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1、THE IPSOS ESG COUNCILExploring the latest thinking in ESG from senior executives responsible for sustainability and ESG in some of the worlds most respected companies.ABOUTEstablished in 2023,the Ipsos ESG Council brings together senior level executives with responsibility for sustainability and the
2、 development of ESG best practice from some of the most respected corporations in the world.The Ipsos ESG Councils mission is to increase the understanding of the key issues in the field of ESG and sustainability management within the corporate environment and provide a forum where senior executives
3、 can cross-fertilise thinking and ideas to tackle the strategic issues and challenges that they face.Methodological note35 in-depth interviews were conducted with ESG Council members between Nov 2022 April 2023,either in person,by telephone or video call.Data may not total 100%due to rounding.INTROD
4、UCTION:ESG COUNCIL REPORT 2023Foreword by Milorad AjderGlobal Service Line LeaderIpsos Corporate Reputation has assembled some of worlds leading companies to form the Ipsos ESG Council.The Council brings together an impressive group of corporate executives with deep sustainability and ESG expertise.
5、The overarching mission is to create a forum in which ESG can be robustly assessed in its role as an agent for positive change.Council members provide critical insights on a range of issues both within the corporate environment and the wider world.In this first sitting of the Council,members conside
6、red a variety of issues including the evolving role of the Chief Sustainability Officer,building a truly integrated ESG strategy and the tangible benefits that applying best ESG practice can bring to an organisation.We would like to say a big thank you to all of our Council members.We greatly apprec
7、iate the time they have taken to participate in this first session and the openness with which they have discussed the complex challenges and opportunities they face.I hope you enjoy this edition of the ESG Council Report and please do not hesitate to get in touch with us about any of the issues we
8、have covered.3Ipsos|ESG Council Report 2023-Introduction5Ipsos|ESG Council Report 2023-ContentsCONTENTS6Chief Value Creator?:The changing role of the Chief Sustainability Officer(CSO)16What is driving change?:The role of stakeholder management24Building an integrated ESG strategy 32Doing well by doi
9、ng good:resilience,risk and the reputation value of ESG42The future of ESG?CHIEF VALUE CREATOR?:THE CHANGING ROLE OF THE CHIEF SUSTAINABILITY OFFICER(CSO)Here we explore the changing role of the CSO and what this tells us about how organisations are responding to the challenges of ESG and sustainabi
10、lity.The worlds first CSO was appointed in 2004;this was Linda Fisher at DuPont and her full title was VP Safety,Health and Environment and Chief Sustainability Officer.Its taken nearly 20 years for the popularity of the role to gather momentum,and for it to stand alone from other functions.A much-c
11、ited PwC study shows that companies appointed as many CSOs in 2020-2021 as in the previous eight years combined.While the growing public renown of the position is perhaps evidenced by the launch in 2022 of CSO Barbie.The creation of a dedicated C-suite sustainability position in many large organisat
12、ions reflects the significant increase in the importance of ESG.There is general agreement among the senior sustainability executives we interviewed that ESG is indeed fundamentally changing the way businesses operate.1 1.https:/ 7Ipsos|ESG Council Report 2023-Chief Value Creator?:The changing role
13、of the CSOESG is fundamentally changing the way businesses operatesustainability up the priority list and we have now hit the point where actually it is really up there on the priority list.”Hence not only are we seeing increasing numbers of CSOs being appointed,but also these roles are evolving qui
14、ckly.All those we interviewed agree that the role or its equivalent(e.g.Head of Sustainability,Head of ESG)has changed over the last 5 years,with nearly three quarters saying it has changed a great deal.I think thats the big difference ESG was a sort of peripheral box ticking exercise and now it is
15、central to everyones work.”There is a convergence of factors driving the rapid rise of ESG up the corporate agenda.Most significantly,the increasing expectations from stakeholders investors,governments,consumers,talent and,in some cases,business leaders themselves.(We explore these drivers of change
16、 further on pages 16-23.)An organisations ESG performance and reputation can now impact its ability to access finance and insurance,adhere to regulation,win customers and attract talent-all of which determine its longer-term success,and indeed survival.Alongside this,ESG topics pose ethical question
17、s of business leaders and,certainly in the case of climate change,present a threat of far greater collective significance than the survival of any single organisation.“W e have gone through a transformation and hidden inflexion point where once upon a time some passionate individuals were knocking o
18、n doors to bring the agenda on To what extent,if at all,do you think the role of the Chief Sustainability Officer,or its equivalent,has changed over the last 5 years?The broad arc commonly described is one where ESG or sustainability has emerged from a marginal position within procurement,risk manag
19、ement,corporate reputation,or philanthropy,and is becoming central to the strategic management of organisations.The role of the CSO,or its equivalent,has become a strategic leadership position within organisations9Ipsos|ESG Council Report 2023-Chief Value Creator?:The changing role of the CSOTend to
20、 agree 46%Strongly agree37%Neither agree nor disagree9%9%Tend to disagreeBase:35 Council membersA great deal71%29%A fair amountBase:35 Council membersStrongly agree46%3%Neither agree nor disagree9%Dont know/N/ATend to agree 43%Base:35 Council members As the CSO,I have got to play mediator,influencer
21、,cheerleader,expert and strategic thinker for the organisation as I try and help move all the different parts of the organisation in a different direction to where they are headed today.So,the scope has expanded significantly and there is a lot more focus on actually transforming business practices
22、and processes than there was in the past.”111Long-term ESG vision.Over the last few years,a key part of the CSOs strategic role has been helping organisations set their basic long-term ESG goals or commitments.These commitments tend to be based on assessments of the issues that are most material for
23、 an organisation and its stakeholders and where the organisation can have the most positive impact.(For more about organisations setting and road-mapping towards these commitments see pages 24-31.)2Value creation.With the elevation of ESG roles towards senior management comes a far greater focus on
24、value,and identifying ways to achieve long-term ESG goals in ways that drive business value.This includes driving stakeholder value and other key forms such as growth(e.g.new product development)and efficiency(e.g.reducing energy usage or cost).3 Embedding ESG strategy throughout the organisation.Fr
