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Enhancing Brand Reputation through Effective ESG Communications in the CPG Sector

Updated: Aug 22, 2023


ESG Communication

ESG reporting is quickly becoming the new annual report by giving deeper insights on company performance and management values. It is an essential business tool that helps companies identify opportunities, mitigate risk, address operational inefficiencies, and attract/retain talent. It can be used by consumers when making purchasing decisions and assessing product benefits. For investors it is a way to assess profitability, value and potential risks. More importantly, every stakeholder expects full transparency from companies beyond their financials. All of these factors influence and impact your overall corporate brand.


Building Brand Reputation with Key Stakeholders


CPG companies can build their corporate brand reputation with various stakeholders as “trustworthy” partners. If your company’s efforts haven’t gained much traction lately with your consumers or investment community, then revisit your overall business practices/communication strategy to evaluate why it’s not working as effectively as it should be. Metrics/surveys integrated into this overall strategy serve as your baseline on which to build your brand strategy moving forward.


As part of this research exercise, dig deep into your company’s business strategy beginning with your employees, consumers, and the financial community. Identify other key stakeholders beyond this initial group.


Employees


ESG Communication Strategy

77% of CSR and sustainability professionals say they are involved in many corporate ESG related tasks, including reporting and disclosure, target setting, measurement, program planning and ESG ratings.* However, budget constraints (35%), lack of human resources (34%), and the measurement, reporting and disclosure of outcomes (33%) are top challenges. Your brand must address both sides of these issues in your communication plan.

*Morningstar's Sustainalytics Corporate 2022 ESG Survey Report,


Financial Community


Sustainability communications strategy

Investors access ESG information primarily through the company's sustainability report or through ESG rating providers. These systems look at how the company is performing versus their ESG goals and KPI metrics. Some secondary sources are social media, government regulators such as the SEC requiring climate risk disclosures, and non-governmental socially active organizations. Utilizing ESG analytics and meeting KPI's/metrics relating to ESG is a competitive advantage as there is a strong correlation to other key financial metrics such as higher profitability and lower volatility.


Companies that effectively execute their ESG programs generally generate more value to their customers in all aspects of their business. However, their reports can be "greenwashed" which is presenting ESG data without actually doing anything meaningful. ESG rating providers generate different scoring with non-uniform standard reporting within the rating industry. Their methods may also not be disclosed to investors. It is important that you work with your teams and consultants to maintain high quality and useful data in a form that investors and your teams can easily digest. A new methodology trend is the use of AI-derived ESG data so investors have a more objective view into progress and risks.


Consumers


ESG Communications

Corporate brands must research “why” consumers care about your product(s). Why do they buy them? Cost, unique selling proposition, price, packaging or maybe because you’re a good corporate citizen who gives back to the community? Once you know these answers then build a brand strategy to communicate/amplify your brand. In a 2020 McKinsey U.S. consumer sentiment survey, more that 60 percent of respondents said they would pay more for a product with sustainable packaging. There’s also data from consumers reporting that a sustainable lifestyle is important to them. Win their hearts and they will become lifelong advocates.


Expanded Research of ESG Business Practices


CPG companies are increasingly introducing environmental and social responsibility into their business practices. One example is the use of product labels to advertise their commitment to the environment. The result is a fact-based case for bringing these products to market as part of their overall ESG strategies and commitments. Creating these types of products turns out to be not just a moral imperative but also a solid business decision.


Your ESG research should also include how a company performs as an environmental steward; how it manages relationships with its employees, suppliers, consumers; as well as a full understanding of the communities where it operates. Further research should also address how the organization handles governance issues such as executive compensation and board diversity. All these factors become an integral part in shaping your brand reputation with the outside world.


Building Your Communication Strategy – Brand Narrative through Storytelling


Communicating your ESG strategies doesn’t always require new tools or channels. A robust marketing and communications plan can help accelerate it quickly. Your owned channels (website, corporate social media channels, etc.) should be the first place to share clear and transparent information on environmental, social and governance practices.


New partnerships/alliances can also expand your brand presence to align with others who share the same ESG goals. Carefully align your mix into your overall brand strategy and build a robust measurement tool to evaluate your short and long-term results.


Use storytelling and narratives in various communication channels to personalize and connect your brand with various audiences: employees, consumers, financial community, media, community partners, government, regulatory and potential, new brand advocates.


Industry Success Stories


For CPG companies, the urgency and high profile of climate change has meant greater focus on the ‘E’ in ESG. This has pushed brands into setting ambitious sustainability targets across the entire value chain – looking at ways to minimize their footprint and create sustainable products.


CPG companies that harness ESG to “green” their operations and their image are rewarded with increased revenue driven by socially and environmentally conscious buyers. Companies that identify and address ESG risks and opportunities are more likely to outperform those that do not. Below is a snapshot of some well-known brands exceling in the CPG industry ESG space.

  • Method: A cleaning products company that produces environmentally friendly cleaning products. They use natural ingredients in their products and have a commitment to sustainability. They also use recycled plastic in their packaging.

  • Ben & Jerry’s: An ice cream company use fair trade ingredients in their products and have a commitment to reducing their carbon footprint.

  • The Body Shop: A beauty products company that use natural ingredients in their products and have a commitment to sustainability and animal welfare.

In closing, brand reputation, equity and corporate financial worth are tied directly to solid business practices. ESG strategies and “authenticity” make for responsible stewardship and create value for every stakeholder associated with your brand. ESG communications done poorly, particularly during a crisis, can damage your brand and take years to regain. Done correctly, it can win you new advocates that last a lifetime to ensure your business success.


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