ESG marketing: Why it's important and how to draft a plan

What is ESG marketing?

ESG marketing is the marketing of an organization's progress on its environmental, social and governance (ESG) goals, using specific types of reporting and status updates.

Businesses have had corporate social responsibility programs in place for years, but the problem with some of those programs is that they were little more than greenwashing. Given the growing evidence of climate change and the disruption of natural ecosystems, stakeholders expect organizations to have ESG programs designed to protect the environment and ensure Earth's long-term viability for generations to come.

"The goal is to share with all stakeholders -- including investors, executives, employees and customers -- how your company impacts and is impacted by environment, social and governance topics that are important to the business," said Mandi McReynolds, vice president of global ESG at ESG reporting software provider Workiva. "Demand for ESG transparency is on the rise. Studies have shown investors, consumers and employees are all increasingly considering ESG topics in their decisions."

For example, Xavier University of Louisiana has had a heavy social justice focus for years. More recently, the university has embraced ESG initiatives and is using the Sustaira ESG platform to track its progress.

Sellen Construction is also a Sustaira customer. In fact, Sustaira built a custom app for the company.

"Companies should figure out what's going to resonate best. If you're a local company, you talk about local impact, and if you're a multinational company, you can build your offset portfolio," said Angi Rivera, director of sustainability at Sellen Construction. "So, you need to do your bean counting, but you also need the PR story behind what you're doing. If you're selling a product, you have ways of getting people interested. ESG marketing has to pull on the heart strings."

The stakeholder demand for ESG has fueled new ESG regulation and regulatory activity, such as the European Union's Corporate Sustainability Reporting Directive and the U.S. Security Exchange Commission's climate disclosure proposal.

The importance of ESG marketing

ESG marketing programs can't be effective without reporting to show the company's progress on meeting its goals. For example, achieving net-zero carbon emissions is a long-term endeavor, not instantaneous. It involves a continuous process of reducing negative environmental impacts.

ESG marketing is the vehicle by which organizations report progress. Without it, carbon offset calculations remain opaque.

There are also better and worse ways to communicate ESG progress. The best way is to make progress relatable to the audience. For instance, a 50-ton CO₂ reduction tends to have little meaning because it lacks context, which is why more mature organizations use comparisons such as "the equivalent to planting X trees" or "taking X combustion engine cars off the road."

There's also a generational aspect. Millennials and Generation Z are witnessing the impacts of climate change firsthand. Although baby boomers and Generation X are also experiencing the same phenomenon, the younger generations tend to think in more socially responsible terms, and they're more likely than older generations to patronize businesses that prioritize ESG.

"As millennials and Gen Z get older, they're becoming more responsibility-oriented buyers than previous generations. They will pay more or choose one product over another," said Sellen's Rivera. "There are sustainable investment groups that are part of an ESG and decarbonization and real estate forum, and [real estate investment trust] investors are talking about their assets: If they don't invest in sustainability and ESG plans, their assets will devalue too quickly."

Creating an ESG marketing plan

Companies should begin with a materiality assessment to identify what ESG elements matter most to the company and its stakeholders. For example, Workiva created an interactive guide to help companies engage with stakeholders and simplify the assessment process into four steps that teams can do on their own or with the help from an advisory firm or consultant.

"Once ESG teams have identified the ESG issues that are important or material to their business, they can begin establishing ESG goals and KPIs to measure their progress," said Workiva's McReynolds. "ESG communications will reflect this process from stakeholder engagement to goal setting to quantitative and qualitative data."

Following are some elements that should be part of an ESG plan:

1. Company mission and purpose. What role does ESG play and what's the value of it? How does the ESG vision reflect the company's mission, vision and purpose? ESG programs must be measured, and progress marketed across stakeholder groups. In all cases, it should be about making a positive impact on society.
2. Target audiences. Who must be aware of the progress the organization is making? Typical stakeholders include customers, employees, investors and partners, but they could also be students, faculty, donors and alumni, for example.
3. Data. The best-written marketing copy won't make up for the fact that an organization isn't as socially responsible as it should be. Goals require KPIs, so success can be measured and reported to stakeholders.
4. Principles. An ESG plan should reflect a company's principles. If a company's principles don't extend to ESG, it's high time they did. Moreover, ESG should be integrated into the fabric of the organization, so the principles are reflected in what the company does every day.
5. Prospects and customers. Consumers are prioritizing ESG and will choose another partner if an organization's values and theirs don't align. As an example, more manufacturers are adopting biodegradable packaging materials because end customers expect it.
6. Bottom line. Profits are important, but businesses must now contemplate a double or triple bottom line, which benefits the environment, society and shareholders.
7. Greater loyalty. Customers, employees and investors care about an organization's positive impact. Having a solid ESG program that's well marketed helps distinguish one brand from another.

How to effectively communicate ESG messaging

Like any other type of marketing, ESG marketing must consider its audience and what will resonate with that audience. For example, Xavier University's primary audiences are students, faculty and alumni.

"You need to make ESG relatable to your audience, so they understand how it affects them and the community," said Helena Robinson, director of sustainability and quality control at Xavier University.

In the past, newsletters might have been the marketing tool of choice, but today it's social media. And not any social media, because the platform choices depend on the audience. For example, Facebook works better for faculty, but Instagram works better for students. TikTok is a new addition at Xavier University of Louisiana.

"If we post flyers on campus, we'll get little participation, but if we post on social media, we'll get a little more participation," said Robinson. "A lot of nonprofits see what we're doing, and they either want to partner or share what we've been posting."

In place of its last ESG report, Workiva built a sustainability landing page that includes a data center with links to updated ESG policies, statements and disclosures. This concept isn't unique to Workiva. Companies such as Walmart are also moving away from annual ESG reports in favor of digital hubs where they can share information with stakeholders.

Workiva's ESG and web teams worked together to analyze heat maps, which helped them identify what interested website visitors. After spending time on Workiva's sustainability page, many visitors looked for the company's data privacy and cybersecurity policies, so the company made them easier to find by adding a link in its ESG data center.

"The key to ESG messaging is stakeholder engagement. Take time to consider how information will be received and accessed by your stakeholders, including customers, employees, investors and the community where your business resides," said Workiva's McReynolds.