Is It Time for an ESG Reset?: Ep. 24 of Red Sky Fuel for Thought Podcast

What You’ll Learn in This Episode:

·       The relationship between purpose, CSR, ESG and sustainability

·       The various ways that the ‘S’ in ESG is being defined

·       How the events and experiences of the past two years have changed the ESG landscape at a high level

·       The importance of simplification and clarity surrounding ESG efforts

The recently elevated attention on company purpose has proven to be a watershed moment for ESG, as stakeholders seek to align on the different approaches on values and purpose, what constitutes ‘best in class’ programs and efforts, and how to harmonize different ways of reporting key metrics. Further, within ESG, we’ve seen a particular focus on the ‘S’ and what it does or does not encompass in terms of the important factors that link to a company’s reputation and brand equity.

In this month’s episode, Red Havas’ Linda Descano, CFA^® is joined by guests Mike Tyrrell and Jeffrey Whitford to explore the current state of the ESG landscape and whether it’s time for a reset in a post-pandemic future.

The conversation begins with a look into the relationship between purpose, CSR, ESG, and sustainability, and how organizations can clarify these terms for audiences.

They're all dealing with roughly the same area of the wider social responsibilities of a company, but there are nuances between them as well,” says Mike Tyrrell, editor, SRI-Connect. “The two that are most tangible are purpose and sustainability. Sustainability is the overarching term that we all need to achieve as a society to ensure our survival. But purpose accords most neatly with companies. Companies have two purposes: they have to make money to satisfy their shareholders, and they also have to deliver on other societal responsibilities, which break down into governance, environmental, social, economic, and ethical.”

“The most important thing that we can do to get employees on the journey with us is to focus on simplification and clarity surrounding what is included under the sustainability umbrella,” says says Jeffrey Whitford, Head of Sustainability and Social Business Innovation for the Life Science business of Merck KGaA Darmstadt, Germany. “It’s also important to make sure that the lived experience of employees matches what they're hearing or seeing from organizations on a meaningful scale. All the work you've done over the years disintegrates the moment your employees lose trust in your efforts.”

Mike then provided a perspective on how the ESG landscape has evolved over the past two years: "We have seen the world change both in terms of the volume of interest in this area, but also the sophistication with which investors are using the information that they receive. Investors are much more up to speed with this, their clients are demanding it much more from them, and companies are talking to them more openly and clearly about how these factors are affecting their business performance."

“You need to be very clear about where you're going to have impact, rather than trying to boil the ocean,” continues Jeffery. “You need to understand what your stakeholders expect of you and what matters to them in relation to your business, which then gives you a roadmap of how to focus in on key issues while ensuring all other issues are still included in your approach.”

Next, the conversation shifts to how the ‘S’ in ESG is being redefined.

“One of the tough parts about ‘S’ is that it doesn't have a clear definition, and you can’t measure it,” says Jeffery. “It is a sea of lots of different things that are inconsistent between different businesses and brands, so it becomes more challenging. For this area to become a clear driving force forward, you must be able to boil it down into something that people can just grab and run with.”

Adds Mike, “Over the last few years, there has been a renewed focus in some markets on DEI issues and public health. I think investors have a pretty good framework for considering social issues, and these newer issues have slotted into that framework quite well. We often talk about ESG issues as if they're all about managing downside risk, but in this social space, one of the things that we've seen is when companies articulate purpose, what they're really doing is capturing that upside social value.”

To round out the discussion, each of our guests offers advice on how to prioritize and communicate ESG issues to stakeholders, along with one thing they would reflect on from the past few years.

“My guiding principles are always data and transparency as an anchor, followed by simplification,” says Jeffery. “For communicators, you must figure out how you simplify this, because it is complex; there's a lot of data and detail. But you need to be guided by data and transparency as your guiding light.”

“If you're communicating to investors, you must bring your investor relations officers into the picture,” says Mike. “Communications is often mistaken as being an outbound activity. From an investor's point of view, we very much want to hear the inbound that communications can bring. If you're sensing a change in your customers based on preferences for climate awareness or DEI issues, then investors need to hear that from you so that we can judge whether this company is or isn't aware of the brand risks and opportunities available to it. That sort of listening exercise is something which investors could really benefit from as these issues become more complex.”

The episode wraps with Red Havas VP of Social & Content Nancy Anderson and our Red Questionnaire guest Amy Takis, Senior VP of Red Havas Health, for a conversation spanning various topics including her go-to travel destination (London), her favorite author (Mel Robbins), and how she would describe her job to a child.

“PR is all about connecting with people to tell stories. And the people that I work with are usually people who are sick and want to tell their stories so others don't get sick,” says Amy on the latter. “Working with the media is like giving those people a really big microphone to tell their really important stories. This microphone is super loud and makes the story spread far. And we know if the PR works by counting how many people we reached.”

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Also mentioned on this episode:

·       SRI-Connect

·       MillipporeSigma Sustainability

·       Mel Robbins

·       BBC: Rejuvenation of woman's skin could tackle diseases of ageing

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