Communication challenges: Strategic pillars to engage stakeholders - Simply Sustainable

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Communication challenges: Strategic pillars to engage stakeholders

If we communicate the vision behind our ideas, the purpose guiding our products, people will flock to us. Adam M. Grant Best-selling author and Organisation Psychology Professor

Telling your sustainability story

Interest in sustainability has grown significantly in recent years, with more and more stakeholders wanting to understand what organisations are doing on ESG matters. However, many miss the mark in effectively communicating their sustainability efforts and fail to realise the opportunity to engage more stakeholders in their journey. Now is the time to capitalise on sustainability and showcase the efforts being made to make the world a better place.

The appetite is there amongst stakeholders: 57% of consumers say that a company’s approach to sustainability influences their perception of the brand.[1] It also influences employees, according to IBM’s Institute for Business Value (IBV) study, with 68% of respondents saying they are more willing to accept roles where they can directly influence sustainable outcomes.[2]

Financial markets are very much tuned in, too; in non-US markets, sustainable investment assets under management (AUM) have increased by 20% since 2020;[3] Bloomberg predicts that ESG assets will exceed $53 trillion globally by 2025, representing more than a third of the projected $140 trillion of total assets currently managed globally.[4]

The issue is that companies need to develop an engaging narrative that will motivate consumers, employees, investors, and other stakeholders to purchase from, invest in, partner with, and work for.

But the question is, how do you draw them in, and what do you put in that shop window to showcase your sustainability efforts while balancing the risk of greenwashing?

The communication challenge

Many organisations need help to tie an approach to sustainability to a brand identity and, fundamentally, what it wants to achieve on ESG matters. It is very easy to misconstrue what an organisation stands for on ESG due to the long list of initiatives which companies typically disclose in sustainability reports. Whilst materiality assessments can help show the importance of prioritisation for specific topics, there is still a disconnect on what companies want to achieve on ESG matters.

For some, this is clearer than others, and many companies begin by developing, implementing and communicating a sustainability strategy. Whilst this is an essential first step, the communication challenge remains; as a skeletal structure, an ESG strategy can tell your stakeholders ‘what’ you are going to do but doesn’t necessarily explain ‘why’ you’re doing it. As a result, it is very common for companies to experience a disconnect among stakeholders in terms of their sustainability strategy and targets.  Ultimately, companies must engage stakeholders with their ‘why’.

Work out why

Whether it’s on your strategy holistically or on individual strategic pillars, a strong ‘why’ can go a long way, but getting it right is the challenge. To be trustworthy and credible, organisations should focus on its true intended impact, how this links to the corporate purpose and, crucially, the real and honest challenges being faced. Being open and transparent can help develop a strong and clear ‘why’, which will help stakeholders build trust and confidence in your brand.

Trust and confidence are two terms which are becoming harder and harder to come by. The 2024 Edelman Trust Barometer established that an increasing number of people believe establishment leaders, government and business leaders, are purposely trying to mislead people, but, at the same time, businesses are the most important actors in delivering change.[5] According to the report, strong leadership is needed for society to accept these new technologies, with businesses needing to partner for change in order to restore trust in society.

This opens the door for companies to take a stronger stance on matters which matter most to them. Communicating the why can win over stakeholders on why focusing attention on its priorities is the right thing for the organisation. However, it is important not to overstate or exaggerate your desired impact, as this can culminate in greenwashing and false claims (more on this below). Taking a more assertive stance on the issues that matter most doesn’t mean being untruthful; it is about having values, being transparent, making commitments and being accountable.

How to drive the message home

After you have established your approach to sustainability and the strength of your ‘why’, the final piece of the puzzle is to back it up with tangible action; while the ‘why’ helps with obtaining stakeholder buy-in, people want to see results that support the initial ambition. This comes in the form of roadmaps, action plans and, finally, performance communications.

