The state of corporate sustainability in the UK

Got curious?

Visit our office in Helsinki or in Jyväskylä. Or contact us via form, email, text message or by calling.

Call (mon-fri 9-17)
+358 40 830 1821
Send text message
+358 40 830 1821
Send email

Article series vol. 3/4

Medita Communication, which represents the Worldcom PR Group in Finland, asked its international communication agency partners how critical they and their key clients consider the demands for sustainable business in their markets and how sustainability expectations are reflected in corporate communications.

Medita Communication together with its Worldcom PR Group partners assessed the situation in Finland, Sweden, Germany and Great Britain. Are companies already in a hurry with their ESG work, and how are sustainability expectations affecting communications?

The next market in Medita’s article series on the state of sustainability is the United Kingdom. What was surprising in this situation review was that British companies are facing more sustainability-related stakeholder pressure from older age groups than from young people. It was perhaps also surprising that even companies at the forefront of promoting sustainable development in their field find ESG communications to be challenging. A deeper understanding of the overall sustainability of companies is also reflected in their understanding of the importance of communications.

In addition to the research and review produced, JBP Associates Ltd supported their situational review of ESG+D (Environmental, Social, Governance, Dialog) by interviewing a food manufacturer selling products in supermarkets, and a wellness manufacturer that provides products for some of the world’s leading brands who consider it vital that their own company’s ESG agenda is in line with the brands they represent in order to enable cooperation. There is, included here, a longer interview with an energy company that was one of the first suppliers of 100% renewable electricity in Britain after starting operations in 1999, when 98 percent of energy was still produced with fossil fuels and more sustainable alternatives were badly needed. The interviews were conducted at the end of 2022.

Finland’s ESG development stage and its effects on communications were assessed by Medita based on fresh research data and dozens of interviews with business leaders, investors and experts during autumn and winter 2022 and spring 2023. Read more here , pages 8-9.

We previously discussed the situation in Germany and Central Europe here. In order to secure their own future, companies of all sizes must take steps to improve their ESG scores, regardless of how regulations develop, emphasised Klaus Kirchhoff, a long-term expert in integrated reporting and founder of German consultancy Kirchhoff Consult AG.

The last part in this series of articles focuses on Sweden and especially on the real estate and construction industry, which has fallen into turmoil. The situational review in Sweden was made by our previous Worldcom partner Oxenstierna Kommunikation.

Special thanks to our client Tana, an award-winning and growing circular economy solid waste management technology company with whom we are also piloting a new type of sustainability development concept together with the law firm Eversheds Sutherland Finland, and Ceriffi, an information systems expert specialising in sustainability verification, and Family Creatives, an expert in visualisations.

Many thanks also to our Worldcom PR Group partners and their clients who offered their time and expertise to clarify the situation in their own markets so that we could learn from their experiences in promoting sustainable development in business.

Tiinu Wuolio and Päivi Tervonen
Medita Communication

Focus on Great Britain: ESG and its impact on Communications in the UK

The situational review below of the ESG and sustainability communications preparedness of companies in the United Kingdom was written by the team at JBP Associates Ltd., on behalf of Medita Communication. Thank you very much for your input!

Environmental, social and governance (ESG) has shot up the corporate agenda in recent years, with more regulation and more demand for action from stakeholders driving the change. The desire for, and requirement to showcase and share what ESG actions companies are taking, along with a renewed sense of urgency in this area, has made ESG not only a fast-changing and rich area for research and innovation but also a high priority focus for communication teams.

In the report below we have drawn on desktop research with a focus on ESG trends (the challenges companies face and their reaction to them), and what good looks like to stakeholders with growing expectations for a non-greenwashing, transparent way of working and communicating in this arena. We have drawn on the experience of a sustainability consultancy (that has worked with around 100 clients) and three one-to-one interviews with organisations of different sizes and at different stages of their ESG journey, their insights incorporated below but with two of the interviews separated out for easy reference.

We have, of course, been able to draw on JBP’s own experience working with medium and large companies and our knowledge of ESG adoption among UK PLCs as a result of running our dedicated environmental communications consultancy, Climate Communication.

