Our clients often worry that by becoming an ESG leader they will lose some of the identity of their brand or become “too expensive” for their customers. I reassure them that by becoming an ESG leader they are not only gaining identity and relevance but also potentially becoming more competitive than ever before. ESG has the potential to revamp how successful organisations plan, implement and operate. Once a company embraces ESG as a business practice, it can easily reap the real rewards from being a good global citizen.
Who is responsible for ESG?
Today, sustainability has become a core issue for boards of directors (BoD) and managers. This is due to increasing awareness of environmental, social, and governance issues among stakeholders, which is connected to the pervasiveness of technology. In turn, this is affecting how companies are governed.
While the scope of ESG is broad, there are a few factors that can help any company get started with ESG. And it all starts with knowing your company's purpose and doing what's necessary to align your business model with societal needs.
Why is it important to manage brand image on the digital front?
When it comes to making an identity for your brand, the digital revolution has fundamentally changed the game. It has made it possible for anyone with a laptop and an internet connection to generate a powerful and recognisable brand persona in seconds.
And because managing your online persona is a vital means to interact with your audience and build trust with them. Today, people expect to have access to information from companies they have a relationship with to make a buying decision. This is why advertising, marketing and selling products or services online requires proper digital hygiene. Without a doubt, businesses of all shapes and sizes will continue to rely on ESG transformation as they look to differentiate themselves within an increasingly crowded marketplace.
How can companies leverage ESG for brand building?
Most consumers today would not purchase a product or service from a company with a bad reputation when there is an option of one that is perceived as ethical and environmentally conscious. Companies can create extremely appealing ESG packages that appeal to next-gen consumers to differentiate themselves from competitors.
One way is by framing their social and environmental responsibilities in ways that people will understand and relate to. In addition to framing social and environmental issues within products/services, businesses can also put themselves out there as trustworthy actors by being willing to take risks to advance innovation and create jobs.
A lot of research has been done by Harvard Business School professor Michael Porter, who initially coined the idea of a value chain, to explain how a company creates value for its consumers utilizing a collection of processes. Creating interconnected processes where every process in the value chain generates value that beats the cost of creating that value will help to foster a competitive advantage for the company.
The ESG transition is a reality, but it's also an opportunity to rewire your business in a way that is compatible with ESG measures and future trends. Failing to handle ESG risks can make it hard for the company to be relevant to stakeholders in the long term.
In our opinion, ESG momentum will keep growing with successful pilots and quick wins that are connected to a bigger whole. When companies can transform smaller actions into bigger ones, they are more likely to capture customer attention and retain it over time. This is why we believe that companies that are willing to radically change course and push their business in a new direction will capture more customers and increase their share prices over time. Given the right content/strategy mix, companies with a strategic plan for ESG transformation could capture and hold more value than their peers.