Impact investment funds and ESG strategists often struggle to distinguish between good intentions and good marketing. It’s not a new idea: tobacco firms once pushed menthol cigarettes as a healthy alternative, and to this day some people believe in so-called “clean coal.”
For those pursuing the double bottom line of competitive returns and a positive impact on the wider world, a constellation of data and methodologies have emerged over the past decade to help separate the green wheat from the greenwashed chaff. But leading indices can produce conflicting assessment of the same company, so ESG data is still in its infancy.
Simon Kelly, CEO and founder of the marketing and messaging firm Story Worldwide, has helped corporate clients get the messaging part of ESG right. “It’s not enough to say a thing. Corporate leadership has to understand whether the purpose or impact they’re seeking to make will drive profit in the future.” Otherwise, he says, “it’s not going to sustainable.”
Kelly spoke with Karma’s Contributing Editor Michael Moran about best practice in ESG messaging, aligning corporate goals with messaging, and how to spot greenwashing.
Michael Moran: How do we separate companies pursuing genuine sustainability from those just using sustainability and other claims as a marketing tool?
Simon Kelly: Well, sometimes it’s obvious. Sometimes we just have companies acting in a dishonorable, disrespectful, harmful way whether it’s harmful to the planet, to the communities or to individuals. These companies are going to get found out. I mean look at the look at Purdue Pharma and the opioid crisis, look at look at what happened with BP in the Gulf of Mexico, and with Volkswagen and the diesel emissions scandal. You know these brands that tried to get away with things are going to get found out and tarnished possibly forever. I don’t know that BP is ever going to be able to recover from that. Every time you think of BP you think of the Gulf of Mexico and a massive oil spill.
Michael Moran: Not many cases are that clear cut, though. You have the coal industry, arms merchants, oil & gas companies, and firms whose supply chains are shot through with corruption, child labor, indentured labor and worse? But most companies live somewhere in between that place and CSR nirvana, right? And ESG data is subjective in many cases; different providers produce different ratings (for same companies?). What do we look for to help us separate the good from the bad?
Kelly: Companies have to be really honest and genuinely sincere in their desire to change behavior and be transparent. No matter what they make or do, they need to say “Look, we’re in the energy business and we can’t hide that. But our goal by 2025 is to derive 30% of our revenue from renewable energy sources, and by 2030 we want that to be 50%.” That kind of public commitment means something because shareholders and competitors see it and react to it. So, transparency is key, but you also have to track it and see that they’re truly doing it. Remember, BP’s 90s rebranding was “Beyond Petroleum” and they introduced their new green sun logo. I remember laughing at that, I mean really hard.
Often you see claims that get your Spidey sense twitching. When you hear talk about “reinventing their brand,” that’s a red flag, if they’ve created a division and rebranded it with something greenwashed, calling themselves earth first or natural essence or some nonsense awkward construction, break into two sentences?
Michael Moran: From a corporate perspective, what are the right steps to take to align your goals and your messaging in a way that avoids the greenwashing charge?
Kelly: There are three things. First, it’s not enough to say a thing, you have to really mean it how does a company show they really mean it? Corporate leadership has to understand whether the purpose or impact they’re seeking to make will drive profit in the future. That needs to be articulated in a transparent and authentic way, and if they get this wrong and the idea is a loser financially, it’s not going to be sustainable.
The second one is developing a narrative that truly reflects the company’s values. I love this quote from Oscar Wilde, “Be yourself, everyone else is already taken.” That’s great advice for corporate narratives and storytelling. Really make sure the message is notable, that it’s by you and only you.
The third thing is understanding and messaging around the “‘why.” Why does the company and its products exist? This is really about anecdotes. You can measure a lot of things these days, and Jeff Bezos at Amazon is famous for saying “we measure everything.” So much of what we do in 2019 is data driven and I feel like I am a big believer in data. But data tells you “‘what,” it doesn’t tell you the “‘why.’” That’s the role of anecdotes. Anecdotes actually help you understand why it is that the data exists.
Michael Moran: If we stand back a second and look at the whole landscape of companies that are out there in the media, who’s doing the messaging on impact and purpose well? Who are some standouts?
Kelly: I think Patagonia is one. They put their money where their mouth is and so you know they’ve spent significant amounts of their profit on the environment and improving communities and so on. I think Unilever is another. It’s a behemoth right now. Over the years it has taken its share of bad press for palm oil production and other things. But its corporate leaders over the last five years have recognized that they have to change as a company and they’ve been divesting themselves of businesses that conflict with their values, like margarine. That’s a decision not necessarily driven by pure profits, but which over the long term is very defensible and these moves conform to ESG parameters.