Doubling down on participation

Photo by Priscilla Du Preez 🇨🇦 on Unsplash

What does it take to communicate corporate sustainability leadership, when most companies just want to keep their heads down?

When BlackRock CEO Larry Fink advocated for ESG in 2018, his statements helped cement the concept into the mainstream of corporate citizenship. In 2021, he was among many in corporate America to emphasise the importance to business of decarbonisation strategies. So it was a sign of how dramatically the tide has turned when Fink stood before an energy conference in Houston last month and proclaimed a new emphasis on energy addition over energy transition.

While such an about-face is striking, it’s by no means the only example of U.S. corporate whiplash on climate change. Companies in Europe too are increasingly pushing back on what they perceive as excessive reporting requirements and the costs to businesses of complying with environmental standards in general.

Much has already been written about the companies that have either walked back their targets or are in full retreat from their commitments. It’s possible that, for some, it’s better to choose to be realistic now about their lack of progress than be compelled to admit to a greater failing later. For others, there may be unbearable pressure to conform with a belligerent new administration in Washington D.C. But whatever the circumstance, it’s probably safe to say that the greater the U-turn a company has taken, the bigger the hit to public trust, and the harder it will be for them to regain that trust later.

What next for those companies that may deem it expedient to keep their heads down at present, but remain committed to their climate and sustainability objectives? How should they think about communications?

For an answer, it’s worth getting back to first principles of what it means to be a good citizen.

Obey the rules. Be virtuous. Participate.

At the very least, good citizenship means obeying the rules. Most companies, like most individuals, have no problem with this, although depressing exceptions that prove the rule can be found everywhere, every day.

Beyond obeying the rules, good citizenship means acting virtuously. This tends to be a stretch for many people, so we shouldn’t be surprised that companies sometimes struggle with this, too. Companies can at least fall back on the notion that satisfying demand, creating jobs and earning profits contributes to society.

Being virtuous isn’t all. Since Aristotle, most definitions of good citizenship include the act of participating in public life. For companies, that means going beyond their narrow value chains of suppliers and customers. There is a distinction between narrow self-serving participation (objecting to something nimby-ish, for example, or advocating for a free handout or preferential treatment) and true citizenship, i.e. acting for the greater good. We all know the difference when we see it.

So how, practically, should good corporate citizens communicate in these challenging times? Many companies have struggled with participation in public or social issues in recent years. According to research last year by my former employer Zeno Group, many companies have found that consumers don’t appreciate them wading into social issues they don’t think are aligned with a company’s business.

A corporate chart from reinsurance company Swiss Re suggests one answer. It serves to illustrate a deceptively simple approach to open a fresh avenue for communicating about sustainability and climate while avoiding the perception of involvement in irrelevant social issues.

Source: Swiss Re

A couple of things distinguish this from your run-of-the-mill corporate sustainability slideware. First is the prominence given to external factors, here called “critical dependencies and uncertainties”. Swiss Re’s own actions remain front-and-centre, but it is also clear about its dependence on the external context. That’s refreshingly realistic.

It creates the rationale for where Swiss Re has chosen to participate beyond its own value chain (in the left-hand box), that is, targeting those critical external dependencies and uncertainties.

Swiss Re’s own list of transition-enabling activities may not seem ground-breaking. But in the hands of committed leaders and skilled communicators, there’s ample scope here to create imaginative and relevant programmes that speak loudly – and proudly – about the impact the company’s participation makes.

Plus, the more any company can talk about its own participation in relevant transition-related activities beyond its value chain, the less effort it needs to spend on unseemly (and now increasingly politically fraught) chest-thumping about its own efforts.

Climate communications leadership is nothing, of course, if a company isn’t doing the right things in terms of participation. But the good news is that, recognising the increasingly immediate and quantifiable climate-related risks they face, many companies are already embarking on the kinds of activities in Swiss Re’s “…and beyond” box. Plus, a whole alphabet soup of climate reporting standards, from the ISSB (International Sustainability Standards Board) to the EU’s CSRD (Corporate Sustainability Reporting Directive) are moving in a similar direction, encouraging further participation.

The lesson for corporate climate communications is to look beyond a company’s value chain and towards the broader context of its sustainability efforts and leadership potential. Continue to obey the rules, of course. Continue to be virtuous (but no need to shout about it). And double down on participation.