25、om commitment to ESG targets follows the expectation to demonstrate progress.This is especially the case when commitments are public,science-based and ambitious,all of which have become basic stakeholder expectations.Achieving progress requires strategy to be supported by planning and resourcing acr
26、oss business units.Nearly nine in 10 of those interviewed agree that the CSO or its equivalent has become a strategic leadership position within organisations.There are three key dimensions to this.The sustainability commitments that we have made as a business are front and centre of business strate
27、gy.When you commit to,for example,achieving net zero,then this has got to be linked to your commercial strategy,your pricing strategy,your customer strategy etc.”Among those we interviewed,there is widespread agreement that businesses still have a long way to go on this aspect of the role.Businesses
28、 have a long way to go before sustainability is fully embedded into every function,process and role Ipsos|ESG Council Report 2023-Chief Value Creator?:The changing role of the CSO 6%Dont know/N/AStrongly agree57%9%Neither agree nor disagree6%Tend disagreeTend to agree 23%Base:35 Council membersChall
29、enges facing CSOs:managing complexity“I think were al ways shooting at a moving target there is no standard way of reporting.Even the ESG ratings,their weighting on different elements of E,S and G varies significantly and changes year on year.Shooting at a moving target is very difficult because fun
30、damentally what ESG ratings should do is allow those looking at them to compare performance on a like-for-like basis.And if you cant do that they dont really serve their purpose.”3 Reporting demands.Reporting demands have increased significantly over the last 5 years.Organisations are now required t
31、o report in more detail and to a wider range of audiences:regulators,investors,ratings agencies,the public and customers.There is a lack of standardisation of data and format,and requirements are also changing as the industry matures.For organisations,and CSOs,this results in an increasingly heavy r
32、eporting load,often“shooting at a moving target”at odds with business planning cycles,and an inability to compare performance like-for-like with relevant peers.Likewise,there is difficulty in sourcing data from groups with no history of robust ESG reporting e.g.business units within an organisation
33、or smaller suppliers.And certain topics,for example Scope 3 emissions,require an uplift in reporting capabilities virtually across the board.The challenges that CSOs currently face are often based upon the scale and complexity of ESG or sustainability issues themselves,and their interconnectedness.T
34、his demands that the CSO has or has access to vastly increased levels of expertise,while also managing a much wider set of stakeholders,both internally and externally.1Multiple dimensions of ESG.The UN Sustainable Development Goals alone cover 17 areas of sustainable development,from sanitation to g
35、ender equality to education.MSCI covers at least 33 dimensions in its ESG materiality map.Each potentially comes with reputational or regulatory risk for organisations and issues are increasingly interlinked,meaning allocating appropriate resources across multiple issue areas remains a challenge.2St
36、akeholder e xpectations.Organisations face increasing scrutiny and feedback(plus regulation)from a wide range of stakeholders,who often have a narrow focus on a specific topic or region.(We discuss in more detail stakeholder management and communicating around ESG on pages later in this report.)The
37、bar keeps rising and the field keeps getting wider.The number of topics is widening and what satisfies stakeholders and the bar for what is seen as a leadership position,in terms of performance and transparency,is rising.”The big data challenge that all of our organisations face is how do you measur
38、e Scope 3 emissions from our partners,because not everybody is disclosing it.”4 An increasingly scientific discipline.TFCD and CDP reporting,LCA and climate impact modelling,Scope 3 measurement these are just some examples of the greater rigour and specialism being applied to sustainability measurem
39、ent and planning.Likewise,topics such as biodiversity and natural capital are increasing in importance.Currently,CSOs are often under-resourced to meet these requirements.It s becoming more of a scientific discipline with things like TCFD with climate change.As a discipline,in its broadest sense,its
40、 becoming more technical and I think as things become more technical,more specialisms need to come out of that.”“5 External f actors.The interconnectedness of ESG topics of course goes beyond the limits of any one organisation.In order to achieve certain goals,organisations are likely to be dependen
41、t on broader change.To take a basic example,an organisations commitment to replace a petrol fleet with electric vehicles(EVs)depends on external infrastructure.And this issue becomes much more complex when working across national boundaries and jurisdictions.“I think tha t for most big businesses to
42、 achieve their sustainability goals they cannot achieve them on their own.And most of their sustainability challenges exist well outside their own four walls that they can control.When one looks at social issues there are things that you have very little control about,for example does a government p
43、olice its own rules on child labour?Because often these issues that were dealing with are a market failure.”6 Scale of change.Ultimately,the scale of change required to meet commitments that have been made and the needs of stakeholders,and in particular the planet,remains intimidating.“I still think
44、 the biggest challenge is one of embracing the size and the scale of the challenges we face.If we are going to decarbonise our business for example,that is going to require huge action on our behalf,huge action on our suppliers behalf,lots of things to happen in the external environment that we are
45、going to depend on,and it is going to require a huge amount of innovation and R&D as well.”13 Ipsos|ESG Council Report 2023-Chief Value Creator?:The changing role of the CSO15The future of the CSOThe last 5 years have seen significant changes in the role of the CSO or its equivalent.And these reflec
46、t a step change in the incorporation of ESG and sustainability into business strategy.But the challenges reported,which all speak to some extent to the sheer scale of the change required to meet the demands of ESG,raise two intriguing questions about the future of the role.1How does the CSO continue
47、 to drive v alue for businesses?The pursuit of value is perhaps the real acid test of organisations commitment to ESG and the ascendance of the CSO.Because,ultimately,for sustainability to be fully embedded,it will need it to be indivisible from an organisations fundamental creation of value.Either
48、by essentially being an organisations value proposition,or by being fully consistent with it.Initially,there is a great deal of value to be delivered through efficiencies for example,better reporting of existing practices,or switching to renewable energy sources where they lower an organisations dir
49、ect costs.The next frontier,however,is a deep embedding of sustainability within governance,portfolio management,R&D,recruitment.And this,of course,comes with greater investment and risk.Some of the easier lo w hanging fruit where you can get financial and environmental value are starting to be depl
