Beware the pitfalls of ESG marketing

ESG communications are everywhere. Whether it’s due to genuine conviction, regulatory and shareholder pressure or wanting to reap the commercial benefits, companies have recognised the importance of running ESG-compliant businesses, and marketing teams are duly seeking ways to integrate those initiatives into their content marketing strategies.

However, as businesses are beginning to realise, touting green credentials and making ambitious commitments that are not backed up by actions are insufficient, and could potentially cause reputational and financial damage if the company is perceived to be indulging in ‘greenwashing’.

Which means that more than ever, marketers need to ensure their campaigns are credible. But that’s easier said than done when ESG marketing is full of so many pitfalls. To help you stay on the right path, we’ve highlighted five potential risks you should look out for and how to avoid them.

• Ambition-action gap

Making claims that are out of step with actual business practices, such as announcing anticipated outcomes before policies and processes are in place to actually implement them, exposes a company to greenwashing risks.

To combat this, it’s important that any targets are metric and performance driven, and that legitimate ESG-related claims are tied to concrete, measurable actions and outcomes. To steer businesses in this direction, the European Union (EU) has announced new reporting standards which include a requirement for ESG disclosures to be externally audited. While Asia is behind the EU in regulatory oversight, companies operating in this region must also ensure that their ESG and sustainability claims are not just marketing hooks.

Avoid this pitfall by asking yourself if you are promoting or saying too much too soon and push back if necessary. Timing of the marketing campaign is key here and close alignment with business leads on a new launch or announcement is essential. In essence, effective ESG marketing should reflect company-wide actions and culture.

• Obscure statements

Closely related to the gap between words and actions is the propensity to make vague or broad statements. The journey towards net-zero is complex for many businesses. Implementing ESG practices and measuring their performance are difficult and very much a work in progress but the pressure on organisations to keep up with their peers and be perceived as sustainability leaders is great. For that reason, many organisations have confined their ESG content to high-level statements of solidarity and 'values' and stopped short of outlining how they will fulfil their commitments.

Declaring a vision without a corresponding action plan puts the organisation’s credibility on the line. Further, the lack of a clear strategy creates potential for inconsistent messaging among different marketing teams, especially when global and regional marketing alignment remains a challenge for many large organisations.

Acknowledging the disparity between your ESG goals and current activities is fundamental to developing a sustainable communications and marketing strategy that tells the story of your company’s transition. Prioritise honesty and transparency when communicating your company’s struggles and deliver a consistent message to all your stakeholders while keeping in mind the different perspectives of your regional and local markets. This brings us to the next common mistake in ESG marketing...

• Universal messaging

Global companies tend to have one message on ESG which doesn't consider the fact that Asia is in a different place in its development and has specific challenges. For instance, the diverse region is still the world's most reliant on coal with emerging markets trying to tackle basic problems like access to clean water.

While there is a need to ensure consistent messaging across the organisation, setting the same tone or focusing only on HQ-centric sustainability goals and achievements in your social impact or ESG narrative alienates APAC stakeholders with irrelevant and uninspiring content.

That means adapting your company-wide ESG content to suit Asia’s context is essential to engage local audiences. You can do so by creating an APAC-centric version of your global social impact report for instance or highlighting Asia-specific sustainability initiatives on your regional website. Global-regional-local alignment is key here to deliver a narrative that is at once consistent across geographies yet relevant in a local context. On that front, we’d caution businesses against creating more content without first thinking through its purpose.

• Inducing indifference

The volume of ESG-related content churned out each day is growing but few say anything new and many make the same arguments.

As fatigue starts setting in, people are switching off from what is a critical conversation that requires the engagement and action of all stakeholders. What’s more, organisations are at a higher risk of backlash as both public weariness and wariness grow. The scale of this problem was highlighted in a recent survey which showed that while climate change was a topic that CEOs regularly posted about on social media, those posts performed poorly in terms of engagement.

Marketers can make a real difference by offering a more nuanced approach and one that tackles the issues rather than just helping your organisation to be perceived as doing the right thing. Auditing your sustainability communications strategy is a good place to start. Then, exercise editorial judgement when creating marketing campaigns and content around a new product, service, or corporate initiative to convey real impact or offer useful information to stakeholders. For example, in addition to explaining the benefits of a new sustainable financing solution, take the extra step by helping your clients navigate new ESG regulations and understand regional taxonomies that apply to them. At the same time, it is equally important to consider whether your new solution or programme incorporates all three ‘E’, ‘S’ and ‘G’ elements.

• ‘E’ eclipses ‘S’ and ‘G’

Most marketing efforts focus almost entirely on the achievement of environmental or climate-related targets and commitments, and ignore or brush over social and governance priorities, even though these are often related.

Limiting the conversation on an ESG initiative to its environmental impact means marketers miss the opportunity to convey the social implications or governance considerations that went into developing that initiative.

Taking a step back and thinking about the impact of a new initiative across ‘E’, ‘S’ and ‘G’ factors, and working closely with the compliance and product teams to develop a deeper understanding of a product or service will go towards creating a comprehensive marketing plan.

With ESG expectations and practices everchanging, corporations need to take it upon themselves to communicate better. Marketers are well-positioned to be the guardians of truth and use their ability to shape perceptions to align all stakeholders with the company’s brand purpose and the highest ESG and sustainability standards.