CSR & ESG
A long journey of commitment by companies to adapt to the world of today and especially tomorrow.
But what happens when we look at it from the perspective of performance and the impact of communication?
A quick look back at the history of these 2 acronyms, and the evolution that has taken place on these subjects. Companies have really evolved in their approaches to societal and environmental responsibilities over the decades.
The concepts of CSR (Corporate Social Responsibility), and ESG (Environment, Social, Governance) illustrate these different approaches that we will quickly review.
CSR: Corporate Social Responsibility
At the beginning of the 2000s: CSR emerges as a response to the growing expectations of different stakeholders (customers, employees, communities) and regulatory pressure. Companies are beginning to integrate social and environmental concerns into their operations.
They are beginning to incorporate legal obligations to improve the quality of life of employees, local communities and society as a whole.
This is illustrated in particular by the implementation of numerous corporate volunteer programs, ecological initiatives, development of sustainable products, improvement of working conditions.
Around 2010: The concept of CSR globalizes and intensifies. Multinationals are adopting international standards to meet global expectations.
We see the emergence of international standards such as the Global Reporting Initiative (GRI), the principles of the United Nations Global Compact.
Companies are therefore starting to publish CSR reports, detailing their social and environmental efforts and impacts.
During this period from 2015 to 2020, I spoke on multiple occasions to present the importance of the CSR segment in the composition of reputation indices, in particular with the Reputation Institute (of which I was the representative in France) and its indicator RepTrak. The weight of the CSR segment in the composition of the index has only increased from year to year to reach 43% (i.e. 3 dimensions on the indicator which has 7).
It was an essential subject for companies, and at that time the general perception was aligned with the idea of Green Washing. Obviously, many were doing it and others were sincere in their initiatives which were still nascent or in their infancy.
ESG: Environment, Social, Governance
Financial Integration and Standardization
Since 2015, the notion of ESG has spread with the growing involvement of institutional investors. ESG criteria are becoming a reference framework for assessing the sustainability and ethics of companies.
In short, we add the financial dimension, to better reflect the strategic dimension of the company and the facts.
ESG criteria are integrated into investment decisions, recognizing that good ESG performance can reduce risks and deliver better long-term returns.
There is also the strengthening of regulations, with initiatives such as the EU Taxonomy, and mandatory ESG reporting for listed companies.
In terms of indicators, they are not fixed, but treat subjects from relatively similar angles. Note the reference standards such as that of the United Nations (with its 17 SDGs), and those of The Sustainability Accounting Standards Board (SASB), its 26 Indicators. Other organizations also follow this very limited list.
We are therefore seeing increased pressure from investors for sustainable investments and pushing companies to adopt ESG criteria for more commitments.
Their adoption promotes innovation and allows companies to stand out from their competitors, on a more analytical and factual level of comparison (versus the proliferation of fine intentions and the communications plans that go with them).
Increasingly strict legislation requires companies to comply with higher environmental and social standards and provides the expected rigor.
The outcome:
The evolution of companies' commitments from CSR to ESG shows progress towards greater integration of social and environmental issues into the heart of their strategy.
As I mentioned in the previous newsletter, for my part I consider that these ESG issues are now the cultural heart of the company, and the common denominator of all sectors of activity.
Today, companies are judged not only on their financial performance, but also on their societal and environmental impacts, thus meeting the expectations of a growing number of stakeholders and contributing to much-needed global sustainable development.
Perception & Impact on our consumers:
According to @RepTrak (formerly Reputation Institute), and the Global RepTrak 100 study, (the Top 100 global companies) we discover a reputation score of 73.8/100, the ESG score was 69.1/ 100 over this same period of 2024.
The analysis demonstrates a relative weight between its two indices of 35% and a correlation between the two indicators of 86%.
So, these ESG aspects are critical in the perception and reputation of companies, their images and therefore the behaviours they generate among their various stakeholders.
Image and perception rhyme with expectations and behaviour
These studies demonstrate the level of consumer expectations regarding these ESG issues and the support they initially generate via behavioural intentions.
Certainly, the dynamics are different in the world from one region to another, with Europe at the extreme at 22%, and Americas at 15% of consumers who believe that the sustainable environmental approach should be the main priority of businesses.
This is reflected in particular by the preference and purchasing intention which reaches 63% for companies which are recognized as committed to these causes, which in fact obtain a good ESG reputation score.
Conversely, for those with the lowest ESG reputation scores, the level of intention drops to 20%.