50、eted and we are starting to get into some of the trickier areas.There is a mindset that you have to continue to grow,you have to make more revenues,you have to sell more stuff,but you have to find a way to do it with fewer resources and less of an impact on the planet.And nobody wants any of that to
51、 give,so you are waiting for the magic solutions to pop up.At some point something is going to have to give.”I think the CSO role is really interesting in that it doesnt have as clear a definition historically as some of the other areas that have the C in it,the Chief Human Resources Officer,that is
52、 pretty much well defined in most cases,or the CFO and others.But with CSO you have to be nimble across the business in so many different ways and pull together so many different players.I do shareholder meetings and I have to talk privacy,responsible data,then environment and ethical business pract
53、ices and inclusion and diversity and on and on and on.”2 How does ESG or sustainability best fit into the corporate structure?In elevating sustainability to or towards C-suite,organisations are following a model of the C-Suite as a set of functional specialists there to advise the CEO.Deloitte has p
54、reviously pointed out the“this model is ill-matched to a business environment in which companies must transform themselves,and continue transforming themselves,to remain competitive.”This model,its argued,can be a barrier to integrated action.And this 2is,of course,exactly what ESG demands.Among tho
55、se we interviewed,we found that in many cases senior sustainability executives are working with small teams(43%with a team of 0-5).Again,given the challenges reported,the corporate structure needs to facilitate the embedding of ESG strategy be this a major expansion of sustainability roles,or diffus
56、ion of responsibility for delivering on ESG into all roles,including C-suite.But its clear that the CSO cannot shoulder the burden alone.“Ipsos|ESG Council Report 2023-Chief Value Creator?:The changing role of the CSO2.https:/ WHAT IS DRIVING CHANGE?:THE ROLE OF STAKEHOLDER MANAGEMENT 17While the co
57、ncepts that sit behind ESG are certainly not new-and have been at the centre of corporate strategy for decades-the growth and formalisation of ESG as an explicit mission have been catalysts for change.The impacts of this change are far reaching including how companies define,prioritise and manage th
58、eir stakeholders.This is demonstrated by the rise of stakeholder capitalism,the notion that businesses no longer exist to create profit for shareholders/owners,but instead have a responsibility to create value for a much broader set of stakeholders.Along with a change in who makes it onto the stakeh
59、older map,business is managing a change,or evolution,of the expectations of stakeholders.Issues that were once the domain of governments and NGOs,are now firmly on the corporate agenda with stakeholders seeing a clear role for business to drive impact.And at the end of the day,stakeholders are citiz
60、ens too,so it makes sense that their concerns match the headline concerns of society more broadly.W ere fortunate in Europe and indeed many other parts of the world to have strong stakeholder views and expectations of the business and mostly they are shaped by the external challenges that society fa
61、ces.”The result is a significant shake-up of the typical stakeholder map with new issues and new stakeholder groups rising in priority,requiring a refresh of stakeholder management strategies.We explored this with our ESG Council Members and found mixed experiences in terms of how businesses are nav
62、igating this change.“Ipsos|ESG Council Report 2023-What is driving change?:The Role of Stakeholder Management Internal versus external driveThere is strong consensus that the rise of ESG and the resulting change in corporate behaviour was certainly sparked by external stakeholder pressure.Some go fu
63、rther and argue that without outside pressure,business would have largely continued the pursuit of profit over all else,whatever the environmental and social impact.“In my experience all of these are because a customer or a stakeholder or a government entity is forcing the issue first.”However,Counc
64、il Members do highlight that the push from external stakeholders is not always well informed and can result in a call for activities that will not make a material impact on sustainability,are not feasible given the operating environment,or are not aligned with the companys specific ESG goals.“I f yo
65、ure following the stakeholder lens very strictly you would say that reuse is always the best model,from a climate perspective reuse is not always the best model,it is often the best model but its not always so youve got to be thinking about it from a what does it mean in practice perspective as well
66、 as the intellectual ideal.”The believe-true gap is further evidence of this challenge where consumers are often misinformed about which actions have the greatest impact on sustainability.This points to the need for greater education around ESG for consumers right through to senior stakeholders.It a
67、lso highlights the importance of corporates being trusted and having the licence to be involved in ESG discussions so when they do say a particular approach is not appropriate,theyre able to credibly debate alternatives.While acknowledging the role of external stakeholders,many feel that ultimately,
68、the extent to which external pressure results in meaningful internal change comes down to the will of leadership.The commitment of leaders within a business is more important in driving change than pressure from external stakeholdersAnd,looking further ahead,many feel responding to external stakehol
69、der pressure to set ESG strategy will ultimately leave a company looking reactive and susceptible to emerging risks.Whats more,any change that is the result of a single driver is likely to be short-lived,and Council members identify that long-term,sustainable change occurs when there is alignment be
70、tween external pressure and other factors such as company values and culture,business challenges,market opportunities and more.It is when operating with this alignment that business can lead,be proactive with its ESG strategy and make a greater impact.“Y oure never going to embed sustainability,or a
71、ny kind of programme change,if youve only got a single driver there and its not being led by the company itself.”In reality,it probably takes a perfect storm whereby external pressure creates both the spark that enables willing leadership to shape strategy based on ESG factors,and an environment whe
72、re boards will ultimately endorse this strategy.19Ipsos|ESG Council Report 2023-What is driving change?:The Role of Stakeholder Management Strongly agree40%Neither agree nor disagree14%6%Tend to disagree3%Strongly disagreeTend to agree37%Base:35 Council membersMost important stakeholdersThe ESG stak
73、eholder landscape,and therefore the company stakeholder landscape,is broad and complex.There is a mix of traditional and emerging stakeholder groups,and nuances across sectors and markets.At the heart of the ESG-specific challenge though,is that as companies make a multiplicity of promises to a mult