With stakeholders wanting to know more about sustainability performance, an increasing number of organisations are engaging in sustainability reporting across the globe. In 2023, it was reported that 85% of FTSE 250 companies and 98% of large-cap companies in the S&P 500 published sustainability reports, representing an all-time high.[6]

The disclosure dilemma

Due to the historically unregulated nature of sustainability communications and performance, many companies have exaggerated and overstated the impact of their performance, products and services on society and the environment.

From September 2022 to September 2023, it was reported that approximately 25% of climate-related ESG risk incidents were attributed to greenwashing and 31% of publicly listed companies linked to greenwashing were also linked to social washing, where companies overstate their impact on social issues.[7]

Frameworks like the Green Claims Code and the European Green Claims Directive exist to hold companies accountable for the claims that they make, specifically on the environmental benefits of products and services. Should companies be found in breach of these, they can face significant financial penalties as well as reputational damage. Many companies, including well-known brands such as Ryanair, Hyundai, Innocent, Oatly, Asos, and Boohoo, have already been investigated by the relevant authorities for the claims made. Whereas some claims were inflated, misleading and false, others merely lacked the specificity and details to back up claims made, leaving them exposed to misinterpretation.

Over time, more jurisdictions will continue to implement measures that assess claims made on actual ESG performance, and the risk of companies being exposed to this practice will continue to rise. Truth and transparency have now become the driving force behind regulations related to sustainability communications. This is also the case with regulations like the EU Corporate Sustainability Reporting Directive and the IFRS Sustainability Disclosure Standards, which now look for accurate disclosure on large companies’ non-financial reporting. Greenwashing is now a material risk to most businesses, fuelled by poisonous distrust from stakeholders, let down by unsubstantiated claims. The antidote to this distrust is not to go quiet but to firmly focus on honest, transparent and comparable communications.

Valuing the benefit of clear communication

With the focus now on transparent and accurate disclosures, the question now begs, can companies even shout about their ESG performance and develop engaging narratives without negative backlash?

In short, yes.

Values matter. Companies should be encouraged to take a stance on the issues they believe in and be proud to communicate the work it has done to improve environmental and social standards. Not only that, people want to see how companies are progressing against their targets, demonstrating that they are committed to their ‘why’. This can be achieved without making exaggerated and misleading claims, which can create a false perception of the true impact of the organisation.

Sustainability is a journey. No organisation is fully sustainable, and stakeholders recognise that. Truth and transparency on performance help build trust among stakeholders, and whilst some may see this as a weakness, it is a show of strength to accept errors or issues which arise. So long as you have a plan to rectify poor performance and you continue to remain committed to your ‘why’, stakeholders appreciate honesty and humanity over exaggerated positivity.

It is essential to be aware of the risks associated with greenwashing and misleading claims. However, that should not deter you from taking solid stances on sustainability and communicating as such. Stakeholders want to know that their decisions align with their values, and they want to be part of a positive solution. Truthful and transparent communications don’t have to be boring; they can be engaging, personal, and fun. As Adam M. Grant says,

“If we communicate the vision behind our ideas, the purpose guiding our products, people will flock to us”.

So, inspire them, tell them what you’re going to do, why you’re doing it and how you will achieve it. It will have a bigger impact than you expect.

For more information on how Simply Sustainable can help with your communications strategy, please get in touch with one of our friendly experts here.

Author: Cameron Wilson, Consultant, Simply Sustainable

[1] Boston Consulting Group, ‘Winning the Consumer with Sustainability’, June 2022.
[2] ESG Today, IBM Survey: Employees More Likely to Accept Jobs from Sustainable Companies, August 2022.
[3] Global Sustainable Investment Alliance, Global Sustainable Investment Review 2022, November 2023.
[4] Nasdaq, ‘What is ESG investing and why is it worth trillions?’, July 2021.
[5] Edelman Trust Institute, 2024 Edelman Trust Barometer.
[6] Governance & Accountability Institute, New Research Shows Mid-Cap U.S. Public Companies Closing Sustainability Reporting Gap in 2022.
[7] BusinessWire, RepRisk data shows increase in greenwashing with one in three greenwashing public companies also linked to social washing.


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