The complexity of ESG (Environmental, Social, and Governance) can help companies build customer confidence and shine light on sustainability-related successes. ESG provides a framework for companies to assess their performance in terms of environmental, social, and governance issues. By taking into account a variety of factors, such as carbon emissions, labor practices, inclusivity and board composition, companies can gain a better understanding of their impact on the environment and society. This can help build customer confidence, as customers can be assured that the company is taking steps to reduce its environmental footprint and improve its social practices. Companies that take a comprehensive approach to ESG will demonstrate their commitment to sustainability and build customer trust.
What is greenwashing?
The ESG space is rife with greenwashing, creating suspicious minds. A report from Mckinsey in December 2022 cited that 88% of generation Z do not trust brands because of verified sustainability credentials.
So what is greenwashing? Greenwashing is a term used to describe the practice of companies making false or misleading claims about the environmental benefits of their products, services, or policies. This can take the form of using eco-friendly buzzwords or images in marketing and advertising materials, without actually taking significant action to reduce the environmental impact of the company’s operations.
Greenwashing is often used to give the impression that a company is more environmentally responsible than it actually is, in an effort to appeal to consumers who are concerned about environmental issues. In the absence of transparency, it can be difficult for consumers to distinguish between genuine efforts to reduce environmental impact and false claims.
How does sustainability create trust with customers?
Creation of trust through more transparent progress reporting with stakeholders builds trust creating opportunities for measurable commercial growth. The negatives weighing on consumers (high inflation, rising mortgage repayments and declining household wealth) now outweigh the positives which kept consumer spending elevated in 2022 (high household savings, a low unemployment rate and pent-up services demand). Now more than ever ESG and sustainability narrative, when validated, could be used to help companies attract and retain customers.
What are the strategies to become more transparent?
ESG is the great enabler, too many (covid/slavery reporting/whale killing/forest burning) companies are trapped in misery-thinking of ESG being a handbrake or expense. We have the opportunity to shine a light on easy wins to unlock trapped value. How many companies can honestly claim to have a real time line of sight on their supply chain? Scope 3 and Modern Slavery together with detailed and validated information is lacking across most companies which is core to meeting ESG regulatory compliance and accelerate the adoption of climate related strategies for Mid-tier & SME.
Shine a light on the value of ESG and sustainability
In conclusion, there are several areas that may unlock value for companies, these include cutting through the greenwash and creating more transparent progress reporting to build trust, shining a light on the value of ESG, using platforms such as Misio to manage impact projects to measure progress and leveraging ESG as a differentiator to attract and retain customers.
By following these tips, companies can not only overcome ESG challenges, but also create opportunities for measurable commercial growth.