What was found

While many see ESG largely as an environmental issue, Comms teams are minded to remember the equal emphasis on ‘social’ areas such as gender equality, modern slavery, fair recruitment and training, Board Room diversity and more. Which is why the sense of urgency has only intensified as a result of events in recent years, including the Pandemic, anti-racism campaigns, gender pay gap battles, as well as growing fears about the speed of climate change. Headlines about inequality at work, greenwashing, and diversity issues have been hitting the headlines more often and more consistently.

Consider greenwashing as a case in point (more on this issue below). London-based media analytics firm Commetric sees the public’s awareness of greenwashing as a specific offshoot of the global sustainability movement, presenting serious reputational challenges (energy and financial service sectors being the most commonly referenced) and crisis management concern across all industries. They highlight how in 2021/22 activists and campaigners have been ‘harpooning’ entire industry sectors with anti-greenwashing campaigns, with the potential to shed light on industry practices and damage public trust. Commetric’s report – suggesting PR and Comms companies could have played a role in helping oil and gas companies improve their image and so blocked real climate energy solutions for decades – might well have given the Comms sector cause to pause. Indeed, only this month [October 2022] saw an Extinction Rebellion protest at the PRWeek Awards, the campaigners targeting PR companies who they alleged do ‘vast quantities of work greenwashing the most dangerous companies in the world’.

It’s becoming clear organisations are now expected not only to understand the impact they are having in this arena, but to demonstrate how they are responding and the benefits that delivers – and utilising effective Comms to do that.

The energy crisis has brought the issue into sharp focus, too, with predictions of business closures underlining the need to speed up ESG actions for organisations’ own protection. The article suggests that nearly three out of four businesses in hospitality and leisure have plans to reach net zero with half considering installing solar panels as a solution to the energy and climate crisis. At the same time Government policies require suppliers to demonstrate their carbon reduction strategy if they bid for contracts (you can read more here), which will of course have an impact on their supply chain, too.

What change does that demand? ESG efforts clearly need to be more mature, measurable, meaningful and relevant to a business – and Comms need to accurately reflect that. Companies should resist the temptation to respond by investing in PR that promotes an organisation’s ambitions (be it net zero ambitions or diversity and inclusion in future recruitment) and instead focus on showcasing their actions to actually make a difference.

But this requires sophisticated Communications. A Financial Times feature earlier this year (2022) signposted one leading UK retailer’s efforts to recruit an ESG Communications Manager to ‘craft and co-ordinate the ESG Communications Strategy’. The recruitment ad talked about the post holder not only delivering regulatory reporting requirements but also building belief in the company’s ESG and wider transformation narrative. The FT article used the example to point out the danger of investing in Comms strategies without accomplishing anything – and the risk posed if companies fail to match the rhetoric and grand claims with real change and a new way of doing business, rather than business as usual with a spin. The latter can jeopardise investment, staff recruitment and sales.

What are stakeholders expecting?

Stakeholders want to see the benefits of sustainability, and certainly in sectors such as manufacturing, leisure and hospitality it is now clear how it can drive down costs and improve the security of a business in the future.

A clear, effective ESG strategy, then, not only helps build a business brand but reassures potential investors, employees and customers. Conversely, the lack of such a strategy can be seen as a sign that a company is out of step with the interests of society and more insecure for the future. One major manufacturer in the lifestyle sector we spoke to (they provide products for some of the world’s leading brands) has seen a different approach from clients in recent years and told us it is vital they ensure their own company’s ESG agenda is in line with what those brands want and are telling their own customers. And, if they can’t demonstrate that they’re in (from concept through manufacturing to delivery), those brands simply wouldn’t work with them. They also referenced the power of the new, small, but growing brands across their own and other sectors who are coming to the market with a strong environmental and sustainable position from the get-go, and who everyone is watching.

We also noted that, ahead of COP26 in November 2021, PwC published an investors survey which suggests investors are paying more attention to the ESG risks and opportunities facing companies they invest in. Nearly four in five said ESG was an important factor in their investment decision making, and about half expressed willingness to divest from companies that didn’t take sufficient action on ESG issues.

