Nine out of ten companies in the S&P 500 publish annual sustainability reports. And you can most certainly bet that each has a section, or at least page, dedicated to sustainability and environmental, social, and governance (ESG) on its website. But while a ESG reporting and website content are where every company should start, it’s not where they should end.
Communicating sustainability and ESG initiatives, both internally and externally, is imperative. Sounds easy, right? Think again. As Anuj Shah of KKS Advisors notes in the video below, multiple stakeholder groups must be considered when communicating these efforts.
In our recent guide, Sustainability and ESG Reporting: Creating Transparency and Credibility, we offer insights about catering to various stakeholders including investors, company leadership, employees, customers, communities, and NGOs, advocacy groups and government agencies. And while the investor community’s dramatically increased attention toward material non-financial information has contributed to the growth of corporate sustainability and reporting, it is the other stakeholders that arguably require more attention when it comes to communications priorities.
This begins at the root of any corporate ESG or sustainability program, a materiality assessment. One of, if not the, key aspects of such an assessment is stakeholder interviews. These include both internal and external stakeholder groups listed above. Many reporters have moved to focusing on communicating to investors, and for relatively good reasons, but in doing so have neglected other audiences and stakeholders.
If stakeholder participation is integral to the development of any credible sustainability and ESG effort, then why would those same stakeholders be left out of the communications process? Even worse, companies often overlook the fact that the value of ESG or the investment case simply doesn’t exist without input and contributions from these other stakeholders. Perhaps this is why five reporting frameworks and ESG/sustainability standard setting organizations have committed to working towards a comprehensive corporate reporting approach.
Investors are important – there’s no doubt about it. But they aren’t the only ones. Friedman’s notion of shareholder primacy is long gone. If you aren’t convinced of that, just look at t the Business Roundtable’s updated statement regarding the purpose of a corporation.
If stakeholder capitalism is here, and here to stay, shouldn’t companies be communicating and engaging all stakeholders? Not to mention, the ESG and sustainability ratings agencies that are feeding investors their scores rely on input from these groups and have access to all public information – news, social media, etc. – they aren’t merely relying on the annual report and website.
Every stakeholder is important. Each care about different things. And each requires a unique message and approach when it comes to communications.
