As corporate boards consider how they will handle increasing pressure to disclose ESG performance for their companies, there are some companies that have incorporated aspects of ESG into their business strategy and have found ways to communicate their success publicly. Instead of looking at ESG in a negative light, corporate boards should be open minded about communicating information about ESG initiatives in ways that strengthen relationships with stakeholders.
The Thomas Reuters Institute recently released an ESG Case Study examining Kellogg’s ESG communications with its stakeholders. As with most aspects of corporate governance, Kellogg’s engagement with specific stakeholders was critical to producing positive outcomes. Some insights from the case study include:
• Kellogg’s has created a “Better Days Promise,” a commitment to provide sustainable and equitable access to food worldwide in an effort to create better days for 3 billion people by the end of 2030. By communicating a “purpose” that stakeholders can support, the company is building a bond that will bear fruit in the future.
• Kellogg’s has embraced sustainability and diversity, equity & inclusion as concepts that will strengthen its relationship with its stakeholders. Since consumers and communities around the world are in favor of these concepts, incorporating them into the business strategy has added value. As the company demonstrates that it cares about issues that are important to communities and people, it builds loyalty and trust, which eventually can turn into consumer loyalty toward its products and services, which ultimately improves revenues.
• Kellogg’s encourages its employees to engage in many of its ESG initiatives during the year, which can have the effect of sending an army of corporate ambassadors into the community to build the company’s brand. When a company creates positive memories for its customers, the benefits can last a lifetime. Additionally, providing opportunities for employees to engage and network with the public builds soft skills that the company can benefit from as those employees continue their careers and are promoted.
By examining what other companies are doing regarding ESG communications, corporate boards can determine if adopting similar ESG policies and initiatives could bring added value to their company. They can also gain information about how others have gone about engaging with communities, consumers, employees, investors and customers.
Since companies determine their own policies regarding ESG, they get to write their own story about how what they are doing regarding ESG. If companies enact ESG policies that produce positive outcomes, then their ESG communications should be positive. Companies should consider engaging with their stakeholders, determining how the stakeholders feel about key ESG issues, and then creating policies and initiatives that support those views. Of course, there will be some disagreements with stakeholders over ESG issues, but this approach gives companies the best opportunity to create positive ESG communications that can add value.