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Increased regulations and reporting standards – and the demand for transparency across all stakeholder groups – have led to an ESG (environmental, social and governance) landscape that is more complicated than ever before. Setting and executing a company’s ESG strategy is an enterprise-wide initiative, but there are trends – and implications – that communicators should be aware of as they help shape and share an organization’s ESG story.
Here are a few of the ESG trends our Insights Accelerator Research team and Social Impact Consultancy and seeing so far in 2024, and what they mean from a communications point of view.
Environmental Trends
Climate Change: 2023 was once again the hottest year on record, and the U.S. experienced the highest number of billion-dollar disasters to the cost of $6B throughout the country. (NCEI)
Climate Migration: As climate changes, the U.S. population’s migration patterns follow suit. Rising temperatures and sea-levels are causing people to rethink their environments. By the end of this century, 86% of areas with an urban center of 10,000 plus people are projected to be affected in some way by net migration caused by sea-level rise. (Deloitte)
Greenwashing: Consumer skepticism of corporate sustainability and greenwashing claims is on the rise. A recent study found that 42% of corporate green claims were exaggerated, false or deceptive. (CBS)
Implications
- Stay vigilant regarding potential disclosure/reporting requirements and regulations.
- How you communicate social responsibility goals is as important as the ability to implement them – it’s better to promise three and deliver three, vs. promise eight and deliver six!
- Avoid the risk of greenwashing – it negatively impacts customer satisfaction, loyalty, brand reputation and the bottom line.
- Be transparent – celebrate success and acknowledge where you have fallen short.
Social Trends
2024 Election: In 2024, more than half the world’s population will go to the polls, including eight of the 10 most populous countries in the world (U.S., Mexico, India and more). Voter participation, free speech and electoral independence will be put to the test as authoritarianism is on the rise. And with vast improvements to AI technology, the World Economic Forum ranks disinformation the #1 global challenge over the next two years, complicating the process. (Freedom House)
ESG Backlash: Also under increased scrutiny is the term ESG itself, as politicos have turned it into an issue on the campaign trail and for the election. BlackRock CEO Larry Fink is on record saying, “I’m not going to use the word ‘ESG’ because it’s been weaponized by the far Left and the far Right.” (Financial Times)
Implications
- In an environment of “fake news” and distrust, control your narrative by leveraging owned, authentic communication channels.
- Get familiar with and be on the lookout for deepfake technology.
- AI images and videos can be surprisingly realistic!
- Consider how ESG communications might be interpreted within the context of the upcoming election.
Governance Trends
Measurement and Reporting: Despite the promise of efforts to standardize ESG measurement and reporting, the lack of comprehensive standards impacts credibility. For example, Tesla’s ESG rating surprisingly trails those of Phillip Morris and Shell Oil (scores out of 100). ESG reporting is often subjective and may not capture the total positive impact of a company’s actions. (Good.Lab)
Artificial Intelligence: AI is potentially a powerful driver of economic growth and industry transformation. However, risks and unintended consequences of using AI are real – reinforcing human biases, aiding in fraud, compromising data security and other forms of disruption, impacting the environment and more. For example, some estimate more than 626,000 pounds of CO2 are used to fully train a large AI algorithm. (Microsoft; Forbes; WE Forum)
Implications
- Keys to ESG and AI strategy & reporting include disclosure, transparency and accountability.
- Analyze each potential AI application and balance the ESG impact vs. the benefits before proceeding.
- Be transparent regarding how AI is used in the workplace (e.g., its purpose, data sources and decision-making processes).
- Ensure that AI models are up-to-date and non-biased.
- Clearly communicate your approach to and standards for ESG and AI and monitor and track performance.
As communicators, keeping an eye on ESG trends is key so you can understand what’s important to your stakeholders, and make sure your brand’s purpose and values are clearly defined and included in your organization’s ESG storytelling.
If you’d like to learn more about how to leverage these trends for your brand or organization, connect with us.
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