple bottom line and we are currently working with Global Friends and The Climate Action Pledge to support their work towards a climate positive future.

Part of our role in shaping their brands and strengthening their communications, is ensuring ESG values are well defined and aligned to company brand values. As well as the clarity this provides, we further integrate these values into meaningful, crafted narratives that can be communicated to audiences, both B2B and B2C, in order to create demand.

Aligning ESG strategy to brand strategy

In a time of uncertainty and change, brand reputation and brand pull go a long way. Brand purpose and being purpose-driven are not new concepts and have been well and truly proven to positively impact the value of a brand and performance of a business. However, we predict ESG will drive brands and businesses beyond being purpose-driven to being action-driven as they strive to establish unprecedented levels of authenticity, innovation and competitive advantage.

ESG is well placed to align with the core constructs of a brand’s currency that resonate with audiences – personal value and identity, social impact and connection, and cultural progress and belonging. ESG values strengthen the essential elements of trust, enrichment, responsibly, community and contribution that create these points of engagement and build demand. It is therefore an opportunity for the planet, people and profitability of businesses.

When aligning ESG strategy to brand strategy, we advise businesses to evaluate the critical insights, key challenges and true growth levers alongside the core constructs of your brand’s purpose to ensure that an action and outcome based approach is taken. Investors and consumers alike will see through a segregated approach to ESG. It is therefore becoming more and more important when telling your business story that your brand messages and ESG narratives together reflect your investment value, your long-term outlook and your competitive advantage.

Being brand-led and not product-led in an ESG world will allow businesses to become more audience-led and positively impact their levels of engagement, revenue and margin, at the same time as contributing to our environmental and social future.

For more information on how we help our clients integrate ESG into brand strategy, branding and narratives or to specifically discuss Change-Storming, feel free to contact us.