I ran across this post from Axios about corporations “rebranding” their ESG initiatives. Not abandoning them, to be sure, but changing when and how they talk about them.

Here are the numbers cited by Axios.

"The number of S&P 500 companies citing 'ESG' on earnings calls has declined (quarter over quarter) in four of the past five quarters," according to a Fact Set study.

The term was cited by only 56 of the S&P 500 this quarter, down 24% (from 74 mentions) since last quarter and down roughly 64% (156 mentions) since its peak in Q4 of 2021.

The big issue is that companies are afraid of being criticized for being “woke” and experiencing a backlash. I point you to the reaction when the Apostate Chick-fil-A hired a DE&I officer. I also point you to the long lines I see at the Chick-fil-A I pass every night on my way home.

Here’s a quote from the Axios article:

"Every CEO I talked to is saying, we want to maintain our commitment, but it's more important than ever that we do it in a way that shows real bottom-line results and connects our investments in ESG with [performance]," says David Meadvin, CEO of corporate strategy firm One Strategy Group.

This makes total sense. Elsewhere in the article, Meadvin says that ESG was probably too broad. He’s right. As communicators, we like to package things up and give them a label so it sticks in people’s mind and exists as a single initiative, rather than asking the public to put the pieces together on their own. Our instinct is to tell the larger story.

In this case, it might have been too much.

Meadvin’s counsel—which is sound—is to unpack and unlabel the initiatives and talk about their impact on corporate performance and benefit to the owners of the company, and all its stakeholders, should that interest you (It should—see Resilient5 here).

It’s way better ground. Rather than defending the “means what you want it to mean” concept of ESG, you tell the story of targeted business-driven initiatives.

Why not just walk away? Because Environmental, Social, and Governance (ESG) factors are increasingly becoming a key driver of financial performance, attracting investors, customers, and talent alike.

The Business Benefits of ESG

There is a growing body of evidence that shows a strong link between ESG performance and financial success. Studies by McKinsey & Company and others have found that companies with strong ESG practices are more likely to outperform their peers in terms of profitability, stock price, and long-term value creation.

Key business benefits of ESG:

• Reduced risk: By addressing environmental and social risks, companies can avoid costly regulatory fines, lawsuits, and reputational damage.

• Increased efficiency: Implementing sustainable practices can lead to cost savings, improved resource utilization, and reduced waste.

• Enhanced brand reputation: Consumers are increasingly choosing brands that are aligned with their values. A strong ESG commitment can help you attract and retain customers.

• Improved employee engagement: Employees are more likely to be engaged and motivated when they work for a company that is committed to making a positive impact on the world.

• Access to capital: ESG-focused investors are a growing force in the market, and they are looking to invest in companies that are making a positive contribution to society.

Seven Tips on Communicating Your ESG Practices Effectively

Communicating your ESG values effectively is essential to reaping the benefits. Here are some tips:

1. Be authentic: Don't just talk the talk, walk the walk. Make sure your commitments are genuine and reflected in your actions.

2. Use stories. Talk about actions taken, not words or value statements.

3. Focus on the business case: Demonstrate how your practices contribute to your financial success.

4. Use clear and concise language: Avoid jargon and technical terms.

5. Be transparent: Share your goals, progress, and challenges openly and honestly. If there’s a setback, discuss it.

6. Focus on the positive: Highlight the positive impacts you are making on the environment, society, and your employees.

7. Engage with your stakeholders: Listen to their concerns and feedback, and use them to improve your ESG practices.

Avoid Woke-Washing

"Woke-washing" is the practice of companies making exaggerated or misleading claims about their ESG commitments. This can backfire and damage your reputation, opening you to criticism from both ends of the political spectrum.

Here are some red flags to avoid:

• Making vague or unsubstantiated claims: Back up your claims with data and evidence. Be transparent.

• Focusing on superficial gestures: Don't just focus on things like greenwashing or philanthropy. Make sure your ESG practices are integrated into your core business strategy.

• Ignoring the negative impacts: Don't pretend that your company is perfect. Acknowledge your challenges and how you are working to address them.

• Being overly partisan or political: Focus on the facts and avoid making inflammatory statements.

By following these tips…

…you can re-position ESG efforts as part of your ongoing business goals. You can build trust with your stakeholders and reap the business benefits of being a responsible company.