2020 is the year for ESG information on the corporate website

The results of Comprend's Web Management Survey 2020 show that one key topic keeping communications professionals awake at night is the right way to tackle environmental, social, and governance (ESG) criteria on their corporate websites.
Where should ESG information be placed and how should it be displayed for visitors to easily find it? What should be included to fully meet user needs?

Why ESG affects share price

With the capital market increasingly taking a company's ESG rating into account when making investment decisions, the stakes are high and companies must strive to put their best foot forward. Communications teams are right to be preoccupied with this topic, with 2020 having been described as a "Tipping Point" for ESG investing by the Nasdaq President and CEO, Adena Friedman. But how have ESG factors gained such prominence in the eyes of the capital market and why are they so important to address on the corporate website?

As consumers and investors become aware of the part their money plays in influencing conditions around the world, for good or for bad, they demand ever-greater levels of corporate transparency and disclosure. Increasingly, there is a need for investments to offer both financial returns and to also align with the moral values of those involved. Consumers want to know how their products are made and under what conditions, as well as the effect this has on the environment. Taking all this into consideration, providing detailed information on ESG factors is now a necessity, and these factors also need to be evaluated from a business risk perspective.

ESG factors do not only impact the general perception of a company (their corporate reputation), but they are also very tangibly monitored through the glut of ESG score providers who report on them. It is estimated that at least $3 trillion of institutional assets now track ESG scores, so this is a trend which will have a direct impact on share price. As such, companies are being pushed to pursue a strategy that mitigates against ESG risks.

The impact of a low ESG score

There are now hundreds of ESG score providers focused on rating the impact of the world's largest companies, and they also act as a core benchmark shaping investment decisions. The ESG ratings industry is now so big that in 2019 it was estimated it could grow from $200m to $500m within the next five years. An increasing number of asset management companies will not invest funds into companies with a low ESG score, and some even have exclusion lists for the worst offenders - companies they perceive as no longer representing a sustainable or responsible investment.

Aegon are one such asset manager. As of January, their exclusion list (PDF) contains 200 companies that have been identified as socially irresponsible stocks in terms of climate change, good health & well-being, or the weapons & arms trade.

ESG and corporate communications, an essential bridge to build

It is clear that corporate communications teams have their hands full when it comes to working with ESG. They are faced with the difficult job of efficiently conveying their company's credentials, knowing that ESG scores could suffer if this communication falls short and risking their company's shares being shunned by investors as a result. With this in mind, it was no surprise that tackling ESG information was a recurrent subject when communications professionals were asked to dicuss their biggest corporate website challenges in Comprend's most recent Web Management Survey.

"As our number one priority for 2020, we need to improve the ESG information on our corporate website."
- Web Manager, survey respondent

A particular topic of concern under the ESG umbrella was climate change (environmental), cited by 55% of respondents as being likely to have an impact on their future communications work, along with regulatory and compliance issues (governance), as denoted by 47% of respondents. These are two logical areas of performance, but are still only a fraction of potential ESG topics, with many other criteria that can be taken into consideration, such as: waste and pollution (E), working conditions (S), and political affiliations (G). These topics are all likely applicable, for example, to a company in the Oil & Gas sector. This is not to say that their ESG rating would automatically suffer if the fail to address these issues, rather that they would need to place extra emphasis on their communications and strive to approach a more diverse topic selection.

What the market leaders are doing

In a 2019 list of the "50 Best ESG Companies" compiled by Investor's Business Daily, multinational technology giant Microsoft placed among the top ten. Microsoft.com includes a thorough Corporate Social Responsibility section which neatly covers a wide variety of ESG criteria and makes it clear that the company is aware of how these considerations affect their business, as ESG topics are addressed point by point:

  • Environmental pages cover the company's carbon negative strategy, approach to waste, and eco-friendly use of materials.
  • Social criteria include an extensive amount of detail on Microsoft's philanthropic work, community engagement, and efforts "to help ensure every person can build the skills and access the resources needed to succeed in a digital economy."
  • Governance is addressed through Microsoft's promotion of their "six privacy principles", stressing a commitment to transparency, security, GDPR, and legal regulations.

Another global company included in IDB's 50 Best list is food packaging heavyweight PepsiCo. Their corporate website's sustainability section features a comprehensive page for ESG topics, structured like a glossary that goes from A-Z and covers factors relevant to their business. When clicked, each of these glossary terms reveals a summary of the company's priorities, supported by PDFs and/or links for further information.

The IR Society has also recently held a ceremony to crown the winners of their 2019 Most effective integration of ESG awards. The winning companies were deemed to have stood out for the quality of their year-round ESG communications. Taking home the accolade for the international category was Russian precious metals mining company Polymetal, who were commended for their "well-integrated and measured approach to their ESG communications". On their corporate website, the company cover many of their relevant ESG topics in the sustainability section, such as Health & Safety, Environment, Employees, and Community. They also report on their ESG progress in an archive that showcases awards they have received and the sustainable indices they belong to. On top of this, they have previously held and reported on an ESG Day featuring an ESG presentation from Polymetal’s Chief Sustainability Officer.

Keep the ball rolling on ESG communication!

Whilst ESG criteria will be naturally tackled differently from company to company, there are still general pointers that any communications team can stand by when it comes to their ESG content creation:

  1. Identify the ESG criteria that are relevant to your business and make sure to include these on your corporate website. If you're in the software industry, then it would make more sense to focus on the "S" and "G", as topics like diversity might be of greater relevance than an environmental concern such as, for example, animal welfare. On the other hand, the environment is going to be a paramount consideration for an oil and gas company, alongside other factors like health & safety and corruption.
  2. Be transparent in your communications. Don't shy away from addressing ESG criteria – even if there is a lot of work to be done on a key issue, a statement acknowledging this would help to show the company stepping up to its responsibility. A bit of honesty can go a long way in preventing ESG communication from looking like a PR exercise.
  3. Show your performance. As a logical extension of the transparency point, stakeholders want to see companies provide tangible evidence of following through on words with actions. In Webranking by Comprend, we often see companies fail to support their strategy with any data. Give weight to your ESG work by setting clear targets and showing the progress you’ve made on reaching them!
  4. Pay attention to ESG ratings. It was no surprise to see Microsoft listed as one of the "50 best ESG companies", given the fact that their ESG work has received the highest AAA rating from MCSI, as well as an "Outperformer" rating from Sustainalytics – impressive accolades from two of the most well-established ESG rating providers! It's important to research different organisations and decide on what makes for a good score to inform your work with any recommendations.

Do you want to make sure your corporate website's ESG communication is ready to withstand investor scrutiny? Get in touch with us! Comprend has a dedicated content team ready to provide all the guidance you may need.

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