CSR 2.0: How to talk about Social responsibility in the ESG era?
The acronym ESG needs no further introduction in business circles. However, there still needs to be more clarity regarding how this three-letter acronym impacts communication and marketing. What does ESG communication entail? How can it be seamlessly integrated into a communication strategy? What effect does a company’s approach to sustainability have on its reputation?
The new EU legislation, the Corporate Sustainability Reporting Directive (CSRD), has recently garnered significant attention. Consequently, in the coming years, many companies will be required to provide, in addition to financial reporting, information on their social impact across three dimensions: environment, social, and governance. In other words, companies must demonstrate their sustainability within the ESG framework.
In Estonia, around a dozen companies are currently obligated to disclose certain environmental and human rights information, with several others doing so voluntarily. The sustainability reporting obligation will apply to approximately 350 companies in Estonia in the coming years. Furthermore, it will indirectly impact their business partners and the business sector as a whole. Swedbank Estonia has developed a valuable tool, the Sustainability HUB, to help companies understand the practical implications of implementing ESG principles. But how will Europe’s green ambition and the changes it brings affect marketing and communications professionals?
As a side note, it’s essential to acknowledge that linguistic nuances further complicate this already complex subject. Terms like sustainability, ESG, CSR, social responsibility, and responsible entrepreneurship are often used loosely in Estonian and may be perceived differently.
ESG versus CSR
Frequently, all the keywords mentioned above are condensed into the term ESG. Consequently, more and more often, people in the communication community ask, “What is ESG communication?”. The ESG framework primarily serves as an internal tool for companies to assess their business performance across environmental, social, and governance dimensions. From a communication perspective, it plays a role in investor relations and fundraising. However, it should not be used interchangeably with sustainability or social responsibility.
While ESG is a specific framework for evaluating a company’s societal impact, responsibility and sustainability encompass a company’s overall commitment to ethical behaviour and contributing to society. ESG is one way a company can demonstrate its corporate responsibility, but there are other approaches. This principle should be kept in mind in PR.
In communications, I prefer to discuss these concepts within the framework of CSR (Corporate Social Responsibility). Admittedly, the rise of ESG has significantly influenced how companies discuss their social responsibility and how society perceives business sustainability – it can be addressed as CSR 2.0. Since both ESG and CSR are acronyms borrowed from English, I would label it “strategic sustainability communication” in Estonian.
Strategic sustainability communication
It’s crucial to recognize that sustainability communication isn’t an end in itself but a component of strategic business management. Utilizing communication tools can benefit a company in marketing communication, reputation management, employer branding, and relations with decision-makers and partners. Numerous studies have demonstrated that sustainable companies appeal more to investors and partners, and strategic communication is vital for highlighting their sustainability efforts in public relations.
Effective sustainability communication is more than campaign slogans or one-time donations to a CEO’s favoured sports field. As a public relations agency, our goal is to assist businesses in translating sustainability communications into success in their core business areas.