It is essential to change the way businesses are managed and give commitment to sustainability the importance it deserves. However, to generate an impact at an environmental, social and governance level, comprehensive strategies based on data and with very clear objectives that are consistent with the needs of companies are needed; isolated actions are no longer enough.
citing Leticia Alvarez, co-director of the “Sustainability Your Competitive Advantage” program at IE Executive Education, “Sustainability is not just the environment, it goes much further, sustainability refers to the economy, way of working, business model, access to new markets and clients, attracting talent to new generations who are looking for more than just a salary, it is a whole conception of the productive model.”
Accountability for the impact that companies have on the environment and on the communities where they have a presence is increasingly pressing. Last November, the European Parliament approved the proposed Corporate Sustainability Reporting Directive (CSRD). The objective is for companies to regularly report on the impact that their business activity has on people and the environment. The initiative will be effective in 2023 for large corporations and in 2026 for small and medium-sized companies.
Likewise, the Impact Weighted Accounts (IWA) initiative has the purpose of promoting reports that reflect the financial, social and environmental performance of companies.
Data transparency seeks to encourage informed decision-making and, with it, redefine the profitability of companies in a broader way.
The transition towards sustainable corporate models is not a trend, it is a real need to guarantee the viability of businesses in the long term.
In this sense, any ESG strategy (environmental, social and governance) must be based on a diagnosis and data that establish the areas to be improved and that support its implementation, with measurable objectives, specific actions and timely follow-up to be able to evaluate the concrete results of each of the initiatives, as well as the strategy as a whole.
This helps us avoid “greenwashing”, a bad practice that is carried out, sometimes without knowledge, in which some companies seek to join the ESG business model without having a comprehensive strategy based on specific actions that support its implementation and results. According to the European Commission, 50 percent of the ecological claims are unfounded, that is, they are empty promises. For this reason, any communication strategy related to the impact of a company on the sustainable development agenda must be accompanied by evidence.
In the words of Sofía Ambrosi, partner of Zimat Consultants, “The value of communication is key to generating trust in audiences. Talking about the ESG initiatives carried out by companies has a direct impact on their reputation. For this impact to be positive, the information must be genuine, with reliable data, clear and transparent messages to publicize the actions that are being carried out, their progress and results. However, “greenwashing” damages the reputation of organizations because it generates distrust in their audiences and undermines the credibility of their commitments.”
Sustainability is a great challenge for companies that must adapt to this new way of doing business and report results to their stakeholders. But it is necessary and it can become a great opportunity in terms of reputation. For them it is essential to involve all areas of the organization, have a strategy that has clear objectives and establish a coherent methodology that allows companies to know what they are doing well and what their areas of opportunity are. And, of course, it is essential to have an efficient communication strategy that accompanies the entire process.