74、iplicity of stakeholders,they must balance increasingly competing stakeholder needs.Its in this context that prioritising stakeholders can feel like a full-time job.While many stakeholders have been agitating for change for some time,many argue that it was the attention of the investment community t
75、hat saw the pace of change step up significantly.“When investors are telling you youre a bit of a la ggard or start asking Where is?and Why havent you?those kinds of questions make you ask the same internally.It drives change.”Many also credit the interest from institutional investors with firm link
76、s being established between ESG and financial performance,and ultimately the shift to formalising and funding-the CSO role.A link exists between a companys ESG performance and its attractiveness to investors“W e have dialogues with investors fairly regularly and over the last couple of years I have
77、noticed a change in the range and depth of questioning and inside knowledge of sustainability issues within the investor community and their ESG analysts have substantially increased.”Still,for some of our respondents,institutional investors are being over-emphasised in their importance and their ne
78、eds should be balanced with other stakeholders.According to these Council members,institutional investors are one of many important stakeholders,not the only important stakeholder.While consumers are well-established as a priority stakeholder segment,ESG has added complexity and created opportunity
79、for those companies that have been quick to respond.The theory of the citizen-consumer suggests that people are increasingly making consumer decisions based on the issues they care about as citizens.This merging of socio-political issues with purchase behaviour has created a green economy where sust
80、ainability is a competitive advantage and can be a driver of growth.There is increased consumer demand and we dont want to be a lagger behind our competitors.And we see sustainability as sometimes giving us a competitive edge in specific areas.”Like consumers,employees are not a new entrant to the s
81、takeholder map but they have arguably never been more important.Employees want to work for a company whose values align with their own,or at the very least,do not compromise their own.And ESG performance is where corporate values are often most stringently tested.ESG performance has a demonstrable l
82、ink with attractiveness as an employertrust-and the associated business benefits-soar.These benefits include attracting and retaining high quality talent.And no stakeholder group is better placed than employees to expose whether corporate ESG promises are followed through on in reality.W e also have
83、 a strong movement within employees and I think employees are really important in terms of driving initiatives on the ground and also pushing the type of company they want to be working for.”Council members comment that while policy development may have been a key driver of sustainability change in
84、the 2000s,today,governments are often laggards rather than leaders in the push for sustainability-related change.As such,they are not necessarily a stakeholder group forcing their way to the top of the priority list demanding more and more from businesses.However,this may change with the push for mo
85、re standardised regulation globally around ESG,particularly in how listed companies report.NGOs,special interest groups,think tanks,and academics are important stakeholders particularly due to their role as conduits for companies to move from negative to positive impact,or scale already positive imp
86、act.Strategic partnerships with independent actors are especially important for those businesses that lack Companies that are able to align their internal and external communications and behaviour,operate in an ideal space reputationally.Where there is no gap between what they say and do internally
87、and what they say and do externally,the licence or skill to drive material changes to the way they operate.“21Ipsos|ESG Council Report 2023-What is driving change?:The Role of Stakeholder Management Strongly agree60%6%Neither agree nor disagree3%Dont know/N/ATend to agree31%Base:35 Council membersSt
88、rongly agree74%3%Neither agree nor disagree3%Strongly disagree3%Dont know/N/ATend to agree 17%Base:35 Council membersStakeholder management strategies A common challenge experienced by Council members as they implement and refine their stakeholder management strategies,is the varying levels of ESG e
89、xpertise among stakeholders.This results in the CSO needing the ability to pivot between being a technical expert and a skilled communicator.“10 years a go,we used to go and talk to ESG investors and there might be five of them in the UK,two in the US and there might be three in Australia.And when y
90、ou would try to talk to what we call non-ESG investors about these sorts of topics they would just say“we are not very interested”.Now everybody wants to be an ESG specialist so you will find people who dont have a huge amount of technical knowledge all of a sudden taking over accountability for som
91、e of this area.”Adding further complexity to stakeholder management,is the emergence of an anti-ESG movement.The motivations behind this movement are varied.At one end are those who question the business value of decisions that are too heavily weighted towards ESG considerations.At the other are tho
92、se rallying against the woke agenda and looking to remove ESG issues from the mainstream.Needless to say,navigating this continuum takes deft skill.These examples highlight that at its heart stakeholder management as a CSO is the ability to understand.To engage deeply and regularly with internal and
93、 external stakeholders,to recognise their needs,to balance these with those of the business,and to find the right way to move forward.Stakeholder engagement is critical and if you are setting goals and defining programmes without assessing the needs and understanding the perspectives of all the diff
94、erent constituents you impact,that is a very silent way of doing it.”23Ipsos|ESG Council Report 2023-What is driving change?:The Role of Stakeholder Management BUILDING AN INTEGRATED ESG STRATEGY When it comes to creating an end-to-end strategic shift in the alignment of ESG with commercial objectiv
95、es,business leaders have many considerations to take into account.How to ensure ESG feeds into the business planning and value creation process?Do the ESG commitments truly deliver on the North Star that is corporate purpose?What are the expectations of stakeholders(both inside and outside the organ
96、isation),and how do you balance competing priorities and expectations?How do you ensure the goals you set are ambitious and impactful,and that your reporting addresses the needs of double materiality(financial and ESG data)?25Ipsos|ESG Council Report 2023-Building an integrated ESG strategy27Through
97、 our discussions with ESG Council members,we have identified a number of important issues that need to be addressed when developing an effective ESG roadmap.1 Ensure that your ESG goals are built on the fundamentals of your business.Designing your ESG goals and commitments will likely include input
98、from numerous stakeholders,both internal and external to the business.This is likely to lead to competing priorities,with certain stakeholders pushing for commitments that are meaningful to them,but perhaps not connected to the reality of the business and value creation process in your organisation.
