ESG Strategy – Attract investors through ESG communication
MACK BHATIA
Meet your investors' expectations on your ESG progress and sustainability commitments
Effective communication with your investors focused on your ESG progress is an important component
of your ESG strategy. It fills the gap between investor expectations and your sustainability
or ESG strategy.
Sustainability and ESG communication is an approach to engage your customers and
investors, and to showcase your ESG progress and sustainability commitments.
It is expected to have a positive influence on the shareholder value when you project how you
drive business value with ESG & sustainability. The following checklist is essential to formulate a
good ESG communication plan.
Checklist for an effective ESG communication plan
Check 1 : How does ESG fit into the business model
There are numerous opportunities to fit ESG through strategic and operational areas. This
includes strategic areas such as product development or operational areas such as
manufacturing, packaging or transportation and delivery. It is imperative to specify such
strategic and operational areas in your sustainability / ESG communication plan and
messaging.
Check 2 : Identify a list of ESG Investors
Sustainable investing is growing in demand
A recent survey by BlackRock indicates that the
respondents are planning to double their ESG investments by 2025. In addition to your
biggest institutional investors, it is useful to identify other asset managers, ESG fund
managers or ESG index owners who may be willing to add your ticker in the portfolio. This is
one of the ways where ESG communication drives a direct financial impact.
Check 3 : The top 5 expectations from your investors
Your investor relations team would have a good understanding of the expectations and
challenges from your institutional investors. It is also a good idea to research and analyze,
and check if all existing or potential investors have similar or varied expectations. To
formalize the top 5 and the most common expectations becomes very useful for your ESG
communication initiatives.
Check 4 : Ensure ESG communication covers the material impact
Beyond the environmental benefits, investors also expect that companies showcase the
material and financial impact of respective ESG initiatives. Your communication and
messaging should include proven impact on financial health of the company. This could
include areas such as increase in customer acquisition from new sustainable products or
cost benefits derived from improved operational efficiency (reduction of waste, inclusion of
recycled packaging etc.).
Check 5 : Engage investor relations, map stakeholder expectations
Your investor relations team will have the closest relationship with institutional investors. In
addition to engaging them, we should also identify all internal and other external
stakeholders who may influence or impact the ESG communication strategy. These
stakeholders include internal teams such as marketing and corporate finance, and external
stakeholders such as suppliers, customers and paid media.
Check 6 : Create a Digital Channel Strategy for ESG communication
Developing a digital channel strategy is an absolute imperative to engage with your
investors and customers. Your investors will look at every possible digital outlet, primarily,
to know about your ESG initiatives and then validate them with their own tools to check the
financial impact. There are varied digital strategies but the most effective one is to create a
dedicated digital vertical focused on sustainability with accountability to deliver on
sustainability and ESG goals.
Check 7 : Meet regulatory and compliance requirements
Beyond the creative aspect of ESG communication, it is important that we meet regulatory
and compliance requirements for our sustainability and ESG messaging. ESG regulation is
an accelerating global trend hence regulation of 'soft laws' by PRI for investors, and
expectations for companies to undertake due diligence on ESG disclosures is highly
encouraged. We also recommend that ESG communication teams refer to similar
regulations such as EU - taxonomy regulations or sustainability disclosure regulations.
Check 8 : Share your ESG performance updates regularly
Maintaining an email list of engaged or potential investors is a great way to organize and
share regular updates on your ESG initiatives. This can also be part of a digital channel
strategy when added as another tactic to attract more investors, customers and to keep
them engaged on your ESG improvements. Providing regular updates is a successful
strategy to generate investor momentum.
Check 9 : Back your messaging with measured data
To negate any perceptions of 'green washing', it is highly recommended that your
ESG messaging is supported by data (and facts) to back your claims. At the least, we
recommend to highlight any processes in place to measure data for your ESG initiatives as
this can generate high level of confidence among investors.
Check 10 : Utilize technologies to deliver on ESG transparency
ESG transparency can deliver on trust among your investors, customers and other
stakeholders alike. Platforms such as SIOChain™ and solutions such as bar code tracking
can activate mechanisms to further engage your investors and customers. It is helpful to
carry out such technologies or applications to support ESG communication initiatives.
If the above resonates with you, see more at ESG Communication services
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