Over the past decade we have seen a revolution in how corporates are judged and expected to behave.
Being merely financially successful and profitable is no longer enough to classify a corporate as a ‘good business’ – expectations have changed and the public demand that companies have a clear environmental and social purpose and a plan for how they will drive better ESG performance and impact over time.
In the face of this global megatrend, SEC Newgate has developed the ESG Monitor, a global survey of more than 12,000 people in 12 countries, to provide fresh insights and intelligence to support corporate strategy.
Now in its third year, this landmark study is building a dataset that shows how expectations of corporate behaviour are changing over time and what the public want the corporate world to deliver.
As the 2023 ESG Monitor gets readied for launch, we asked SEC Newgate Group CEO, Fiorenzo Tagliabue, for his thoughts on ESG and its impact on corporate reputation and brand.
Fiorenzo, you’ve spent over 30 years advising international business on promoting and protecting their reputations, just how much of an impact has ESG had on corporate behaviour and reputation?
ESG has had a huge impact on the ways corporates behave and on the judgement that we all make about what good corporate behaviour looks like.
By providing a framework by which investors and corporates can measure, monitor and report environmental and social impact, it forces business and the financial community to prioritise these areas of corporate activity and allows corporate strategy to reflect these outcomes in the same way that it reflects P&L.
It also ties into a much more enlightened view of the corporate world as being part of local and global communities and answerable to them, not a separate entity unto itself.
That creates more sustainable business models, that have greater long-term resilience and investability and which are more reflective of the people and communities through which corporates operate.
What does the ESG Monitor tell us about the ways corporates are judged and held to account by the public?
The clear trend that we see through the first two ESG Monitor reports that we ran, and which we anticipate seeing in the 2023 ESG Monitor, is that people care deeply about ESG issues and they expect corporates to show leadership in delivering positive environmental and social outcomes from their operations.
We also see that the public do not trust much of what corporates currently say about ESG performance, instead they value evidence of impact and of positive change that corporates are delivering
That creates a case for greater corporate transparency. For setting a clear vision and strategy for change, for outlining what objectives and deliverables you seek to achieve and for showcasing how you are progressing in delivering those goals.
For some corporates that level of openness and transparency is uncomfortable, but it is what the public (and regulators and politicians) expect. It is a new reality that we need to embrace and put at the forefront of communications strategy and programmes.
With ESG under intense scrutiny this year, what do you think the ESG Monitor will tell us about how the movement to ‘purpose-led’ business is evolving?
ESG has faced criticism and scrutiny, including by groups who label it ‘woke’. What the ESG monitor tells us is that the public do not support corporate behaviour that fails to deliver positive environmental and social outcomes.
They expect business to behave like ‘good citizens’ and that trend has been consistent across the past three years of ESG Monitor research despite very challenging economic and cost-of-living headwinds.
What do you think corporates need to be most aware of as they look to corporate strategy and ESG?
Corporates need to be aware of the responsibility they have to the planet, to their people and to the wider communities in which they operate.
We are seeing a big focus at the moment on nature and biodiversity, with the launch of the TNFD (Taskforce for Nature-based Financial Disclosure) framework recommendations in September at Climate Week NYC providing a new global standard for understanding corporate impact on the natural world.
That, coupled with TCFD (Taskforce for Climate-related Financial Disclosure), gives a set of global standards that start cementing the process of creating a universal understanding for how we measure and report ESG. However, for corporates that measurement is only half the battle. Decarbonising business, building more sustainable supply chains, leading on DE&I and ensuring that governance within the organisation lives up to the core values and purpose of the business remains critical to success.
When I started my career those considerations were secondary to profit and growth, today they are fundamental to delivering it in a sustainable, long-term way.
Thank you Fiorenzo.
The ESG Monitor 2023 will launch on 11th October 2023 with a global panel of experts discussing the findings and what they tell us about business in the coming year. To join the event please sign up here.