99、This lack of connectivity has the potential to lead to ESG programs that run out of steam as their relevance and importance is seen to diminish over time.This disconnected approach also has the potential for reputational damage or erosion as such ESG goals maybe deemed to be inauthentic and seen pri
100、marily as window dressing.Ipsos|ESG Council Report 2023-Building an integrated ESG strategy Commitments need to be material to your business,so play in your lane so you can have an outsized impact.You know we get a lot of really good suggestions that have nothing to do with where we have business ex
101、pertise.”2 Dont develop your ESG goals in a v acuum listen to your stakeholders.Notwithstanding the previous point,it is essential that ESG strategy and goals are developed with external consultation.While its nearly impossible to address all the desires of your various stakeholders,it is important
102、to acknowledge that many have expertise that can help to shape your strategy and increase its credibility to the outside world.External consultation will also increase the likelihood that your subsequent communications will reflect the language and needs of external stakeholders(rather than anodyne
103、corporate speak)which in turn increase its impact and ability to inform.3%Dont know/N/A29Ipsos|ESG Council Report 2023-Building an integrated ESG strategy Number one,listen to the outside world,make sure that you understand stakeholders material issues and then what their expectations are.”Strongly
104、agree40%14%Neither agree nor disagree6%Tend disagreeTend to agree 37%Base:35 Council members I think employees are really important in terms of driving initiatives on the ground and also pushing the type of company they want to be working for.”However,its also critical to listen to internal stakehol
105、ders as of course they are in many ways the agents of change when it comes to embedding ESG practices and principles.Some commitments are designed to address the unique needs of employees particularly in the area of governance,and internal expectations may differ from external expectations,or place
106、more emphasis in certain areas.Ultimately,when determining how to balance the priorities of internal versus external stakeholders,ESG Council members indicate that the commitment of leaders within the business is more important in driving change than pressure from external stakeholders.Its evident a
107、mong these leaders that change must be driven from within.The commitment of leaders within a business is more important in driving change than pressure from external stakeholders313 Set a long-term direction and measure progress on the way Long-term goals demonstrate that a company is focused on dri
108、ving big,meaningful change in both their business operations as well as in society at large.However,setting long-term goals without shorter-term milestones has the potential to open a company up to criticism of purpose-washing.Shorter-term goals provide more tangible,bite-size steps that can be take
109、n to achieve the longer-term vision.This also provides the company the opportunity to measure and report on progress internally and externally,and to demonstrate the next steps that will be taken in the journey against the bigger vision.I think its really important to have the long-term vision and g
110、oals because I think it sets an arc that you can go after,it inspires for something bigger.It is hard to get really excited about an incremental goal.So,I think that really galvanizes people.I dont think it can be done without the incremental pieces though.So,setting a 10-year goal and not having so
111、mething for the next two years to show youre on track you will quickly lose trust and belief.”4 Goals should never be written in stone and transparency is key.Setting shorter-term milestones provides the opportunity to measure progress and sense check your ESG strategy against broader developments i
112、n society.Indeed,some companies may identify specific roadblocks that have emerged to achieving goals and objectives,and there may be a need to modify or reframe ESG ambitions.Modifications need not be about compromise some companies have found that they were able to make faster progress against the
113、 commitments they set and have therefore modified their longer-term goals to be more ambitious.Ultimately,it comes down to informed and transparent decision making that allows ESG strategy to evolve over time.You really need to focus less on the commitment and more on the action and the progress to
114、them and there needs to be a degree of transparency against your progress towards them.”Transparency is based on talking openly and in detail about your progress against milestones,the hurdles along the way.Indeed,in a connected and digital world the idea that you can hide negative information is in
115、creasingly futile.Its clear from ESG Council members that candid discussions with stakeholders is not only the right thing to do but can also strengthen an organisations reputation as its seen to be taking a genuine approach to tackling difficult issues.You need to be very transparent about your pro
116、gress against those goals,even if they are not going well.”Ultimately,ESG is about accountability and the role of companies in society.It is unlikely that there will ever be a total consensus on what that role should be and indeed in some quarters we are seeing a backlash against ESG with the emerge
117、nce of terms such as woke capitalism.However,its clear from Council members that setting ESG goals demonstrates a corporate ambition to reconcile the creation of shareholder value with the desire to be a force for good in society.And for Council members its ok to stumble along the way as long the co
118、mmitment is genuine,and companies are not deflected or distracted from the goal.Ipsos|ESG Council Report 2023-Building an integrated ESG strategyDOING WELL BY DOING GOOD:RESILIENCE,RISK AND THE REPUTATION VALUE OF ESGToday,youd struggle to find a business leader whod endorse Milton Friedmans famous
119、assertion in 1970 that“there is one and only one social responsibility of businessto use its resources and engage in activities designed to increase its profits.”Just a year after Friedmans seminal essay,McKinsey&Co.countered that it was possible to“do worthwhile things for society as well as to ear
