Sustainability communications: Learning from ESG reporting

TPB’s communications lead Siân Wynn-Jones on how the Hong Kong Exchange’s analysis of ESG reports reveals advice for good sustainability communications

Summer brings a mass of Environmental, Social and Governance (ESG) reports from Hong Kong listed companies and you’d think for many corporates, the huge amount of effort that creating the report involved would be exploited through their corporate communications. Yet time and again emails, social media accounts and press releases announce their arrival in minimalist – if not reductionist – style: ‘a report was published’. Hang on a minute … hit pause … this is ESG – the big stuff set to have the most tangible impact humankind will ever realise, survival – such work is surely worthy of a more considered communications approach?

The Hong Kong Exchange reviewed the ESG reports of 400 listed companies published to reflect activities during the first year of mandatory reporting, financial year starting 1 January 2016. The Exchange’s report serves as a useful benchmark on corporate ESG activity in Hong Kong, and the areas highlighted by the Exchange for improvement can be seen to indicate both the direction of travel and ambitions of the Exchange. One of the themes, I see running through the report is the articulation of ESG activities – and the findings reveal some interesting and consistent messages on the importance of good communications within reports themselves, and each observations also provides a good grounding for planning corporate communications that really engage a diversity of today’s stakeholders and audiences.

Tell it like it is – and make sure you tell

Among the Exchange’s analysis the report identifies areas for improvement, and the first of these is communication.

The Exchange asserts that ‘the primary function of ESG reporting is to communicate a company’s commitment and approach to ESG reporting and the process by which it identifies relevant ESG areas.’ Whilst no company should be reliant on a report as a sole or independent communication channel, it is clear that there is an expectation and need for companies to ensure their audience – ie their stakeholders – understand what and why their business is doing with regard to ESG issues.

As the Exchange reports notes, ‘effective communication with stakeholders is crucial to a company’s success’, and this rings true beyond your ESG report. Clearly every company has a multitude of different stakeholders with differing influences and dependencies on that business. Identifying your different stakeholder groups is not only crucial for your materiality assessment, but also a critical foundation for understanding and building effective corporate messages and communications channels. Stakeholder identification and engagement strategies are common areas where organisations value working with external, specialists such as TPB.

Keen to be compliant, clients sometimes ask us, ‘Are we doing ok?’ A common response includes, if you are articulating your business strategy, clearly demonstrating your processes for identifying your present and future risks and opportunities, and explaining your plans for addressing these through your business, then yes. The key is in the communication as well as the thinking and the doing. Without the communication, no-one knows about the thinking and the doing, and without communication, progress and growth on the thinking and doing is obstructed.

Hong Kong companies are not alone in being called out for this – the Global Reporting Initiative (GRI) itself, when evaluating its previous sustainability report received feedback that they ‘should be more explicit about how we engage with our …and ensure that we made engagement a part of our day-to-day business practice.’ The emphasis on communications is consistent, and the message that consistent communications builds a better business is clear!

Resourcing ESG responsibility

Responsibility for a company’s ESG activities ultimately lies with the Board, and it is for this reason that the Exchange emphasizes the value and importance of having Board members involved in ESG reporting. ‘Through scrutinising the issuer’s environmental and social policies and data, the Board will also be in a better position to evaluate and respond to the issuer’s environmental and social risks and opportunities.’

The Exchange also stresses the need for clear lines of delegation from the Board to an ESG working group that has authority, knowledge and resources to deliver on its terms of reference. Sustainability is a rapidly developing professional specialism, and it is here that many organisations will righty seek the support of specialist sustainability agencies such as TPB. A useful measure in successfully engaging a sustainability consultancy would be openness for knowledge sharing, so whether through for example a Boardroom briefing, a strategy stress-testing session, or an employee relations workshop, the in-house appetite, understanding and capacity around ESG is developed.

Building organisational capacity also helps ensure that your company gains confidence in speaking about sustainability from eg the Boardroom to the customer-service centre. The more your organisation speaks about the ESG issues that provide your particular risk and opportunities, the stronger and more assured your corporate sustainability voice will become.

Get out of the box

Another strong message from the Exchange is that there is no place for box-ticking: ‘A box-ticking approach to reporting should be avoided as it would not add value to the process and would deprive the company and its stakeholders of the benefits of ESG reporting.’

If you are ticking boxes for ESG reporting, not only are you failing to look at risk management properly, you are defining yourself on someone else’s terms. What makes your business unique, different to your peers and competitors cannot be defined if you think inside the box, and definitely not inside someone else’s box. Understanding your unique offering in the marketplace is paramount to business success.

In recent years companies have increasingly sought to understand and articulate their purpose, to understand the ‘why’ behind their market offer. For many, this is not a quick nor easy process but there is no doubt that along with the other benefits of purpose-focused thinking, it provides a particularly strong basis from which to identify and plan an ESG strategy that is truly relevant.

One size fits nobody – context, materiality and communications

‘It is important to set out in the beginning of the ESG report the company or the Board’s commitment to ESG and management approach and explain how they relate to its business. It should also include the Board’s evaluation and determination of ESG risks and how it ensures that appropriate and effective ESG risk management and internal control systems are in place.’

‘How they relate’ is a powerful phrase, and setting the time to work out how your ‘how’ is articulated in a tone and language that is authentic to your company voice, is time invested in a valuable communications tool that will stand you in good stead.

Given the emphasis on context it is somewhat surprising that , there was no explicit mention of the Sustainable Development Goals (SDGs, or Global Goals) in the Exchange’s analysis. Yet it is hard to imagine a listed company, that is not impacted by or able to contribute to, the globally agreed targets to end poverty, fight inequality and stop climate change.

The UN has reported that Asia-Pacific needs to ‘significantly step up’ its efforts with regards to the SDGs, and that as region it is currently ‘on track to meet only one of the SDGs’.

Whilst the 17 SDGs and the 169 targets and 230+ metrics that support them can seem overwhelming at first, no one private or public body is expected to solve the world’s biggest problems alone. The SDGs are a framework for focusing on your organisational ‘how’ – for measuring and communication impact, and crucially to collaborate across industries, sectors and geography.

Maybe in time we’ll begin to see companies in Hong Kong engaging stakeholders with messages about the impact they’ve made, rather than notifying an echo chamber that, ‘a report was published’. Let’s hope it’s sooner rather than later, as the issues at the heart of sustainability strategies are urgent, and the world will not make the collective progress it needs to if we can’t collaborate, learn and thrive.

In Hong Kong, I’ve observed that organisations are often keen to wait until something is complete, boxed and gift-wrapped for perfect delivery before they talk about. This misses a key point in sustainability communications – as with all things sustainability – that transparency builds trust. Sharing your ambitions, direction, and challenges demonstrates authenticity, as well as providing more opportunities to engage and learn from your stakeholders. It will help to build stronger communications for your company and strengthen your reputation beyond your ESG report.