Environmental, Social & Governance (ESG) is an increasingly important business focus for companies globally. The number of organisations implementing ESG strategies is rapidly on the rise and it is fast becoming a corporate necessity, as investors and consumers are beginning to base their perceptions of a brand on its ESG credentials. 

It is therefore vital that companies not only have an ESG strategy but also develop an ESG communications strategy, to ensure that their messaging is reaching key stakeholders and supporting a positive perception of the brand. 

However, many companies are falling victim to prioritising the environmental and social elements of their strategy when reporting to stakeholders, often forgetting the governance aspects; failing to give the whole picture.  

But just what is governance? And how can you make sure that your ESG communications strategy shouts about your governance credentials?

Understanding the ‘G’

The official definition of governance is “the action or manner of governing an organisation” – in other words, it is the process of making and enforcing decisions. This includes everything from policymaking to the distribution of responsibilities among people like the board of directors, managers and shareholders of a company. 

A company’s governance factors will indicate its rules and procedures, and some of the core elements of corporate governance structures include; a company’s purpose, the role and makeup of boards of directors, shareholder rights and how corporate performance is measured. 

When it comes to improving your governance, things such as board diversity, good business ethics and conduct, tax transparency and strong policies on data protection, privacy and cybersecurity can all help to boost your rating.  

Is it important?

It’s a common misconception that, in today’s society, environmental and social metrics hold greater importance than governance, but this is not the case. Research points to the long-term value of strong governance and, according to S&P, companies with robust governance practices have stronger financial performance, lower cost of capital and more operational efficiency than those with weaker practices.  

In contrast, companies that rank well below average on good governance are prone to mismanagement and risk their ability to capitalise on business opportunities over time. In an analysis of 4,000 public equities by RobecoSAM, securities with the lowest governance scores, on average, underperformed in the market by 7.8% compared to companies with better governance ratings.  

Communicating your governance credentials

As governance often doesn’t have the same interesting ‘newsworthy’ angle that environmental and social does, one of the best ways to communicate your governance credentials is through reporting.   

According to a recent Sustainalytics survey, annual ESG reporting is the most frequent use for ESG ratings by companies, with 28% of companies disclosing their ratings in such reports. Although many companies opt to issue a single annual report, having an ‘always-on’ communications strategy that projects your results and highlights new positive developments throughout the year will ensure that your key stakeholders are continuously updated on the great work you’re doing.   

Social media should also be a key element when it comes to communicating your governance credentials. Utilising the key results and figures from your reports and turning these into engaging content such as infographics, motion graphics and short videos will easily grab the attention of your followers.   

Here at Liquid, we have a wealth of experience in helping our clients to communicate their ESG credentials. If you’re looking for expert advice from a Birmingham PR agency on how to achieve practical change and communicate it effectively, then we’d love for you to get in touch.