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Even before the COVID-19 pandemic, firms of every type and in every industry faced a growing challenge of how to tell their “sustainability story.” The challenge is three-pronged: how do you tell your story authentically in a way that is true to your firm’s business, strategy, and values; reliably in a way that withstands close and often skeptical scrutiny; and effectively in a way reaches and even inspires multiple audiences – investors, employees, customers, suppliers, regulators, the press, and the general public – each of whom has different interests and roles to play.
Clearly communicating a sustainability story can provide an advantage with these audiences – and for the business itself. Recently published research (Barron’s, 2020), for example, finds that companies with better sustainability scores are outperforming those with lower ones since the S&P 500 peaked in February; similarly, stocks with lower sustainability scores are seeing bigger cuts to earnings forecasts compared to stocks with top sustainability profiles.
The challenge of telling an individualized story tailored to multiple constituencies is compounded by (i) calls for increased standardization of reporting (McKinsey & Company, 2019); (ii) the existence of various reporting frameworks on sustainability-related topics; (iii) hundreds of agencies that rate companies on sustainability matters; and (iv) over a hundred specific issues that fall under the heading of sustainability (TCB 2020). Further complicating the issue is that what constitutes sustainability not only varies by company but that there is no universal or commonly accepted definition of sustainability.
Based on what we have heard from dozens of our members, we believe that now is the time to convene a cross-functional working group of members and outside experts to help companies think through how best to tell their sustainability story authentically, reliably, and effectively – in an increasingly challenging environment. As a tentative working definition, we are defining sustainability as a firm’s ability to operate to the long-term benefit of stockholders, other stakeholders, society at large, and the environment.
The Working Group is holding sessions that focus on:
Session 1. Defining sustainability & state of play. A kick-off meeting, to discuss (i) what we mean by “sustainability” and how it relates to other terms, such as ESG, corporate citizenship, and corporate social responsibility; (ii) the current state of play in sustainability storytelling; (iii) the scope and schedule of the Working Group’s efforts; and (iv) any additional particular topics to be covered and resources to tap (July 2020)
Session 2. Decision-making and analytical frameworks. A discussion of how firms decide what to include in their “sustainability story.” Some use materiality as a guide; others do not. There are also multiple analytical frameworks used by firms to determine what to include . . . and what not to include. And there are varying approaches as to who “owns” and is involved in this process, including the role of the board (October 2020)
Session 3. Creating an “authentic” and “reliable” narrative. A discussion of how to make sure your sustainability story is “authentic” (that it reflects your firm’s business, strategy, and values) and “reliable” (that it withstands scrutiny). Again, companies take varying approaches in relating sustainability to their business strategy; and there are multiple ways in which companies use internal and external resources to verify information (November 2020)
Session 4. How to tell your story “effectively”. A discussion of how to tell your story “effectively,” in which we’ll hear from the investor, customer, employee, and regulatory perspectives as to what information they truly want and need, as well as success stories in meeting those expectations (2021)
Session 5. Regulations and Reporting. A discussion of how best to navigate the multiple regulations, reporting frameworks, and rating agencies in conveying your firm’s story (2021)
Session 6. Concluding guardrails and best practices. A concluding discussion to address the key take-aways from the sessions to date, including key principles, best practices, how to organize to put those practices and principles into practice, and whether there are any policy implications or recommendations that firms may wish to pursue (2021)
Every member company from The Conference Board’s ESG Center and Marketing & Communications Center is welcome to participate. We encourage companies from different sectors and industries to participate, and welcome your participation whether you work in sustainability, disclosure, marketing, and communications, and/or currently serve as a board director.
For more information, please contact: Lindsay Beltzer, Program Manager, ESG Center, at Lindsay.Beltzer@conference-board.org