120、n substantial financial rewards.”Over the next 50 years,business leaders have been grappling with this issue how to do well,while doing good.But one hard fact hasnt changed:few businesses can afford to base their investment decisions on altruism alone.ESG,like most corporate initiatives,has to earn
121、its keep.Indeed,this is crucial to ESGs longevity,because when times get tough and resources become scarcer,history suggests that Friedmans doctrine starts to look more seductive.Thankfully,Council members say that ESG initiatives create tangible value in many ways.2133Ipsos|ESG Council Report 2023-
122、Doing well by doing good:resilience,risk and the reputation value of ESG1&2:https:/ begin with,much of the ROI from improved ESG performance is about reducing risk because risk is expensive.Council members describe ESG as a risk management tool,which builds greater long-term corporate resilience.A g
123、ood example of this is de-risking supply chains,by slashing complexity or cutting dependency on natural resources and,ultimately,reducing costs:Weve certainly found a lot of energy deals have been parity or have been lower cost.They have certainly been important in terms of value creation,in terms o
124、f traction.”Risk can also be mitigated by acting ahead of regulation.As well as reducing risk,ESG creates opportunity.In particular,it helps to drive innovation.Its sustainability lens forces businesses to think critically about the long-term value they create,and to identify new trends,business opp
125、ortunities and partnerships.More broadly,ESG is an increasingly powerful tool to strengthen corporate reputations.As one member of the Ipsos Reputation Council said earlier this year:“I do think ESG is 90%of our corporate reputation,probably.I do think it has a really big influence.”335Ipsos|ESG Cou
126、ncil Report 2023-Doing well by doing good:resilience,risk and the reputation value of ESG3:https:/ role of ESG in building trustTo see how this works,lets think about trust.Trust is the key that unlocks the value of your corporate reputation.Ipsos research shows that higher levels of trust in a busi
127、ness lead to more resilience during times of crisis,and greater communications efficiency(people who really trust a company are more likely to choose its products and services,and to find its communications believable).But critically the same research shows that trust is about more than just compete
128、nce.Yes,we need to trust airlines to get us to our destinations in one piece,and banks to keep our money safe.Competence and reliability are still table stakes.But,increasingly,we also care that the airline or the bank acts responsibly,has good intentions,and most importantly shares our fundamental
129、values.And we expect business leaders to stand up for these values:50%of the global public say that business leaders have a responsibility to speak out on the social and political issues that matter to them4.Thats where ESG comes in.Strong ESG performance helps build these higher dimensions of trust
130、,by showing that a business shares our values and takes decisions based on more than just profit.As well as creating resilience,this can open ears,minds,doors and even wallets across the whole range of stakeholders.“There are c lear business opportunities linked to sustainability in the way that you
131、 talk with customers and clients mirroring what theyre doingso people want to work with other companies that similarly operate in a sustainable way.I think also the realisation that there is a big business opportunity in products and services that deliver social,environmental value.”This matters:in
132、a world where just 3 in 10 of the global public trust business leaders to tell the truth,any trust dividend will be a potent competitive differentiator for a company.4ESG:a weapon in the war for talent?Council members also view ESG as a vital asset for the employer brand.3 in 4 say that ESG performa
133、nce has a demonstrable link with attractiveness as an employer.Why is this?Once again,were back to the power of shared values,and the trust that these can engender:Ive been to campus recruiting trips,when they target bringing in a new crop of engineers from Georgia Tech or from MIT,and they have a t
134、onne of questions about this stuff and they really want to position themselves in an organisation where they have shared values.”This is interesting,because recent research by Ipsos suggests that employees,like consumers,are looking for ESG performance to be delivered as a co-benefit rather than the
135、 benefit.All things being equal,many employees will choose to work for an employer that promotes sustainable values,but on the proviso that their hygiene factors(remuneration,career development)are met.The same is true of consumers.To drive a change in customer behaviour,ESG performance must be a co
136、-benefit alongside other factors which are key in the category,such as being easier,cheaper,or healthier.Sustainability can work as a tie-breaker between two otherwise comparable products,services,or potential employers.Once again,companies which deliver on both the table stakes of trust(reliability
137、 and competence)AND higher level,shared values,will see the greatest return on their ESG investment.This helps to explain why CSOs are working closely alongside other functions,such as marketing and HR.In each case,2 in 3 Council members say theyre collaborating with these colleagues a great deal or
138、 a fair amount.537Ipsos|ESG Council Report 2023-Doing well by doing good:resilience,risk and the reputation value of ESG4:https:/ ESG communications:avoiding the pitfallsCorporate reputation is a flower that doesnt grow well in the shade.Strong ESG performance will be of little value,reputationally,
139、if stakeholders dont get to hear about it.And yet Council members are very mindful that the public,especially,are increasingly sceptical about what they see as corporate smoke and mirrors:“There s talk these days of green-hushing where people are actually doing things but dont want to talk about the
140、m because theyll be accused of green-washing.”The Ipsos Trustworthiness Monitor 2022 found that 52%of the global public believes too many businesses use the language of change to help the environment or to promote greater equality without committing to real change.In turn,this has prompted greater s
