With the COVID-19 pandemic as a catalyst, many companies have been urged to rethink the importance and relevance of ESG risks and opportunities to their commercial resilience and long-term performance, while others have rediscovered the strong incentive to embed ESG considerations at the heart of their strategic decisions. ESG has unquestionably moved on from a fad to the mainstream, and will likely become the norm for both investors and corporates.
As investors’ scrutiny of the company’s social and environmental impact continues to grow and intensify, companies will need a robust ESG communications strategy on their corporate websites to evidence their understanding of long-term ESG implications and speak the same language to appeal to long-term investors. However, the lack of a one-size-fits-all approach in the market means that companies will continue to explore different ways of communicating their ESG-related information, such as a standalone ESG report, dedicated ESG webpage, webcast and factsheet, or a combination of all of these formats.
Following the growing investor pressure, companies are clearly stepping up their ESG communications. The number of companies that discuss ESG on their website has jumped from
13% to 34% this year. It is also moving to a more prominent area such as a standalone ESG hub or dedicated subsection primarily in the IR section to effectively guide responsible investors to the relevant information. The number of corporate websites providing ESG-related reports and documents has also increased to almost a quarter this year. While the overall number remains low, we are also seeing an upward trend in ESG-focused webinars and presentations (at 6% and 16% respectively).
However, there is still a long way to go when it comes to providing more insightful ESG discussion that goes well beyond commitment and acknowledgement. Despite the increase in ESG discussion, only around 10% directly address specific ESG risks and opportunities that are financially material to the company’s long-term performance on the webpage. Similarly, the proportion of companies disclosing ESG performance metrics and data on the webpage also remains as low as around 10%, whereas those referencing externally recognised ESG raters and rankers is below 20%. While companies continue to refine their ESG communications formats such as videos and podcasts, this also needs to be met with more clarity and insight as well as consistency in terms of their ESG approach and strategy.
Black Sun is a global stakeholder communications company with offices in London and Singapore. We are united by a common purpose of making businesses more valued by their stakeholders. We are powered by a unique mix of strategic insight, creative inspiration and technology advantage, and help businesses communicate authentically how they deliver value to their stakeholders. We believe that inspiring strategic communications can spark positive change and drive long-term, sustainable performance.
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