Summary

  • 91% of Australians either don’t trust what companies claim about their ESG performance or are unsure.
  • Research reveals that while people expect business to play a role, they feel current efforts are falling short. There is a strong underlying level of cynicism around perceived ESG “green-washing”.
  • For ESG action to have a reputational benefit, it must be authentic, go beyond an ambition or target to make a meaningful difference, and also be backed by ongoing commitment over time

 

New national research released by SEC Newgate has drawn the substantial ESG challenge for corporates into sharp focus. There is a ‘Great Disconnect’ between what the community wants to see from business on ESG and what they think is actually being delivered.

The increasingly close relationship between ESG performance and business reputation means this situation is becoming a material risk for business.

SEC Newgate’s research shows that Australians believe ESG issues are important and feel strongly that business has an important role to play and should use its influence to drive positive change – particularly given the perceived lack of leadership from governments.

However, they are generally not aware of how seriously business is taking ESG and they don’t think there is much value being delivered. They really struggle to recall examples of positive business ESG initiatives from big business, despite the substantial investment of funds and resources in this space.

When they are aware – they are cynical, making quick judgements based on convenient mental shortcuts.

83%
agree companies have a responsibility to behave like a good citizen and consider their impacts on other people and the planet
75%
“never” or “rarely” look for information on a company’s ESG activities or performance
91%
either don’t trust what companies claim about their ESG performance, or are unsure

“Business cannot just ‘phone in’ its ESG response. Public expectations are high, they want business to play a positive leadership role, but they are cynical and view current efforts as falling short.”

Angus Trigg – Partner


 

If you are interested in a briefing on current community expectations of corporates, how people are processing information on ESG initiatives and our insights on the anatomy of an effective ESG campaign please contact Angus Trigg or Sue Vercoe.

Why are ESG initiatives being interpreted in this way?

Focus group conversations made it clear that people find it difficult to process the often-conflicting information they hear about the actions of large organisations and are not sure how to compare or judge their effectiveness.

They default to using representativeness – assessing companies based on their sector or past behaviour in the sector and then applying a pre-existing judgement. For example, when participants were asked about generic ESG initiatives, some examples received surprisingly lukewarm responses, (e.g., supermarkets stopping single-use plastic bags), generally because they were seen as involving a greater benefit to the business than the consumer.

However, once an ESG initiative is attached to a specific company, with all of its own specific ‘baggage’, people’s views can change.

For example, a net zero commitment by Meta/Facebook was discounted as it was seen as not a core issue for that company; while Qantas’ Marriage Equality stance and Woolworths’ Free Fruit for Kids were marked strongly, as both involved a perceived cost to those businesses.


“Critically, this suggests that ESG is at least as much about who is doing it and how they are executing it, than it is about what is being done.”

Angus Trigg, Partner


 

So how can you respond?

Focusing on who you are and how you execute sounds simple, but it does indicate there is no ‘magic’ ESG formula that can be uniformly applied to guarantee success.

Your response must be mindful of the specific operations and footprint of your company, its history, sector and existing reputation. You then have to deliver those elements that the research indicates are now built into public expectations – they are ‘baseline’ hygiene factors and include:

  • Governance issues, like paying a fair share of taxes, behaving ethically and taking responsibility when things go wrong and ensuring employees receive their entitlements
  • Environmental issues like responsible and sustainable use of natural resources and responding to climate change by minimising emissions
  • Social factors like addressing workplace diversity and discrimination

For the companies that fall short of these baseline expectations there is now the risk of significant reputation damage.

Companies will no longer get – nor should they seek – much credit for delivering to this baseline.

If you have jumped this bar, the community is more likely to give you credit (and a reputation bump) for your broader ESG efforts.

However, the execution is critical, and SEC Newgate has used behavioural science to develop a framework to strengthen your focus and chances of success.

Contact us for a full briefing on the findings and how the framework can guide a successful ESG response in your business.

 

How SEC Newgate can help

As Australia’s premier full-service strategic communications, research and community engagement firm, SEC Newgate is uniquely positioned to help clients prioritise and respond effectively to the complex environment around ESG.

Our ESG services include:

  • Proprietary framework developed directly from these findings to guide development and execution of ESG approach
  • Stakeholder, employee and community research to build a clear understanding of gaps and opportunities – and for identification and prioritisation of ESG initiatives
  • Analysis of what will resonate based on findings
  • ESG narrative development and communication strategy
  • ESG/Reputation dashboards for executives and NEDs
  • Sustainability Report drafting, editing and review
  • Internal engagement and change communications
  • Community relations
  • Issues and crisis management

Our research-driven methodology provides deeper understanding and insight of complex reputation issues; while our expertise, relationships and understanding of community engagement ensures your response is clearly understood by those who need to know.

Our approach is flexible and can be fully customised to suit your business’ specific situation and needs.

Research design and more information

The findings are based on comprehensive qualitative-quantitative research conducted over the past six weeks that builds on the inaugural SEC Newgate ESG Monitor released last year. The updated study includes eight focus groups and follow-up depth interviews, followed by a representative national online survey of 1,400 Australians in May 2022.

Heads up: The Global SEC Newgate ESG Monitor 2022 will be released later this year.

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