(Sources RepTrak 2024)
The scene having been set, the subject that interests me in more than one way is the real impact of the communication that is made around these subjects.
Obviously, investors look in detail at the reports resulting from financial communication, which in the process is structured inexorably by integrating IFRS standards, which give them an up-to-date reading at any time. They therefore become alive and dynamic, perfectly aligned with our current world.
But, apart from the recommendations of financial analysts, it is quite difficult to see what perceptions other stakeholders in the business ecosystem have.
For around 10 years, everyone has known that it is critical to communicate what the company is doing on these subjects. But what really is perception? ? Is it effective?
It’s not insignificant that this newsletter is called Image and Perception….
I therefore worked on the development of a study with one of my partners @Epsilon Technologies, on the one hand the methodological phase, by adopting the criteria and defining the framework of a specific study on the analysis of impact of ESG communications from listed companies (CAC40 / SBF120), over twelve rolling months (from March 2023 to February 2024).
The study covers two angles which were selected to explore the importance of the ESG subject:
How do consumers respond to company-generated ESG content on social media?
Are ESG issues a real concern in consumers’ daily lives? (Using the Google search engine)
What stands out and is absolutely interesting is the impact that these subjects have when they are communicated on different social media.
The analysis of the scope of these communications is divided into three axes:
The relative weight of ESG communications in number of publications versus the whole (volume),
The total number of views (exposure),
The number of interactions such as Likes, comments, shares (reactions).
The results surprised me somewhat:
ESG digital activity represents 10% of all publications,
The share of ESG amounts to 5.7% of the number of total views,
ESG interactions represent 3% of all interactions.
The vector for disseminating ESG messages to the general public is mainly via the LinkedIn and Instagramnetworks.
Unsurprisingly, LinkedIn is the most used platform for the corporate dimension. Instagram is the most effective, due to the Reel format.
The ranking is heterogeneous, we do not necessarily find in the same positions the companies that have performed the best in terms of efficiency in their digital communication, as measured in 2023 (see the Epsilon Technologies 2023 studies)
I invite you to access the press release, which summarizes this study and gives you the ranking of the best performances within the SBF120.
You will find the link at the bottom of the page……I will be happy to present the study to you in its entirety, I will let you come back to me directly.
What are the lessons learned from this study to increase the performance of digital communication?
The use and involvement of recognized ambassadors as representatives of the brand or company is very effective. Targeted product campaigns aimed at communities and social projects give substance to messages and make them more appropriate.
The use of teaching, advice, and even educational games, via community managers, accelerates the appropriation of messages.
Are corporate communication and marketing antagonistic?
This is the main lesson of this study.
Certainly, ESG subjects are by nature corporate, mandatory in financial reporting, but highly necessary for establishing or improving the brand image or that of the company.
In the long term, they are fundamental to differentiating yourself, especially in an international and global dimension.
This study demonstrates that the same recommendations and best practices of digital marketing apply and produce the same beneficial effects on ESG subjects.
I invite you to read the Top Digital Trends 2024 published at the beginning of the year by Epsilon Technologies (link at the bottom of the page)
There is still a lot to do because you noted that if the relative weight of ESG subjects represents 35% of the company's reputation, we are far from the scores on the three dimensions analyzed, namely Volume / Exposure / Reactions.
But there is still time to stand out, several paths are traced in this study and need to be integrated into the activation of communications to be more efficient.
In the next newsletter, I will discuss examples of companies that are trying (notion of perception & reality), or quite simply standing out in their CSR / ESG approaches.
@Danone, @L’Oréal, @Schneider Electric, @Michelin, @LVMH, @Nature & Découvertes, or even @Bel which has just adopted the status of a mission-driven company.
It will also be interesting to look at how companies are transforming themselves from the inside in their statutes, in their missions to definitively anchor these ESG subjects at the heart of their DNA.
This newsletter is intended to reflect interactions and exchanges that I have had for years with companies and this ecosystem. I am always delighted with an exchange, so do not hesitate to ask me, argue, or take the opposite view.
I am always very interested in feedback, this is an aspect that I wish to develop and get more into the concrete aspects of business transformation initiatives, via use cases
This is where we should interact directly together…. https://calendly.com/olivier-omwo/discovery-session-de-30-a-45-mins
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References:
Etude ESG SBF120 (March 2023 – February 2024)
Epsilon Technologies
Top Digital Trends 2024
Epsilon Technologies
Looking forward to future exchanges
Olivier F.
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