ESG and the Role of the Brand Leader
Over the last decade, Environmental, Social, and Governance (ESG) factors have risen to become the primary yardstick for ethical business practices. The ESG conversation quickly shifted from “Should we do something about it?” to “What do we need to do?” and “How do we do it?” In an economy that is becoming increasingly stakeholder-driven, corporate values hold almost as much weight as financial values. This highlights the changing role of brand – and the brand leader – and its inextricable link to corporate ethos.
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ESG and the changing role of brand
The focus of brand expression used to revolve around the practical application of corporate visual identity. As consumers became more conscious about their choices and more verbal about their expectations, that focus also evolved from visuals and aesthetics to being more purpose-driven.
Brands can no longer just embody what an organisation is and wants to be; they also represent the crucial link between what organisations truly stand for and what their stakeholders expect. This raises the question about brand leadership’s role in the ESG conversation.
ESG and brands in the boardroom
For so long, ESG has primarily been tied around the CEO and other senior leadership. After all, the burden of decision-making, as well as that of accountability and performance, is theirs to carry. But if an organisation is to make a real difference and lead the ESG agenda, the brand leadership (i.e., CCOs and CMOs) would have to push for and take the lead in aligning the organisation’s ESG strategy and the brand’s positioning and proposition. Moreover, the brand leaders also have the crucial task of ensuring that everyone across the organisation is on-board with its ESG agenda.
"If an organisation is to make a real difference and lead the ESG agenda, the brand leadership would have to push for and take the lead in aligning the organisation's ESG strategy and the brand's positioning and proposition."
How to align brand with the ESG agenda
Aligning the ESG agenda with brand has many benefits, the most significant of which is fostering brand growth and customer affinity. But, as with any significant commitment, it requires a great deal of long-term planning and ongoing commitment. Nevertheless, here are some steps that organisations can take to begin shifting towards an ESG-aligned brand:
- Identify ESG priorities. Identifying and setting priorities is the foundation of a strong ESG-driven business strategy. As important as it is to act, it is just as crucial to determine where the organisation wants to make an impact. These priorities and KPIs are ideally directly relevant to the organisation’s internal and external stakeholders. An energy brand, for example, can make a stand on anything, but the only place where its viewpoint is truly credible is if it demands and inspires positive change in the energy sector.
- Begin with a cultural transformation. The most effective way to deliver on ESG promises – and therefore, align the ESG agenda and brand – is to start from the inside. Employees must believe in the organisation’s commitment to enact and advocate for change.
- Adopt an ESG-aligned brand strategy. When the priorities are set, organisations must assess how their ESG commitments impact the business strategy. And if they do, the necessary adjustments must be made to the brand strategy.
- Communicate ESG commitments. Effectively communicating ESG commitments is a balancing act. Saying too little can be perceived as inaction; too much can be seen as insincerity. And then there is purpose-washing – a deliberate act of deception where companies make bold claims of positive actions when, in reality, they do little or nothing to deliver upon them. Organisations must find a careful balance of authenticity, vulnerability, and ambition in their ESG communications.
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Communicating ESG: Key priorities and best practices
ESG-aligned brand strategies work only if they are built on open, authentic, actionable plans that can be tangibly judged or measured. Of course, building an ESG-aligned brand strategy depends on whichever ESG framework the organisation follows. Industries and affiliations can also influence how organisations move forward with their business and brand strategy. But best practices dictate that communication should always be transparent and consistent. Anything other or less than that can backfire with severe consequences.
Besides the how of communicating, ESG-brand strategies also depend on what is being communicated. ESG-aligned branding should prioritise communicating:
- Goals and KPIs. ESG alignment should begin by communicating KPIs. This part expresses what the organisation intends to achieve and where its priorities lie. This also sets the stakeholders’ expectations and establishes what organisations can be held accountable for. The communication of tangible goals demonstrates a recognition that ESG is about committing to substantial changes with long-term benefits, not quick fixes without lasting change.
- Road-mapping. Alongside communicating goals, ESG brand strategies should also express a roadmap for action. These further cement the organisation’s commitment and consistency.
- Reporting progress. Just as standard ESG reports designed for stakeholders and regulators need to be transparent, ESG-aligned brand strategies should also communicate progress (or the lack thereof).
"Brands can no longer hide from ESG. ESG is the present and future of doing business."
ESG is here to stay
Brands can no longer hide from ESG. ESG is the present and future of doing business. ESG is a key business and brand driver. And the first step towards future-proofing a brand begins with taking action today.