By Meera Haridas
ESG has moved from compliance to an imperative if brands and businesses wish to thrive. Brand journeys in the past two decades have undergone immense transformation in terms of ESG agenda and action in an ever -dynamic systemic risks. This is an integral part of the DNA of brands that care for enduring relationships with its stakeholders.
The Oxford globe scan report global corporate affairs survey 2024 has revealed important findings where geopolitical risk and uncertainty is the top perceived short-term category risk for global businesses. The others among the top 5 concerns are climate change, impact of macro-economy on business, rise of political populism/social divide and impact of AI and Technology.
The survey further reveals that short term opportunities for corporate affairs vary across sectors be it, consumer products/retail, financial and professional service, ICT and media, energy, extractives, manufacturing, or food, agriculture and beverages. Among the opportunities perceived – innovations, digitalization and AI tops the charts across these sectors. However, other aspects viz. sustainable growth/ strategies/ESG, energy transition, driving economic growth and upliftment, upskilling / attracting talent, adaptation to climate related issues, inclusivity and diverse work force vary in ranking in order of priorities of the specific sector.
The underlying attribute for survival and sustenance of a brand is “Trust”. Brands gain trust of its stakeholders through transparency, purpose driven approach and its commitment to walk its talk. This is where the larger business imperatives of environmental stewardship, social impact and governance practices speak volumes of a brand beyond call of Ps and Cs strategies/ formulae for marketing and branding. Marketers are re-writing their stories – seeking new purpose driven positioning and communication.
B2C dimensions: Today a world largely driven by well-informed millennials and Gen Z, there is a clear shift in consumer expectations. There is a strong demand for being and doing the “right”. Be it the daily food and personal care products, apparels or luxury items, the consumer ask is loud!
Is it Organic? Is it Eco-friendly? Is it Ethically produced and delivered?
The shift is perceptive. Responsible organizations from HUL to H&M, to name a few, have taken conscious steps with purpose driven marketing campaigns. The effort is to align the aspirations of corporate, consumers, communities along with the government’s larger agenda. Among the CSR initiatives some of the priorities are health, education, skilling or women empowerment by creating self-help groups (SHGs) taking cognizance of geographical sensitivities. The larger ESG agenda focuses on bringing hygienic practices to raw material procurement, manufacturing processes, supply chain, etc. that can impact environment and society.
B2B dimensions: When it comes to manufacturing/ B2B businesses the pressure to address environmental issues, corporate governance, and societal impact of business decisions become even more critical. End- product for the customer is the starting point of stakeholder management. The tenets of stakeholder commitment and engagement needs to be carefully curated based on transparency, integrity and purpose driven agendas to ensure lasting relationships. In India as well as globally, large conglomerates initiate meaningful CSR programs for various cohorts that have positive brand impact. Educating and ensuring their supply chain is aligned to the company’s values ensures a holistic approach to a Brand’s commitment to transparent and ethical values.
From the remarkable Tata Steel Campaign-“We also make steel”, to the Mahindra “Rise” or Vedanta’s “ Transforming for good” responsible brands have expressed consistent commitment to value and purpose for betterment of planet and people.
Establishing brand visibility through continuous commitment to ESG practice is an ongoing journey. Discerning consumers today make purchase decisions basis how does product or business impact the planet and people irrespective of the geographies, nationality or gender. The growing awareness for the need to push back climate change, protect environment, and people rights have become articulated and unarticulated metrics while selecting a brand. The purpose driven era for business has truly arrived.
The CRISIL MI&A Research estimates that Rs. 5.70 lakh crore of green investments have been made during FY 2015-22 and this is further estimated to grow by 4X by FY 2030. It further reveals that organizations which have committed to public disclosures of their capex and R&D spend in tech to improve environmental and social impact of their products and processes, had registered decline in emissions and energy consumptions logging negative CAGR of 9.25% & 8.91% respectively.
Evolving agendas: Despite the increasing societal and legislative expectations on businesses in terms of ESG, Boards do not feel financial pressure to act on sustainability. A recent report by Heidrick & Struggles, INSEAD and BCG finds that 68% of those directors surveyed shared that sustainability considerations have a “slight or no effect” on financial performance, while 10% believe sustainability will negatively affect medium to long-term financial results and 52% agreed that they are acting on sustainability as the “right thing to do”.
Economic uncertainty, rising social activism, and critical climate targets are relatively new challenges for company boards. This extends far beyond their traditional priorities, viz. operational and financial health of businesses. Several surveys and studies repeatedly show how companies and boards can no longer take a complacent view on ESG/ sustainability compliance as a measure to please investors, communities, other stakeholders, or legislative demands.
In the era of social media, digital communications democracy and AI, brands and businesses need to be sensitive while strategizing marketing communication. Prudent steps beyond checking boxes on matters of environmental / social impact, transparency and governance can make significant difference to the growth trajectory of a company. Organizations that have successfully put to ground their ESG initiatives and leveraged the power of media and technology have gained significantly in building brand trust, transparency, and inclusivity for meeting social and governmental expectations.
The author is former chief communications officer, Vedanta Ltd. – Sterlite Copper. Views expressed are personal and not necessarily those of financialexpress.com.