Beyond Data and Metrics

In the realm of ESG it’s easy to get wrapped up in the data. The introduction of legislation to combat greenwashing has heightened the focus on quantifying and reporting progress.

The Competition and Markets Authority introduced the Green Claims Code, which requires companies to demonstrate transparency towards green claims and comply with consumer protection law.  Having the data to underpin green claims is a necessity.  

The US Securities and Exchange Commission went further, releasing a draft rule for mandating disclosure of Scope 1-3 emissions by listed companies (March 2022). Compelling companies to be accountable for their GHG emissions. 

But to build trust, you must do more than satisfy regulatory requirements and ‘tick boxes’.

You have no doubt made efforts to improve the sustainability credentials of your business in the last 12-24 months. It’s right to communicate success. Whether it’s increasing diversity among management, reducing carbon emissions or adopting initiatives such as tying executive compensation to ESG goals. Stakeholders will ask about your progress. You need to tell them.  How you do this makes a difference.  

Scoring high “socially” or “environmentally” doesn’t mean much to a customer unless they are aware of the methodology used to determine the ratings. And they almost certainly aren’t.  

You could skip the ratings and offer stakeholders quantified snapshots of your ESG progress. Carbon emissions have been reduced by “x” amount. The ethnic make-up of our staff is “this”. In many cases, such figures will have to be disclosed anyway under incoming regulatory requirements.  

But ask yourself whether this alone is going to resonate with interested parties. Not every stakeholder will know industry averages for these figures. Not everyone is going to be able to look at a number on a page and say, “yes, I can see progress there”.  

Don’t just throw out the numbers. Provide qualitative insights about your progress as well. Show don’t tell.

Providing an audience with a window into how your actions have an impact – on customers, employees and the broader community surrounding your company – can help make sense of sustainability-related disclosures.  

So, if you’ve adopted an initiative to support underrepresented groups in your company, make sure the voices of these beneficiaries are amplified. A video interview, a podcast, a blog – make this story accessible. Show how the policy works in practice.  

Avoid trying to justify every adopted policy by pointing towards a bottom-line benefit or ESG compliance. As Jonathan Guthrie argues in his recent Column (Financial Times), it’s worth taking positive action because it’s the right thing to do – not just because it boosts you up a proverbial ESG table or fattens your profits.  

ESG disclosures and targets are useful, if not essential. But, additionally, look around and assess how your steps are impacting people and the planet. Engage and empower your stakeholders to share your story.