Managing your corporate reputation involves monitoring a variety of reputational elements — including ESG. Some of you reading this might not be so keen on using “ESG” in business, but we’re here to tell you why this “dirty word” is still essential to corporate affairs.
Despite some claims that ESG is more of a cultural weapon than a business practice, Environmental, Social, Governance (ESG) principles are critical reputational areas pertinent to corporate longevity. There is an undeniable importance for ESG in shaping sustainable, equitable, and ethical businesses. In 2023, while some organizations may have shifted away from the ESG label in favor of terms like Responsible Business, Corporate Social Responsibility (CSR), Sustainable Business, or Corporate Citizenship, the core message remains unchanged. The components of ESG are not just buzzwords or optional add-ons; they represent fundamental elements of contemporary business practice that can drive long-term success, resilience, and ethical leadership in a rapidly evolving world. As we delve into this data, remember that the transformative power of ESG initiatives goes beyond labels. We measure and report on the state of ESG as part of our dynamic data suite. We view it as a measure of an organization’s specific ethical efforts. If companies were ditching the acronym, they sure didn’t ditch their efforts. ESG is up ▲1.7-points this year with a Score of 69.1. That’s a higher increase than Brand and Reputation Scores had.
We also break ESG down into 3 corresponding component Scores — and all three are up. While we measure the E, S, and G as individual components, just like all our reputation metrics, they are intertwined. How you respond to Environmental concerns says a lot about your care for communities (Social) and how your organization operates (Governance). These Scores reflect a similar bump in sentiment that we saw in our Conduct and Citizenship Drivers. Remember that committed effort in these key areas will help improve your reputation across the board.
At RepTrak, we keep up with trends in corporate reputation. In Q4 2023, our quarterly current events survey revealed a clear directive from consumers worldwide: they want their preferred brands to place a stronger emphasis on environmental sustainability. However, RepTrak data is nothing but nuanced. Across the globe, the importance placed on environmental efforts varies amongst stakeholders from region to region — reflecting diverse cultural, economic, and regulatory landscapes. This variation underscores the necessity for companies to adopt a tailored approach to sustainability, recognizing that what resonates in one region may not hold the same urgency in another.
The whopping ▲2.0-point increase in this year’s Environmental Score demonstrates that companies are listening and delivering in this area. Sue Tobias, EVP of Advisory in the Americas, believes that “companies have increased their communications efforts around their environmental goals, while keeping stakeholders updated as they progress.”
This Score, however, is still in the Average range. Given its priority status for stakeholders, companies will need to continue to listen and ramp up environmentally focused initiatives to keep stakeholders happy. Stakeholders are not backing down in their demands for E, S, and G-based efforts. No matter what you call it, remember that ESG plays a pivotal role in forging a path toward a more sustainable, ethical, and accountable corporate ecosystem. Tobias tell us that companies “can avoid the politicized term 'ESG,' but they should nevertheless communicate about the initiatives and programs they are activating in ways that logically tie back to their business — such as reducing waste, net-zero emissions, or their diverse and inclusive workforce.”
Some might think that ESG is another fading fad of the corporate world. But these initiatives shouldn’t just check a box until the next synonym comes around; they must be intricately linked back to core business operations that are in line with an overall corporate strategy. Despite debate, 2024's increasing Scores signify a shift towards a more holistic and interconnected approach to ESG. When sustainability, governance, and social responsibility are embedded within the fabric of corporate decision-making, and aren’t just adjunct considerations, businesses will be rewarded in more ways than one.
Learn more on why ESG is so controversial with a video from Sue Tobias.
Read the full 2024 Global RepTrak 100 report for more on monitoring corporate reputation.
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