141、crutiny from regulators such as the UKs Advertising Standards Authority over companies climate claims,particularly around carbon offsetting.The EU environment commissioner,Virginijus Sinkeviius,has said he intends to crack down on climate-related claims that are unclear,ambiguous or short on informa
142、tion.As the Financial Times put it before COP26,“stunts and pious pledges wont save the planet.”ESG initiatives tackle complex problems in which progress is iterative and often incremental.If some ESG headlines sound too good to be true,its because they are.Rather,its about doing the hard yards,with
143、 trade-offs,and that doesnt make for glamorous headlines:7639Ipsos|ESG Council Report 2023-Doing well by doing good:resilience,risk and the reputation value of ESG ESG is lots of little tiny,hard,boring things you have to do to reach the end goalit is not sexy.Some of the social impacts can be sexy,
144、right,but the E stuff is bloody hard work and the G stuff is like hard and tricky and weird.”Communicators whove had to explain corporate positions on issues such as corporation tax,pharmaceutical pricing or energy investment will be familiar with this challenge.Council members are confident that th
145、ey can engage with informed stakeholders;more than 3 in 5 disagree with the proposition that its difficult to tell stories about sustainability that resonate with stakeholders.But public-facing comms are far trickier.Understanding is often low.Cut-through and credibility are hard to achieve.There ma
146、y be first-mover disadvantage to communicating around some issues,while actions that we see as positive can quickly be turned around and made negative.6:https:/ ten tips for ESG communicationsSo whats the solution?Weve distilled Council members recommendations into 10 key principles.10 Engage,inform
147、,educate “There s definitely a responsibility on big brands to engage and educate and communicate on these topics.”Well thought-through,non-preachy,jargon-free comms which speak to essential human needs and values will find an audience.If the story is especially complex or risky,collaborate as an in
148、dustry or sector.9 Stakeholder expectations Hypocrisy destroys trust,fast.“I kno w its not a great message to say look at our amazing environmental performance,but on the flipside of that we have a really poor human rights performance.”8 Marshal your proof-points “I think the biggest challenge is ha
149、 ving strong systems in place that measure metrics and KPIs accurately and communicate those accurately.”Third party validation is important.7 The data or the story?Both is better “F iguring out the balance between the storytelling component which is the more compelling but with the data component w
150、hich shows that youre not greenwashing,that youre not fluff.”6 Zoom out “T alk to them about the general direction of travel,give them confidence that we are moving in the right direction but then help to explain to them how they can get involved and contribute.”5 Use ESG to inspire your own people
151、“I think weve actually got lots of good proof points in our organisation and storytelling that we can do and I think it does play an important role in inspiring our people.”4 Tailor the comms to the audience “Investors want da ta but other stakeholders want other pieces of information and when youre
152、 a resource-lean organisation,like we are,thats not so easy to do.”3 There is no off switch “There is a tent pole moment of the year when we produce this ESG report but it needs to be woven through all our communications,our Twitter feeds,our Instagram posts,our day-to-day engagements and our media
153、strategy.”2 Use the ACE checklist -Is it Authentic:is this a salient issue to our company,or are we jumping on a bandwagon?-Is it Credible:do we have a convincing story to tell?Do we walk the talk?-Is it Effective:have we effected tangible change and can we prove it?1 Above all,be an action leader,n
154、ot a thought leader “W e are not doing stories,we are doing work and the work will speak for itself.”Ipsos|ESG Council Report 2023-Doing well by doing good:resilience,risk and the reputation value of ESGTHE FUTURE OF ESG?In light of a recent backlash against ESG investing,we take a critical look at
155、the ESG framework and explore its future relevance for CSOs and organisations.43Ipsos|ESG Council Report 2023-The future of ESG?ESG emerged as an investor framework that promised simultaneous ROI and environmental and societal good.ESG performance was heralded as a key indicator of long-term resilie
156、nce and therefore capital was expected to flow to organisations with good ESG records and away from those with the less good ones.The market itself would be the means of change.And from the investment community,the language of ESG spread apace throughout the wider business community.The push-back ag
157、ainst ESG has begun at source in the investment community,and based partly upon underwhelming performance by ESG funds.Last year,it was reported that funds of equities,debt and other asset types dedicated to responsible investing posted net outflows globally of$108 billion to the end of September.Wh
158、ile more broadly,of course,the bigger effects are not evident the world is simply not on track to meet,among other things,the UNs Sustainable Development Goals or the Paris Agreement.A critical assessment in the FT espouses the view that ESG investing rests on“weak conceptual foundations and should
159、be viewed suspiciously by investors who seek adequate returns,and by citizens who want real rather than cosmetic change.”So,given these signs of a possible tempering of attitudes towards ESG,in what ways if any does the framework remain useful for CSO or other senior sustainability executives?4321A
160、framework for materiality ESG as a framework remains useful for CSOs and organisations as a map of those intangible factors that are important in stakeholder management and business strategy.This map allows organisations to conduct the materiality assessments that determine where they need to focus
161、for greatest impact(in the case of double materiality,in both managing outside-in risk and inside-out effects),while ensuring they have at least a point of view or holding position across all issues.ESG frameworks,while differing slightly across organisations and ratings agencies,also offer a degree
