Carolyn McMaster | January 15, 2015
The vast majority of investors see sustainability as an opportunity and a business advantage, but most also say companies don’t successfully communicate how “sustainability initiatives are linked to their strategy, financial performance and value in meaningful ways.”
That’s according to research by Principles for Responsible Investment (PRI), a U.K.-based initiative that works under the aegis of the United Nations Global Compact. Investor Study: Insights from PRI Signatories, co-written with Accenture, finds that a majority of CEOs (still only 57 percent, but that’s a topic for another day) say they are able to set out their sustainability strategy. However, only 9 percent of investors say that CEOs can do this. And while 38 percent of CEOs say they communicate the business value of their efforts, only 7 percent of investors agree.
These findings reveal “a striking gap which exposes the shortcomings of many companies in effectively communicating their approach to sustainability and its links to the traditional measures of business value and success,” says the report.
The PRI report makes a number of recommendations for addressing this challenge, though curiously, only one—“focus on opportunity and value,” rather than risk and mitigation—is fundamentally about communications. The others are suggestions for systemic changes often beyond the scope of an individual company: commitment to the long term, developing the knowledge base of investment advisors, developing common metrics across industry sectors, collaborating with policymakers to reshape markets and systems. These are worthy efforts, but they overlook something every company can do that I believe would vastly shrink the communications gap: create strong brand stories for sustainability.
This is a significant overlooked opportunity. Few companies are telling sustainability brand stories, but they can deliver a range of benefits from improving investor communications to gaining customer buy-in to motivating internal teams. A sustainability story can:
- Enable you to realize the brand value of your sustainability investment
- Clearly articulate your sustainability mission so people at all levels align around it
- Support increased investment in sustainability program funding
- Integrate your sustainability story with your brand story and overall business objectives
- Clearly articulate your value and values to all audiences
- Serve as a lodestar for evaluating potential actions
To be sure, investors want hard business facts. And it would be simplistic to say that a brand sustainability story alone will give investors the information they seek—there needs to be a “there there.” But stories bring facts to life and make them memorable. They resonate in ways hard numbers don’t; a story connects the dots to the wider world as well as to the company’s own vision and goals.
Fully communicating value and benefits requires a story that engages the heart as well as the mind. Giving sustainability a narrative that places the company’s efforts in context, highlights the people involved (both those who are acting and those who benefit), illustrates qualitative as well as quantitative value, chronicles the journey, and maps that journey to goals will help companies provide the information that investors—and customers—need to spend their money wisely.