Risks and opportunities of communicating your sustainability story

The second event in our series of Sustainability Networking Forums in Perth focused on how to work with the United Nations Sustainable Development Goals, the risks and opportunities of communicating your environmental, social and governance (ESG) strategy and how to tell your sustainability story without Greenwashing; with speakers Dr Sandy Chong (Director of the UN WA), Anthony Hasluck (Managing Director of Clarity Communications) and Jane Gouvernet (BDO Associate Director, Corporate Finance).

What are the United Nations Sustainable Development Goals?

In 2015, all United Nations Member States adopted the 2030 Agenda for Sustainable Development, the core of which are 17 Sustainable Development Goals (SDGs). Each goal has several targets to measure progress and is a call to action by all countries in a global partnership. The West Australian Government’s recently released report ‘Supporting Continuous Improvement in ESG Outcomes for Western Australia’ provides a concise example of implementation of all 17 SDGs, with targets and tracking against these targets.

While these goals were developed to spur action at a country level, they are also useful as a universal language for framing a company’s approach to sustainability and offer a low-cost entry into sustainability reporting for smaller companies and organisations. While they provide an easy entry into measuring a company’s sustainability efforts, it is important to remember there is no expectation that a company measures against all 17 goals. Instead, a core group that are relevant or material to a company’s operations should be selected, to keep your sustainability efforts focused and effective.

What are the risks and opportunities of communicating your ESG strategy?

Recent years have seen a dramatic rise in the expectations of internal and external stakeholders that organisations report their ESG strategy, and while this presents many opportunities it also carries some risk.

Key amongst those risks is the complexity of ESG reporting and the confusion that complexity can cause. While knowledge of ESG reporting continues to disseminate into industry there are still gaps, and people involved in the sustainability space must not make the mistake of assuming every audience has the same level of understanding as industry professionals. To this end, it is important to make your sustainability reporting as transparent as possible, and part of doing such reporting is educating your audience.

Conversely, while there are risks, there is also enormous opportunity for companies that get their ESG messaging right. While ESG reporting is increasingly viewed as a societal expectation, it is still in its nascent stages with no current legal requirement to report. However, it is likely pressure from larger companies in your supply chain will begin to push the expectation of ESG reporting onto their key suppliers and customers. Even as recently as March this year the U.S. Securities and Exchange Commission announced proposed mandatory climate disclosures, which if approved would have a flow-on effect on reporting in Australia. Now is the time to start reporting, while it is voluntary, and to embed best practice in your business before it becomes mandatory.

So how do you tell your sustainability story while avoiding being accused of Greenwashing?

As the number of companies reporting on sustainability has increased, so too have the accusations of Greenwashing – the idea that companies are misleading or outright lying about their sustainability credentials. While the general public are quick to investigate claims made by companies, they are not the only ones. Often it is the company’s employees and customers who are first to criticise the statements being made. This can have flow-on effects on the ability to hire new employees, as newer generations place greater importance on ESG impacts of organisations when deciding where to work. The key to ensuring your organisation is not seen in this light is effective communication and justifiable targets.

When communicating your ESG strategy it is important to tailor how you communicate to the expected audience - with the board, employees and general public requiring different approaches. For the first time in history workplaces will soon have five generations working together, all of which have different perspectives and understanding of what ESG means and how it relates to them.

Lastly, it is critical to distinguish between aspirational and achievable targets and ensure any targets are justifiable. Legally speaking, the same approach should be taken to ESG targets that is taken to financial targets - there should always be a reasonable basis for the statements being made and it should be made clear if these statements are aspirational. There is the risk of reputational damage if ESG targets are set to unattainable heights and continually missed.

Taking all of this into account it is important to remember reporting is not a proxy for progress, and while increased reporting is encouraging there is still a lot of work to be done. We have seen a hundredfold increase in reporting using the Global Reporting Initiative Standards in the last 20 years, however carbon emissions have continued to rise. 

Find out more

If you are interested in attending the next Sustainability Networking Forum in Perth, please email perth.events@bdo.com.au.

To learn more about how BDO can help you on your sustainability journey, please contact us.