As we charge headlong into a warming planet, climate change and its effects ring louder. This trend bears a truth that many are still reluctant to accept: exposure to risks posed by climate change is bad for business.
This greater susceptibility to climate risks forces organizations’ hands on several fronts. Stakeholders crave data that proves an organization’s alignment with, or vulnerability to, sustainability.
As a result, the intersection of sustainability and finance continues to broaden and become more complex. Converting climate risk data into digestible facts that can be understood outside a boardroom is imperative. An essential part of this fight will be waged in communications.
The state of sustainable finance is riddled with jargon, acronyms, and language that desperately needs distillation if audiences are to understand the significance found within. Communicators will craft the messages that stakeholders can approach throughout the value chain.
Let’s explore some trending campaigns in sustainable finance, taking special note of how communicators play a part.
Debt-for-Nature Swaps
Climate change is an expensive problem. The damage that supercharged weather, drought, and flooding can have on a nation’s economy, tourism sector, and stability is costly. Worse, developing nations simply lack the resources to protect their biodiversity from further damage. Data from the World Bank and Bloomberg found that 34 of the 59 developing economies that are most vulnerable are also at high risk of fiscal crises.
The Polluters Pollute and Aren’t There to Clean up the Mess
Seeking to parry this objectively unjust situation are debt-for-nature swaps: financial mechanisms that trade developing nations’ debt for mandates to protect the environment. The nitty-gritty of the process is convoluted, but an important takeaway is that when they are executed properly, the result is an agreement that mutually benefits all parties.
As outlined above, a debt-for-nature swap typically involves a developing nation, and often one with rich biodiversity reserves. Recent swaps have involved countries like Belize, Seychelles, and Barbados, each with thousands of miles of coastlines that need protection as ocean levels rise.
Through a debt-for-nature swap with The Nature Conservatory (funder) and Credit Suisse (creditor), Belize protected 30% of its ocean, including lush coral reefs, fish spawning areas, and mangroves. The transaction topped out at US$364 million and reduced Belize’s debt by 12% of its gross domestic product. All told, the swap will give Belize US$4 million a year for the next 20 years to support marine conservation (US$180 million total).
Communicators and Debt-for-Nature Swaps
Communications will be critical for debt-for-nature swaps from bell to close. As part of initial scouting for deals, communicators must fine-tune their pitch decks so that the potential for conservation isn’t lost among the complicated financial details. These pitches will have to be tailored to the country in question and then tailored again to the unique audiences within.
In this same vein, communicators will be tasked with forming meaningful relationships with several communities in debtor countries. If these deals are to run smoothly, all parties must feel as though they are working with trusted allies. Those with international relations and financial acumen will be most valuable for these exercises.
Race to “Net-Zero”
Of the more prolific sustainability campaigns that have sprouted in recent years, pursuing a “net-zero” future perhaps ranks highest in controversy.
These efforts are simple enough on their face: corporations and other entities move to advance their carbon-offsetting measures so that their greenhouse gas (GHG) emissions effectively zero out.
While net-zero pursuits are seen as a pathway to keeping our global temperature from exceeding the Paris Climate Agreement’s 1.5°C threshold, not everyone is on the same page. Critics of net-zero take issue that, despite UN-backed criteria for such pledges, many firms use the term in ways that mislead more than outline climate action.
Promises made with the net-zero label are often loosely tied to tangible deliverables or lack an end date. The resulting campaigns are closer to greenwashing than meaningful progress at a time when immediate action is necessary to avert climatic catastrophe.
Communicators and Net-Zero Campaigns
Thankfully, communicators can be on the front lines of fixing net-zero. Communicators can play a vital role at every stage of executing a net-zero pledge, from planning to execution.
With planning for net-zero, communicators need to ensure that endeavors are tied to real, on-brand end goals. Anything less will come off to the rest of the world as a performative exercise in greenwashing, eroding stakeholder confidence wholesale.
Communicators will need to advocate for the strict adherence to the UN’s guidelines for net-zero claims, as found by its High-Level Expert Group. The group’s report clearly outlines from soup to nuts how firms can properly harness net-zero, with emphasis on increasing transparency, accountability, and investing in just transitions.
Corporate Climate Disclosures
The calls for corporations to come clean on their business’s environmental impact come from all sides and within. Stakeholders, both internal and external, have an insatiable appetite for data that confirms that corporations are taking the climate crisis seriously and won’t leave any wiggle room for mistakes.
Corporations that are forthright with their climate data are making the most of an incredible opportunity to win stakeholders’ hearts. Investors cling to transparency and accountability as measures of robust governance.
Moreover, by proving to stakeholders that your firm is not only aware of its climate impact but is risk-averse to such vulnerabilities, a powerful indicator of a strong business emerges, one that’s prepared for the environmental headwinds.
However, getting to that point takes an enormous investment of time and capital. And with the Securities and Exchange Commission plotting its climate disclosure regulations, it’s high time for laggard corporations to embrace accurate climate reporting.
Communicators and Corporate Climate Disclosures
Corporate climate disclosures, much like our previous two examples, provide fertile ground for communicators to shine.
These disclosures will produce mountains of data, which, to the untrained eye, will hardly tell the story of a company’s relationship with the climate.
It’s up to strategic storytellers to refine this data into a narrative that ties back to the business itself. Communicators must align climate disclosures with the firm’s stated brand values and identity. Missing the mark in this respect will make any report reek of inauthenticity.
ESG and sustainability reports are increasingly part of earnings calls and the investor relations equation. Making a convincing case that climate action is being prioritized is knowing the rules. This means devoting your reporting to standards set by credible names such as the Global Reporting Initiative (GRI) or International Sustainability Standards Board (ISSB).
By tethering a climate disclosure to standards outlined by either body, the credibility of the report’s contents is immediately bolstered.
Conclusion
As we’ve explored, the collision of sustainability and finance has opened a door for communicators to increase their standing as trusted partners within their organizations.
In truth, the markets will ultimately decide the fate of sustainable business campaigns. Still, as our planet continues its steep environmental decline, the drive for such efforts will only grow stronger. The boldest communicators will advocate for stronger solutions that everyone can rally behind.
Sustainable finance is, in many ways, a brave new world for most. At Longview Strategies, we have the tools, experts, and know-how to illuminate a path forward. Wondering how you’ll navigate the choppy waters ahead? Reach out to kickstart real, impactful progress.
