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One of the topics that is increasingly filling the sustainability agenda and is difficult to get around is ESG communication, including the so-called green claims.
An area many companies find challenging to navigate, not least because legislation is still evolving rapidly.
At the same time, we see that many are not being able to exploit the business potential that exists in ESG. Many actions are never communicated - perhaps because of uncertainty about how to do it correctly or in fear of doing it wrong.
This phenomenon is also called Greenhushing: when companies understate or completely fail to tell about their efforts. But it is when you communicate clearly and credibly that ESG can create commercial value, strengthen your brand and increase trust in your business.
To help you navigate the landscape and unlock the potential of ESG communication, here we demystify what ESG comminication is, the key requirements and come up with our recommendations to get you started.
What and why ESG communication?
At its core, ESG communication is about how and what companies tell about their work with environment (E), social affairs (S) and governance (G). It can range from reporting and websites to marketing, newsletters, sales materials, product names, packaging and certifications.
Especially the E and the so-called green claims has come into focus. And it's not without reason. According to a study from European Commission 53% of green claims are unclear, misleading or without real evidence, while a whopping 40% are completely lacking in evidence.
To tackle the problem, the EU has adopted new rules to protect consumers from misleading environmental claims. This means that companies must be able to support their ESG communications with solid documentation in the future. Legislation must ensure solid numbers behind the green statements.
New requirements - what does it mean for you?
The demands that you have to deal with right now are referred to in public as Green Claims. In reality, these are two closely linked directives:
- Empowering Consumers for the Green Transition which has already been adopted and is about consumer rights.
- Green Claims the technical foundation, which is currently in trilogue negotiations in the EU.
The first directive has already led to changes to the Marketing Act, the Consumer Contracts Act and the Consumer Prosecution Act - also known as Bill 147.
With the new EU rules, the definition of environmental claims has been widened and the requirements tightened. An environmental claim is not just about the words you use, but also about visual elements, colors, tone, and the overall expression.
This means that ESG communication covers a wide range of channels, such as reporting, website and marketing for newsletters, product names, logos, packaging and labelling schemes.
In addition, responsibility for environmental claims lies not only with the manufacturer, but extends all the way from manufacturer to dealer. Dealers are obliged to request documentation from manufacturers and suppliers, while manufacturers must be able to provide this documentation.
The Consumer Ombudsman, the executive body, has already delivered judgments and assessments on marketing. In addition, they have published a series of specific recommendations and examples that companies can use for their environmental marketing.
Among other things, it emphasises that an environmental claim must be correct and accurate, relevant and balanced, and verifiable in order for it to be applied. In addition, there are a number of specific requirements and recommendations that can be useful to familiarize yourself with.
How do you succeed in ESG communication?
Our experience shows that strategic ESG communication succeeds best when companies work with four key principles:
- Structured approach focusing on the right elements: Prioritize your most important areas and focus on them.
- Strong data base and documentation: Claims must be verifiable. Start by building and strengthening your data base.
- Specific statements rather than general promises: The more concrete you can be about your efforts, the better.
- Progress on perfection: Be honest about where you are and where you want to go. Transparency breeds trust.
Where do you guys start?
We recommend that you approach the work in two ways:
- Start with what you already have and communicate based on existing data and inputs.
- Start with what you would like to be able to say and build the necessary documentation and effort up around it.
Both paths require structure, transparency and a solid data base, but open up in return to reap greater commercial value from your ESG work.
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