Customers are, of course, increasingly strong drivers of change. A recent PwC survey of UK consumers found over two thirds of respondents said ESG considerations are important for them and that people want businesses to make a profit, deliver benefits to customers, while also solving social and environmental challenges. Their Consumer Intelligence Series found (in June 2021) that over three quarters of consumers would discontinue their relationship with companies that treat the environment, employees or the community in which they operate poorly. And, contrary to popular belief, the older segments of the population are even more concerned than millennials.

There has also, of course, been a growing awareness across the UK that employees also want their workplace to align with their own values. Back in 2020 around 65 per cent of 2,000 UK employees surveyed by Censuswide for Unily said they were more likely to work for a firm that had strong environmental values, while 64 per cent said they would turn down a job offer from a company that had a bad environmental reputation.

This is backed up by other UK sector reports, and another from PwC last year suggesting 86 percent of employees prefer to support or work for companies that care about the same issues they do. It was also a trend recognised in an Edelman report on what they called the ‘belief-driven employee’ which, published as we came out of the worst of the pandemic, suggested employees are becoming more “belief-driven” in Covid’s wake, with over half changing jobs to find a better fit between their own and their employer’s corporate values.

Companies, then, pay a high price when they fail to deliver on ESG. Think Tesco’s employees taking them to task over the gender pay gap, with the BBC headlining supermarkets like Tesco and Asda losing legal battles when their staff took them to court. And companies – from fashion houses to funeral directors – hitting the headlines for attempts to mislead the public about their ‘eco-friendly’ products.

How do companies meet these now established expectations and communicate in kind?

We’ve identified seven key recommendations.

1. Companies should find the parts of ESG which are most relevant to their business.

Companies who handle this successfully know there is no uniform approach to an ESG policy. It needs to align with their purpose and mission, and they need to communicate the policy effectively to address the specific work of the company and its stakeholders’ questions. In other words, companies should ask what is their own strong (i.e., accurate, transparent, detailed and evidenced) story rather than trying to mimic others.

It’s also now essential to avoid falling into the trap of communication strategies and even product launches or new company policies that follow trends which may have nothing to do with a company’s work or core principles.

Comms teams should also avoid generalising. It’s clear companies don’t always fully understand the link between good ESG and their own business reputation. Flawed communication has, in the past, labelled too much if not everything a company does as ‘environmentally friendly’: a claim which backfires when it’s not backed up. So climate pledges, for example, are insufficient without a company showing and not just telling their stakeholders what they are doing and the impact their actions will have.

Comms today needs to explain exactly why a product or action has a reduced impact (and/or how much CO2 it avoids for example). Organisations are called out or accused of hypocrisy when they merely talk about ambitions for or commitment to equality, diversity and inclusion without providing evidence of how those ambitions are impacting on recruitment, staff training or working practices.

This in itself may, for some companies, demand a shift in the position of its Comms team. A report by PwC signposts how, historically, Comms teams might have been charged with ‘honing, tightening and simplifying messages on complex issues’ when working in this arena when, it suggests, this may now be perceived as lacking in authenticity and seriousness. Today, detail and quantitative measures to make a difference need to be shown. The PwC report suggests that ‘the style as well as the role of communications professionals requires evolution’ and that ‘they should be able to understand the issue and opportunity and frame it so that different stakeholders have the messages they need. All this while acting ‘as sentinels of transparency and truth, being empowered to challenge the business [they are working for] if they feel things are not being done properly’.

2. Companies shouldn’t forget the ‘S’ in ESG.

As above, there is a temptation to focus on the environmental aspect of ESG, when stakeholders are equally interested in supporting companies that provide clear social benefits. A report in Schroders highlights how the United Nations Sustainable Development Goals (or SDGs) are not only a call to action for the planet but also to end poverty and ensure people can enjoy inclusion, peace and prosperity. Of the 17 SDGs it points out that the majority focus on addressing improvements in society and suggest this is a useful tool for investors to assess a company’s qualitative impact on society.

Commetric describe communicating the S as a conundrum for PR and Comms teams, largely because it’s less measurable. ‘If you can promote your ‘E’ by reducing greenhouse emissions and your ‘G’ by increasing the percentage of women in executive ranks, how do you promote your ‘S’?’ they ask in a report. But their analysis also demonstrates the risk of avoiding the S word. Looking at how the ‘S’ factor has been reflected in the media, they analysed 328,264 English language articles published between January 2021 and March 2022 and found philanthropy and diversity powerful reputation drivers. Donations were the most prominent, responsible for twice as much media coverage as the second most prominent driver, gender equality; but with sexual orientation and racial inclusion also in the top five.

