Rethinking ESG: Getting the Horse in Front
Since mid-2023, there's been a noticeable shift in how we perceive ESG (Environmental, Social, and Governance) metrics. Once hailed as a vital standard for assessing investments, ESG seems to have lost some of its allure among investors. The BBC ran an important story in November 2023 titled “How 'ESG' Came to Mean Everything and Nothing” points out the ways (and reasons) that the term “ESG” has fallen out of favor even as companies have continued to pursue ESG-related goals. But perhaps it's time to reconsider our approach to ESG, viewing it not as an investment principle but as an ethical one, and a crucial category in public relations and communications.
ESG was initially championed as a revolutionary concept, promising financial returns while also fostering societal and environmental benefits. Yet, if ESG never quite gained the enduring traction it aimed for in investment circles, perhaps it's because we've been putting the cart before the horse. Even 30 years ago, in their book For the Common Good: Reorienting the Economy Toward Community, the Environment, and a Sustainable Future (Beacon Press, 1994), economist Herman Daly and philosopher John Cobb made a compelling argument that we have our relationship with the economy backwards. The economy exists to serve human needs and aspirations, not the other way around; and business ethics and practice should reflect our broader societal values and goals, not just financial gains.
While the label of ESG may have waned in investor circles, its significance in public relations and communications has only grown. The 2023 Edelman Trust Barometer found that 63% of consumers factor their beliefs and values into their brand selections, while 69% of employees want their work to have societal impact. And far more people believe that business is not doing enough to address issues such as climate change, inequality, and misinformation than believe it is overstepping its bounds.
In essence, the ethical imperatives of ESG embody the principles of neighborliness and being a responsible member of the community. When put in those terms, we are naming timeless values deeply ingrained in our societal fabric, and they resonate strongly with consumers and the general public. Businesses that prioritize social impact initiatives not only align themselves with these societal values but also enhance their reputations and strengthen their relationships with stakeholders.
As we navigate the evolving landscape of corporate responsibility, it's crucial not to lose sight of the broader impact businesses have on society and the environment. Instead of viewing ESG solely as an investment metric, let's recognize its fundamental principles of neighborliness as a strategic imperative for community relations—a means for businesses to authentically connect not only with consumers but also with their neighbors and demonstrate their commitment to social and environmental stewardship.
This means that, while ESG as an investment principle (and perhaps as a label) may have lost its luster, its importance in public relations and communications cannot be overstated. It's time to reframe our approach to being a responsible organizational member of the larger community, elevating ethics and societal values in our interactions with consumers and stakeholders. After all, in today's interconnected world, businesses that prioritize goals of sustainability and justice not only drive positive change but also foster trust, loyalty, and long-term success.
Ready to elevate your business's social impact strategy and effectively communicate your achievements? I specialize in helping businesses develop robust ESG strategies and craft compelling narratives that resonate with stakeholders. Contact me today to learn how I can support your journey towards meaningful social and environmental impact.
