Public perception is essential for ESG (Environment, Social, Governance) because stakeholder understanding and support are crucial for sustainable change. However, the complexity of European ESG regulations and the risk of greenwashing increase the gap between intentions and perceptions. Transparency, clear communication and involvement of all stakeholders is needed to build trust and achieve effective results. With frameworks such as the ESRS, Stainable, in collaboration with legal support, translates these complex regulations into understandable and effective texts.
The term ESG - Environment, Social and Governance - was first used in 2005 as part of the UN Global Compact initiative “Who Cares Wins” to help integrate environmental, social and governance (“ESG”) issues into investment analysis, processes and decision-making. Today, ESG represents the spectrum of sustainability beyond investment analysis.
But the term sustainability is complex and also refers to the ability to preserve resources for use, including for future generations. Many call this “People, Planet and Profit. Another view might be that sustainability (or ESG) is about “People, Planet, Prosperity. It is worth noting that in its breadth, the long-term focus and sometimes competing definitions of the term “sustainability” can be a problem in itself. It can be a difficult topic to navigate and communicate about for governments, businesses and the general public alike. The umbrella term “sustainability” has become increasingly common in recent years. There is an abundance of terms: carbon neutral, the UN SDGs, climate justice, CSR, etc. But what meaning does it have for (world) citizens and is it the same for everyone?
The UN Sustainable Development Goals (or SDGs) were created in 2015 to serve as a “blueprint for achieving a better and more sustainable future for all. They provide guidelines for businesses and organizations in specific actions to achieve sustainability. It is a collection of 17 different targets incorporating environmental, social and economic measures, and it is common for both the public and private sectors to refer to the SDGs as a source of information for broader sustainability strategies.
Many organizations and companies have actively joined the UN Global Compact. The Global Compact is a voluntary initiative. It requires companies and organizations to commit to, implement and report on their progress toward global goals. Governments and companies have a mandate to take action and lead ESG initiatives - and Stainable's role is to help them facilitate this.
Companies need to pursue all three ESG pillars simultaneously. People are increasingly making the connection between the “E” for environmental and the “S” for social, especially when it comes to the health of the planet. That is, our ability to thrive on this planet depends entirely on how we use (or misuse) our energy, and how we handle our precious resources (natural capital and human capital).
And what about the “G”? If we adopt the United Nations (UN) definition of good governance - “the political and institutional processes and outcomes necessary to achieve development goals,” then good and positive governance will ensure that environmental and social goals are achieved. When the term “ESG” was first used by the United Nations, it was first suggested to be called “GES” because Governance was considered central. Therefore, brands and companies must ensure that they do not approach ESG in isolation, but take everything into account, even if the emphasis is placed in one direction.
The Say-Do and Believe-True gaps.
Historically, brands and governments have focused their efforts on influencing people's behavior to close the say-do gap (i.e., the discrepancy between what people say they will do and what they actually do). This means they tend to focus on “nudges/pushes,” using positive enforcement and indirect suggestions to influence behavior. However, the complexity of the sustainability issue means that people need more than nudges. Governments and businesses need to consider the role they play directly in closing the gap. The focus is on helping people navigate this ESG space through education and addressing key barriers - as there is a lot of evidence of a significant gap in understanding the steps citizens can take on their own.
ESG as an added benefit
Often the environmentally and/or socially conscious origins of a service or product are not enough to entice the public. People get the feeling that they are doing enough, while industry and government are not doing their part. Industry and government should therefore try to position sustainability wherever possible as an added benefit alongside other direct benefits to their target audiences. For companies, ESG is the long-term viability of a business. It is more than corporate social responsibility and goes beyond corporate reputation. It also goes beyond environmental sustainability. A sustainable company integrates long-term stakeholder value into all dimensions of its operations: the supply chain, employee relations, community relations, environmental impact and its governance practices.
A key problem many companies are facing is the lack of differentiation. This can be due to a lack of public understanding about the broader scope of ESG, but also because of companies trying to communicate too much - there are too many labels, too many initiatives and too many words that the public cannot connect with. It is of critical importance to understand where and how companies should focus. Organizations and brands must be careful not to take action and talk before a strategy is in place. They need to make sure they have a full understanding of “the landscape” they are moving in and where they are first, to orient the business. Then they need to figure out where to focus their efforts. This should be initiated from the top of the organization and should take into account the impact the organization has on all aspects of ESG, who the various stakeholders are, what they want and expect, what the commercial opportunities are to bring about positive change and, last but not least, the value it brings to the organization (financial and otherwise).
Organizations should also consider how their actions and initiatives align with how people see the organization and the brands within it - is there a gap? This is where perceptions of greenwashing can creep in. Brands and organizations need to connect seamlessly and make intuitive connections between what the brand does and says and what it stands for (in the industry, in the world). Then layer in honesty, transparency and integrity on the organization's/brand's ESG journey.
Impact
People often feel powerless in decision-making processes when it comes to ESG/sustainability. At Stainable, we believe it is important to include people in the impact journey. Monitoring and evaluating the impact of stakeholder activities is often required for reporting, but it also helps to validate investments or current business processes and provide proof of engagement with stakeholders. Support in the form of software results in faster report preparation, provides a more understandable roadmap through the support, and ensures a conclusive audit trail. Therefore, choose Stainable's software.
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