3. Companies need to be realistic and transparent about what is available and the costs and benefits of ESG activities.

This means companies foster trust by giving an audience a clearer understanding of what a company is doing via measurable details, rather than losing their trust with vague or general terms without explanation. In a recent Institute of Directors policy paper on ESG, Priorities for UK Companies, one of its six key guidelines stresses the need for a business not only to accelerate its decarbonisation process but to do so in a phased manner that allows the business to adjust. It should make sure the company has the right skills to oversee it; and if not, to remedy gaps in expertise via training or recruitment.

4. Companies should consider a ‘whole organisation’ plan.

There is a growing recognition that top-down ESG approaches are not the answer. Employees not only offer perspective and ideas, but their involvement ensures they get behind the changes ESG involves and in turn help tell a more sustainable story. A whole company plan can be powerful, and more organisations are seeing the effective role of a working group of senior leaders and operational staff including (but not led by) Comms. The latter gains cross-company benefits – Comms becomes joined up and runs through everything a business does – and the whole company benefits from a wider and ongoing discussion on how ESG activities impact each other and cause things to grow.

There are some great examples of this in companies such as Commercial Group Insurance who headline their sustainability and mission to be a force of good front and centre. They have longstanding initiatives like their Change Champions (an initiative giving staff the chance to help shape sustainability policies) which can be seen in action here. We spoke to Good Energy (below) who have a similar example with their staff Culture Champions and a Good Future Board.

5. Companies should know greenwashing doesn’t work.

There are countless examples of this, but the backlash makes it a clear area to be avoided. Meanwhile, there are increasingly effective efforts to separate the greenwashed from the truly sustainable – such as this one highlighted by The Guardian.

The term, incidentally, was first used by US environmentalist Jay Westerveld in a 1980s essay which looked at the hospitality industry’s invitation to reuse towels to help save the environment when little effort was being made to reduce energy waste. Rather, the towel reuse saved laundry costs – and so the real objective was increased profit. Westerveld labelled this and other profitable-but-ineffective ‘environmentally conscientious’ acts as greenwashing. Commetric’s analysis shows how this has gained extensive traction in recent years with the number of articles mentioning it increasing from just over 6,500 in 2019 to over 75,000 in 2021.

Commetric suggests a tipping point in this increase was McDonald’s introduction of paper straws which turned out to be non-recyclable. And, of course, in the conversations around COP26 when thousands of activists headed to Glasgow to demand more immediate action, with Greta Thunberg referring to the event as a ‘greenwashing’ event. In Commetric’s analysis of over 1,800 English-language articles published in top-tier outlets since 2019, greenwashing accusations were most prevalent in the Energy industry (27 per cent), but Financial Services, Food and Drink, Fashion and Automotive (14 per cent) were also featured.

It’s clear that soon there will be no more room for excuses with an ongoing drive to quash any wriggle-room with greenwashing in Comms. The Competition and Markets Authority (a UK Government body) launched its own awareness campaign ahead of the UK’s COP26 in Glasgow in 2021, both to eliminate the risk of the public being misled and to help businesses navigate the law. Its investigation into the impact of green marketing ahead of the launch found a whopping 40 per cent of green claims made online could be misleading – suggesting thousands of businesses could be breaking the law and risking their reputation. It published a Green Claims Code as part of the campaign. This gives six principles based on consumer law to help businesses comply. Ahead of COP 26 last year it also announced new greener rules for companies bidding for Government contracts. And, more recently, it carried out a review of misleading green claims with a view to taking action against offending firms.

Companies like Good Energy have been quick to highlight when greenwashing is getting in the way of their own communications with messaging like this. They also run a campaign to address companies marketing tariffs as ‘green’ when they are buying ‘dirty power’ from the wholesale market and labelling it green through a regulatory loophole.

6. Companies can, though, afford to own genuine shortcomings rather than masking them.

Companies do well when they listen to accusations and respond respectfully and honestly and have a plan to address areas where there is work to do. Transparency with customers, employees and investors builds trust. It not only increases their credibility but also the effectiveness of the ESG.

