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Why ESG Marketing Should Incorporate Crisis Communication Plans

Published on March 6, 2023

The rise of ESG has created opportunities for investor relations, PR purpose campaigns and DEI initiatives, yet few organizations have adapted their crisis communication plans to incorporate ESG factors.

Ever since it broke into the investor mainstream in the wake of the Global Financial Crisis of 2007-08, the environmental, social and governance (ESG) paradigm has only grown in popularity. Organizations now recognize that the ESG cluster of non-economic factors has a material impact on their financial performance. This understanding has deep implications for communications and crisis management.

ESG factors are especially prevalent in the investment industry, thanks to the leadership of BlackRock and other massive institutional investors. ESG is now arguably the most powerful acronym in capital markets today, as a torrent of fund flows measured in trillions of dollars has flooded the space. Indeed, the seemingly insatiable demand from some of the world’s biggest allocators has helped fuel an ESG boom across asset classes.

As the world’s top asset managers have embraced ESG, more corporate leaders have felt compelled to adopt ESG policies of their own, not only to attract institutional capital, but also to assuage investors’ growing concern about factors such as social impact and environmental justice. Integrating ESG principles into core business functions provides a way to manage risks and forestall crisis.

ESG Marketing and Public Relations

ESG Marketing Responds to Crisis Events

The rise of ESG has created tremendous opportunities for PR campaigns. ESG marketing strategies offer companies tremendous advantages in differentiating products and services. While many companies have taken on ESG as policy, only a minority have made sufficient consideration of how to communicate their ESG positions and practices. 

This lack of thoughtful, well-planned ESG policies and ESG communication can expose companies to material risks, especially when their ESG policies come under public or media scrutiny. When a company is found to have violated or otherwise failed to live up to its staged ESG policy and principles, it can result in a serious backlash from customers, external partners, shareholders and other stakeholders. 

This makes proper ESG reporting essential to avoid investor conflicts and potential PR blowups. In a recent research report, Pitchbook pointed out how ESG communications can be misconstrued among general and limited partners and other capital market participants.

“One manager’s ESG strategy might necessitate investing in only carbon-neutral businesses, while another’s might involve acquiring companies in “dirty” industries such as oil, coal, and gas and making ESG improvements to them where possible. If both asset managers have funds they describe as ESG aligned, an LP might expect the use of one strategy and find that it has invested in a fund that uses the other. This kind of dissonance between what one party expects from another’s ESG strategy has resulted in greenwashing accusations, feeding into negative perceptions of ESG. Thus, it is necessary for GPs, LPs, and portfolio companies to all proactively communicate about what their approach to ESG entails, what its purpose and goals are, and how it will be implemented.”

ESG also faces the broad, unfocused political charge of “woke capitalism.” However, delivering a clear ESG message is as crucial in securing legislative and regulatory approvals as it is in raising capital. ESG crisis communication plans increasingly must engage both investor relations and government affairs teams. Staying silent on ESG is a missed opportunity to communicate an organization’s risk management practices and its commitment to do well by doing good.

Fortune 500 Marketing

ESG in a Crisis Communication Plan

Corporate leaders of all industries can preempt most potential criticisms with advance preparation, which is the foundation of any crisis communication plan. A company with a vocal and visible ESG policy should prepare and adopt a rapid response document to address various stakeholders in the event of ESG policy failures. These policies should be clear and direct, with an action plan built in to allow the company’s PR and comms team to react swiftly and effectively.

We believe that ESG is one of the most undermarketed areas of opportunity for corporations. Currently, reports are being created for an investor audience and rarely tie in the marketing departments to “market” the content seriously to the public. In our many conversations with some of the nation’s leading strategic consultants, we have found that they share this concern. 

Corporate leaders would be wise to take proactive steps to develop a crisis communications plan for ESG. Doing so will help set them apart from the competition and preempt many of the difficulties that may arise from a surprise crisis.

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ESG Marketing and Public Relations

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