More than one story in town

COVID-19 has dominated corporate messaging since its outbreak – but could clear communication of your ESG agenda be the key for investors? Tom Brown investigates

Turn back the clock a couple of months and all eyes were on how organisations were responding to the COVID outbreak. What steps were being taken to protect employees, support customers and contribute to the global fight against the virus?

But as the world begins adjusting to a ‘new normal’, many investors are starting to question how businesses are adapting to the changing operating environment over the longer term. And they want information. Now.

That means ESG factors are back in focus. For some, they never went away; but for others they have been all but forgotten in the hectic atmosphere of recent months. Investors are increasingly being swayed that those who can communicate their management of environmental, social and governance issues seem like a good bet – and look set to emerge the other side of the crisis in the strongest position.

Retaining confidence
The virus has raised serious questions about how well companies are able to manage their ESG risks, compounded by the fact that shares in companies with a focus on ESG issues have outperformed since the outbreak. If investors are left without answers, it won’t be a surprise to see many head for the door. Alternatively, as seen in the last economic downturn, activists may look to leverage these issues to win board seats and reset the organisational agenda. Renewed emphasis on promoting your ESG strategy and engaging with investors around the subject will be vital in securing continued support.

There is also growing pressure to prioritise a ‘green economic recovery’ as governments look to reboot economies in the wake of lockdowns. Further waves of spending are being encouraged to incentivise the transition towards sustainable supply chains and business models. Firms that can highlight how ESG factors fit in with their long-term strategy will be in a stronger position to capitalise on this.

Supply chain shift
To date, climate change has dominated the sustainability agenda, but the crisis has switched the spotlight onto aspects of ESG that are often overlooked – how businesses manage their supply chains, or the importance of solid cyber security policies, for example. While these ‘less glamorous’ issues may have previously been pushed to the back of any communications agenda, they are starting to move into the limelight. Businesses that can showcase real success stories in these areas will likely be the ones who find favour with investors over the coming months.

If your organisation needs help communicating its sustainability story, get in touch.