One food manufacturing company we spoke to pointed out that good communications is never about beating up the consumer. No one wants to be told they are not doing enough. It’s instead, they said, about helping consumers understand the choices they make, encouraging them to rethink their consumer journey. When they go into the supermarket to buy our product, we want to tell them about any changes we’ve made, and what we’re working on, they explained. So, for example, how reduced weight will impact the environment. How the film packaging isn’t recyclable but we’re working on an alternative. We also want this to support conscious consumerism – encouraging deliberate purchasing decisions which have a positive impact – and the wider benefits that brings, said the company.

7. Companies should never assume they know what stakeholders want or patronise them.

Instead they should make a consistent business case for activities recognising stakeholders’ needs. They should recognise stakeholders not only understand the challenges of ESG at certain periods (e.g., during a recession) but also are likely to welcome a balanced approach in tune with the current economic picture that doesn’t, nevertheless, involve abandoning ESG ambitions. This is about thinking long-term performance rather than short-term promotional gains.

How can these actions be measured?

The role of data in Comms should never be underestimated. There’s a move to see more transparency, consistency of metrics and comparability of rating methods to help tell an organisation’s story. The CIPD (Chartered Institute of Personnel and Development) suggests that workforce data (and a relevant analysis of it) is crucial in shaping management decisions about Diversity and Inclusion Activity. And a 2019 report from Harvard (Four Things No One Will Tell You about ESG Data) suggested a need for clearer understanding of what different ESG metrics might tell us and how they might best be institutionalised for assessing corporate performance. The aforementioned IoD report also stresses this, urging companies to evaluate how they measure and monitor levels of inclusiveness and diversity within their organisations. It asks companies the extent to which they’re providing a level playing field in terms of career development to employees of all backgrounds and personal characteristics, setting targets and monitoring them.

The message from these and other reports does suggest, though, that the very different ways companies report their data (and a lack of transparency among data providers about, for example, observed ranges for ESG metrics) creates market-wide inconsistencies. But if – moving forward – companies take control of the narrative rather than being overwhelmed by requests, they can customise their own metrics while at the same time agreeing with industry peers a baseline for ESG metrics to support comparisons. This would deliver more meaningful, standardised metrics. It would then make it easier for investors to be able to see and choose where they put their money to achieve ESG outcomes, as well as the trade-offs those outcomes present (including in financial performance). And it means stakeholders become more aware of the push for businesses to link boardroom bonuses and pay to environmental and social goals. This year the FT reported that 70 percent of S&P 500 companies incorporated some type of ESG factor into their executive bonus plans.

The UK’s Certified B Corporations – or B Corps (part of a global initiative covering 84 countries)- is one of the most effective and popular ways for companies to showcase their ESG policy and it effectively supports comparisons in their sector. To be verified by the B Lab, companies (those who operate for profit and operating for at least 12 months) have to meet high standards of social and environmental performance, transparency and accountability. The process itself (while comprehensive, rigorous and time consuming), is considered a way of involving and motivating employees and generating increased customer loyalty. Smaller companies, like the three-person team from Oxford’s Y.O.U Underwear are a great example of how the smallest company can make a change and feel the benefits, whilst generating a story as they do so.

How can you find new ways to tell your story?

Companies with a confident and more transparent story can go beyond Press releases pledging change and be more expansive in their Communications. They can find ways to get their story and their ESG journey out there: for example, in company ESG reports, by speaking at events covering ESG, by contributing to articles in the media looking at the challenges, and by hosting events and activities for suppliers and for customers in their community.

Communications is about reputation and that now more than ever relies on getting ESG right. That means showing – shouting about even – a company following through on its commitments, playing a proactive role in positive change and making it an ongoing priority. The results of that go a long way to build a company’s brand, to enhance its reputation and gain stakeholders’ trust.

