Our panel discussion at the SDG Tent in Davos gathered:
- Christy Hoffman Secretary General of UNI Global Union
- Linden Coppell director of Sustainability for MSC Cruises
- Herman Betten Vice President for Strategic relationships at DSM
- Dr. Fridrik Larsen from Brandr
- Our very own CEO Rolf Olsen
- And myself
What happens in Davos stays in Davos, or not?
Last week’s discussions during World Economic Forum Annual Meeting in Davos and myriad of side events focused a lot on sustainability and ESG. The importance of ESG for business was declined in all cases and languages. However, what is the impact of the discussions between heads of partnerships, public affairs, communications and other relevant functions with the representatives of civil society and international organizations. How to bring connection between the world of multilateralism that aims to “catalyze”, “mitigate”, “build bridges” and real action?
While 2050 ambitions are important, we need to also focus on the here and now. And for that consumer engagement is the answer. On one hand, it brings additional scrutiny. On the other hand, it helps to sharpen the focus and create lasting business change.
Reporting and compliance versus business evolution
Sustainability and ESG reporting standards are proliferating. More standards mean more choices for the companies and less opportunities to distinguish between the great, the good and average.
Too many choices and standards raise the question what the end game is. Often, ESG becomes a game of ratings and standards where a report or an evaluation becomes an end goal on its own.
Real behavioral change and new business practices must be the end game, not reporting and ratings alone.
It is a given that brands need consumer trust to be successful. There are many ways of building trust, starting with the provision of the promised products and services. That is always the first step to creating trust and building loyalty.
Our study developed together with Brandr study shows very clearly that ESG is also critical to generating trust. Consumers’ perceptions of how well a brand is performing against its ESG promises has a significant impact on the trust they give that brand.
And it isn’t just about the Environment. Consumers are increasingly concerned about Social and Governance as well. Companies have to take a holistic approach if they are to convince people that they are genuine about ESG.
It is very clear that, within ESG, governance and ethics are key to how a company is perceived. Consumers expect companies to stick to their promises and to behave properly.
Perceptions are, of course, based on reality, meaning the first thing companies have to do is live by the standards they espouse. The second is to ensure they communicate about what they are doing, to advocate for their own ESG performance.
There are three clear steps in that process:
- North Star: Put a sharp focus on the company’s purpose
- Align: Ensure everyone throughout the company, and ideally the value chain, understand the purpose and use it as they basis for all operations
- Engage: Build communications and engagement strategies, taking into account the duals needs of global consistency and sensitivity to local cultural norms. At the same time, engage with a broad range of stakeholders, including governments, NGOs, communities where the company has operations and consumers
Consumers will play a crucial role in scrutinizing the approach and driving further change.