By Sara Williscroft, ABC, CDMP
The investment world is changing. Gone are the days where cash flow and debt were the sole indicators of a company’s success.
Investors are now looking at risk from an Environment, Social and Governance (ESG) perspective. They are digging into the environmental impacts of companies’ operations, how companies are making an impact socially in the areas they operate, and how companies are governed. In fact, there are $22.89 trillion of assets being professionally managed under responsible investment strategies today.
If this is foreign to you, don’t fret. ESG is relatively new, with standards and interpretation of available data varying greatly.
The investment community uses ESG frameworks to guide them in comparing companies. For example, in the oil and gas industry, companies can align their reporting to frameworks like: the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB), or the Global Reporting Initiative (GRI). Frameworks like these provide a series of metrics, standards or guiding principles that have historically been optional, but investor pressure has catapulted from nice-to-see to standard-quo.
Where Communications Comes In
If you work at a publicly-traded company, chances are you produce some sort of Corporate Social Responsibility (CSR) Report or content consistent with the ESG principles and the frameworks set out by the investment community. These tools are the conduit between investors seeing a company’s performance and understanding their brand.
Communicators can, and do, play a large role in ESG messaging and disclosure. For example, communications has a hand in:
- Identifying and packaging the right stories – Our strong relationships allow us to find the right information from the right people so we can communicate stories and examples of ESG that are relevant to investors in a meaningful way.
- Sharing our story – Our role is to paint a unique picture to position us against our peers. We share the facts and help investors interpret our reporting in a way that matches our corporate identity, doesn’t over-promise, and highlights performance and new projects.
- Message consistency – We have a pulse on internal and external key messages. Our ongoing focus is to ensure these key messages are current and align with company strategy and vision.
The future of ESG reporting, interpretation and frameworks is largely uncertain, but one thing is clear: ESG is becoming a normal part of the finance world’s investment strategy and a huge part of the internal and external corporate communications strategy. The sooner communications professionals understand the critical role we can play in this area, the sooner we can add even more value to the bottom line.