A conversation with Good Energy, one of the first 100 per cent renewable electricity suppliers and launched at a time (1999) when 98 per cent of energy was generated from fossil fuels and more sustainable options were desperately needed. It’s now a member of the UN Global Compact, the world’s largest corporate sustainability initiative which encourages businesses to support its Sustainable Development Goals. Two of these goals lie at the heart of Good Energy’s business. The first is to deliver affordable, clean energy – it offers a community of over 1,900 generators (small, clean energy projects), a fair price and a route to market while investors, customers and employees support the model. The second tackles climate change in the way it is run; its financial decisions, customer offers, policy and regulatory positions are all based on its mission to address climate change. But, as their Head of Communications Ian McKee explains, the right communications have allowed the company to bring all this to stakeholders in an effective sustainable way.

We were doing ESG before ESG existed as a concept. The company was created with a mission to mitigate climate change. That was our bid to investors. That said, we can’t rest on our laurels and assume those investors (indeed all our stakeholders) will invest in or buy from us based on our reason for being in business. Sustainability sells and brands and their marketeers know that. It is one of the strongest selling points today and businesses are very keen to tell people how green they are. Think back to the recent adverts for Budweiser. It wasn’t about how great tasting and refreshing the beer is, but about how the company is powered by renewable energy. Taste didn’t even come into the messaging. That’s no criticism of Budweiser. It’s an example of a big brand which knows what appeals.

But Comms goes further and deeper now than it once did. It is not enough to say we have ESG at the heart of what we do. We have to spell out what we are doing to meet our ESG objectives. Communicating that is critical, especially when there is so much noise – including greenwashing – around. For example, we have come under intense competition from bigger companies in this sector claiming to sell 100 per cent renewable electricity. But some 60 percent of electricity tariffs are sold as being from 100 percent renewable electricity when they are not. That’s completely confusing and misleading, and we are working to close the loopholes that allow companies to do that.

Stakeholders want – expect – companies like ours to show and not just tell. Whereas 20 years ago an annual report might have been taken at face value, its ambitions lofty and welcomed, now it’s now a window into how you do business. In this digital age anyone can lift the veil and drill into the details: say about supply chains and a company’s treatment of their suppliers. And so they should.

From the outset we wanted to show that green energy was investable, and that investors could make money out of it, and that is at the heart of our Communications too. ESG is integral to our business and, at the same time, we are a listed company and have a responsibility to our shareholders. There are companies out there who have great ESG ambitions but who may feel that is enough in itself to attract staff, customers and investment. I’m not sure that always happens. For us it’s always been about matching our ESG mission with the return we can offer investors and the deal we can offer customers.

Communications in this arena should never be set to work to ‘hide’ business truths or difficult decisions, but rather explain them. So, in our 2021 Purpose Report (and the Press Release that supported it), we have committed to halving our own carbon emissions by 2030 – we’ve signed up to the global Science based Targets initiative. We’ve also outlined the pressures we’re dealing with in meeting those targets (for example we include supply chain emissions in it and home working energy use) and the work we’re doing in response (e.g., monitoring carbon reporting more regularly and sourcing more net zero suppliers). We volunteered to sign up for this scheme to challenge us to move further and faster. We make it clear that it’s what this is about.

I do believe as companies transition to a greener, fairer, more sustainable way of working stakeholders can, if the company is transparent and the story properly told, accept the challenges a business faces and how it is working to tackle them, and go on that journey with them. That’s what we’ve always aimed to do – to take stakeholders with us on this journey.

There are other ways to tell the story too, and we look to a whole number of initiatives to help us do that. That can be by seeing our leadership at events or in the media contributing to relevant conversations – for example our Chief Executive Nigel Pocklington has been on the news commentating on the energy crisis – or via other ongoing initiatives. A great internal Comms example would be our Culture Champions working group. Developed after Covid, the group consulted with staff and fed back to the company about what was needed to support people back to the office. It resulted in changes here and in hybrid working. And we have a Good Future Board made up of a group of secondary school students (recruited from 1000 applications from schools across England). This isn’t a PR exercise. They ask us tough, uncomfortable questions. They do what a Board is supposed to by holding us to account on our purpose, while at the same time communicating what they are learning to inspire other Good Future Boards in the environmental sector.

When it comes to the skills to make this happen, a leader who is a strong communicator and who embraces openness is important. But we’ve invested in skills to embrace different digital comms to support our messaging. For example, we’ve launched a successful podcast and have a team who can record and edit video footage, turning around high-quality content quickly so we can continue to tell our story in an accessible way to build authentic relationships with stakeholders.