Communications: The Missing Link in ESG Strategy
No longer limited to corporate storytelling gestures like tree-planting and compostable cups, communication is beginning to play a central role in bridging the gap between important stakeholders and the evolving business ESG narrative. It is the engine that articulates the strategic vision to employees, attracts investors aligned with new paradigms, and educates customers on product and service differentiation. In essence, communication becomes the conduit through which ESG principles are understood, embraced, and leveraged to drive business growth and enhance brand reputation.
A Case in Point
In 2009, Danish Oil and Natural Gas (DONG) found itself ensnared in a disheartening reality: responsible for nearly one-third of Denmark's emissions, the company stood as a discordant note in a nation renowned for its sustainability endeavors. By 2012, the situation escalated as plummeting gas prices and a negative credit outlook from the S&P threatened to plunge DONG into crisis. However, under the stewardship of CEO Anders Eldrup, and his successor Henrik Poulsen, the company embarked on a journey of reinvention.
This effort kicked off with a pivotal op-ed from Eldrup in 2009 that served as a catalyst for change, marking a bold declaration of intent to flip DONG's energy portfolio from an 85/15 mix of dirty to clean energy to the converse within a generation. This public proclamation not only charted a new course for the company but acted as a beacon of purpose among internal and external stakeholders. And while communications alone couldn't guarantee such a radical transformation, they provided a vital north star vision for the company, employees, Danish government stakeholders, and capital markets alike.
Amidst the arduous task of pioneering cost-effective and scalable offshore wind power, DONG underwent a symbolic metamorphosis, rebranding itself as Orsted—an homage to the Danish physicist who discovered electromagnetism. This strategic shift away from fossil fuel nomenclature underscored Orsted's commitment to a new energy paradigm and signaled its emergence as a global leader in renewable energy.
Throughout its transformative journey, Orsted leveraged communication as a powerful instrument of change. The metamorphosis story earned them significant organic media coverage and generated numerous case studies and white papers that promoted the company's success, amplifying its narrative of reinvention. Today, Orsted not only reached and exceeded its 85/15 target set in 2009, but it did so within a decade, much quicker than Eldrup initially proclaimed, resulting in accolades like being featured as one of Harvard Business Review's top 20 corporate transformations of the last decade. Its rapid ascent to prominence is also underscored by becoming one of the largest IPOs of 2016 and gaining a commanding position in the offshore wind market, capturing 30% of the market share.
Orsted's story serves as a compelling testament to the valuable potential of effective communication in driving sustainable change. By articulating a bold vision, engaging stakeholders, and fostering a culture of innovation, the company not only redefined its identity but also reshaped the energy landscape. As Orsted prepares to shutter its last fossil fuel plant in 2024, its journey serves as a blueprint for companies worldwide, demonstrating how strategic communication can propel organizations towards a more sustainable and prosperous future.
“[E]ffective ESG communication is not merely a public relations exercise. It is a strategic imperative to address the complexity of operating in the modern business landscape. ”
Communications: A Vital Component of ESG Strategy
Orsted's transformation underscores the critical role of communication in driving sustainable change and shaping a business’s perspective of itself going into the future. Across different industries and verticals, companies are integrating sustainability into their core identity, leveraging communications and messaging as a strategic tool to amplify their value proposition and drive business impact. Here are a few examples to show the diversity and variety of places sustainability is becoming a core aspect of a business’s identity:
Interface Flooring has redefined sustainability in the flooring industry by positioning its products as carbon-capturing solutions. With messaging centered around "Seeing carbon as a resource," Interface frames itself as an innovator in an otherwise prosaic industry. By reframing sustainability as a value proposition within their product, they are able to highlight their flooring as the most technologically advanced in the industry.
Eileen Fisher has pioneered circular fashion practices, documenting and transforming the way their clothing is designed, produced and redefining and understanding of their products lifecycle. Present with equal weight as their ‘Shop’ function on their website, their "Circular by Design" initiative communicates Eileen Fisher’s commitment to building the best products in their category through pivots that show their clothing’s “first life” as to how advanced their creation process is, its “second life” as a valuable and long-lasting article that can be sold on their RENEW secondhand market and its “third life” as luxury clothing that becomes the basis for elaborate, purchasable works of premium textile wall art through their WASTE NO MORE site that shows where some of the 1.8 million pieces of clothing they’ve taken back have gone.
Tetra Pak has adopted a holistic and company-wide approach to sustainability in packaging, addressing interconnected areas such as food systems, circularity, climate, nature, and social sustainability. With packaging at the frontline of discourse around pollution, waste, and microplastics, they are not only working to future-proof themselves against changes in regulations and customer expectation, they are also presenting a positive vision for their customers and day-to-day consumers through the lens of packaging as a solution partner in food safety & quality, loss & waste and access, availability & resilience.
ESG continues to drive purchasing and investing habits throughout the business value chain.
These businesses see sustainable action, brand story and product value proposition as increasingly interrelated. But they also show that no matter where you are in the value chain, these offerings are increasingly preferred by consumers. As highlighted by global communications giants such as Edelman and Havas, the importance of trust and meaningful engagement in brand-consumer relationships cannot be overstated. The 2019 Edelman Trust Barometer Special Report underscores that brand trust is now a non-negotiable for consumers, with over 70% linking purchase decisions to considerations such as supply chain, reputation, values, environmental impact and social responsibility. Similarly, Havas' 2023 Meaningful Brands report reveals that 59% of people would stop buying from companies that don't respect the planet or society.
In today's landscape, companies are expected to demonstrate a genuine commitment to their customers and society as a whole. Therefore, as organizations navigate the complexities of ESG integration, effective communication emerges as a vital tool for building trust, fostering meaningful connections, and driving sustainable business success. By aligning communication strategies with an ownable value proposition, transparency and social impact, companies can not only enhance brand reputation but also create lasting value for all their stakeholders.
Realizing ESG's Full Potential
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