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Initiatives related to Environmental Social Governance (ESG) have grown in popularity over the last few decades. Businesses are now making it a point to become more sustainable, and they are doing that in very public ways.
According to our research, 88% of publicly traded companies had ESG programs in 2022, as did 67% of privately owned businesses. This number is expected to continue growing, and growing with it is the consumer expectations around sustainability.
Even though there are endless company and global benefits to ESG programs, not every initiative is bulletproof. Some businesses may fear that “going green” could do them more harm than good when it comes to public image and perception.
Here, we will outline how companies can combat—and avoid—negative feedback to their ESG initiatives.
When companies come under fire for ESG programs, it is likely because they are being accused of “greenwashing,” or making false claims for the aim of appearing more environmentally friendly than they really are. Our reports found that “42% of green claims were exaggerated, false, or deceptive, which points to greenwashing on an industrial scale.”
For example, it was revealed in 2015 that Volkswagen was installing “defeat” devices that would lie about the cars’ emissions during a test. All the while, Volkswagen was touting reduced emissions and more eco-friendly models, even though their emissions were “releasing from 10 to 40 times the permissible amount of nitrogen oxide,” according to The Independent.
This can also happen in smaller ways, in which companies use words like “plant-based” or “sustainable” when their products do not actually live up to those labels. Making sure that the marketing and public relations statements of a business align with their actual, tangible work is key to avoiding “greenwashing.”
If your company releases a statement that you will be carbon neutral by 2075, but all of your competitors are working toward carbon neutrality by 2025, that statement will be doing your company a disservice. Consumers are aware of major promises from corporations, so they know when a stretch goal is a little too stretchy. According to our findings, “doing too little or being too slow to adjust an ESG strategy to meet emerging industry expectations can be a major risk for future crises.”
This backlash was seen with United Airlines, after their announcement that they would be “100% green” by 2050. Critics saw this goal as a baseless attempt to “give the impression people can fly guilt-free.” Air travel specialists didn’t see a possible way for United to achieve carbon neutrality, especially when the airline was only increasing its emissions with new flights every year, so the long timeline gave consumers a misleading promise that wasn’t even close to happening.
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From this lens, it’s important to do plenty of research to understand how progressive your company is compared to competition. Having regular alerts and receiving competitor press releases can be a helpful way to understand which businesses are making promises that could impact the rest of the sector.
The Securities and Exchange Commission (SEC) has an entire task force dedicated to keeping companies in line with climate goals. This group will address things like whistle-blowing claims and public concerns around sustainability, and will also enforce new regulations, like the recent announcement that they will require businesses to disclose ESG-related things such as the use of unsustainable materials.
Staying up to date on SEC regulations is also imperative because consumers and investors are likely to be aware of these new changes—for example, if a company believes their goals are progressive when they’re just promising basic SEC standards, it could foster negative opinions.
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Another way to stay ahead of the curve on ESG initiatives is by making use of social media and helpful third-party social listening tools like Nexis Social Analytics. These tools mine public social media posts, like tweets, Facebook and Instagram captions, and even comment sections, for specific keywords. They then categorize that content into “negative,” “neutral,” and “positive” labels to give a company a feel for the overall sentiment.
Consumers often turn to social media to share opinions on business matters, like negative customer service interactions or positive feedback around an ESG goal. This practice can therefore help a company spot any red flags and can also bring green flags to the forefront to identify the things that are going particularly well.
Overall, implementing ESG initiatives is one of the best ways a company can attract consumers and investors—and the rapidly increasing expectations have made it so that these kinds of goals are more than just a marketing move. Companies should be aware of the pitfalls of ESGs, like not having progressive enough goals, ignoring SEC announcements, or “greenwashing” their brand.
Keeping up with competitive announcements, negative press and other media alerts is key here, too, and the Nexis Newsdesk™ ESG Tracker can be another helpful place to begin. Search any company and get a real-time glimpse into ESG news coverage as well as overall trends in the ESG conversation.