162、 of consistency and apparent rigour to the management of stakeholder priorities and organisations societal impact.I think ESG has been helpful in driving the agenda.And in being clear that its not just about the planet or philanthropic stuff,but were talking about a wide set of topics.So,it is a con
163、venient shorthand I find for us to say it is this set of topics its been a useful framing for us.”45Ipsos|ESG Council Report 2023-The future of ESG?1.https:/ 3.https:/ 4.https:/ A return to the language of sustainability?ESG factors will also remain vital in assessing organisations long-term value.A
164、lex Edmans of London Business School makes a strong case for ESG being nothing special:“Considering long-term factors when valuing a company isnt ESG investing;its investing.”Going on to say that a“companys relationships with its employees,customers,communities,suppliers,and the environment are high
165、ly value-relevant;theres nothing particularly cultish.in considering them.”For many of the CSOs that we spoke to,ESG reporting will certainly continue to be a key feature of investor relations.Although ESG reporting is in some cases seen as a complicating factor,with a proliferation of reporting dem
166、ands and ratings agencies.These often employ inconsistent methodologies,provide counterintuitive rankings and offer little guarantee of real impact on the important topics covered.Hence an increasing association of ESG ratings with greenwashing.And indeed,they are often not even relied upon by inves
167、tors,who are running their own models.KPIs and standards relating to ESG compliance andbenchmarking are too fragmented7 6another and a company can be at the top of one and at the bottom of the other;the methodology is so inconsistentI think ESG ratings are basically spiralling into a lack of credibi
168、lity,into distrust frankly.”There s a real danger that sustainability teams just spend all their time reporting,crunching numbers,and forget that actually weve got to decarbonise the business.”Investors,bond holders,shareholders are interested in risk management and assuring return on investment,so
169、thats the ESG side of sustainability for me.The sustainability side of sustainability is more about our clients and our government contracts where theyre not so interested in a return on investment as in the value generated to society.So,theres overlap but theyre two sides to the“ESG has almost beco
170、me a phrase tha t is associated with ratings.And you can look at one rating and compare it to materiality assessment.”.“47Ipsos|ESG Council Report 2023-The future of ESG?6 and 7.The End of ESG by Alex Edmans,London Business School,January 2023Strongly agree49%6%Neither agree nor disagree9%Tend disag
171、ree3%Dont know/N/ATend to agree 34%Base:35 Council membersAnother criticism of ESG frameworks is that they tend to imply an equivalence across the pillars and dimensions of E,S and G.There is a danger that climate change,for example,becomes seen as one among many issues,when really all organisations
172、 need to be addressing this with the upmost urgency.Allocating the right amount of resource across issues should be addressed by good materiality assessments,but this can be challenging given the range and sometimes tension between ESG factors.Whats also conceptually challenging for many organisatio
173、ns is the inclusion of the G,governance,within the framework.Governance often sits in a different part of the business to the E and the S(in legal,for example),and can been seen as something more fundamental,encompassing all of issues grouped within ESG.The B Corp movement is already rooting ESG in
174、commitment at the level of corporate governance:B Corps are legally required to take into consideration anyone that is materially affected by that companys decision-making,like workers,customers,local communities,wider society and the environment.8 To me the G has always been there.People have often
175、 said I know we say ESG but really it is G and that E and S under it,so it is all about how we have strong governance across the company and if you have strong governance then you probably are including E and S in it.”For stakeholders other than investors e.g.customers,employees,government and third
176、 sector many CSOs predict a return of the language of sustainability.Including associating sustainability with good governanceThe benefit of this for organisations is that they can potentially tell more distinctive stories,while focusing resources where they can have the greatest real impact and rec
177、ognising the increasing interconnectedness and complexity of ESG.I do think even then it tends to separa te us into these silos of environment,social,governance,where actually its all completely interrelated,which is why I think sustainability as a term is also important because it recognises that i
178、nterrelatedness.”The danger for stakeholders would be the potential abandonment of some of the most appealing elements of the promise of ESG investing frameworks:their comprehensiveness,their implication of scientific rigour and measurement,and their consistent lens applied across organisations.And,
179、in turn,the prod that ESG has undoubtedly given organisations to begin making the deep changes required by the planet and society.To avoid a return to CSR then,what will fill these roles?For many CSOs,the answer would be that the time is right for stronger regulation.“49Ipsos|ESG Council Report 2023
180、-The future of ESG?8.https:/ COUNCIL MEMBER PARTICIPANTSOrganisationBHPBTCoatsCoca-Cola Europacific PartnersColgate-PalmoliveCox Enterprises CSLDarden RestaurantsFerrexpoHitachiHome DepotInternational SOSITVJupiter Fund ManagementKierLenovoLowesLV=MarsMitieNeptune Energy PetrofacSchrodersUdemyVisaVo
181、lvo Wolters KluwerQBE51Ipsos|ESG Council Report 2023-ESG Council member participants35 senior level executives were interviewed as part of this years ESG Council report.Some Council members requested that their participation remain anonymous,therefore 28 contributors are named here.THE EDITORIAL TEA
182、MAuthors:Henry ArcherMatthew Painter Sally BraidwoodJason McGrathMilorad AjderESG Council Director:Simone WilliamsABOUT IPSOS CORPORATE REPUTATIONIpsos Corporate Reputation has been a leader in reputation research for over 40 years and we work for some of the biggest corporations in the world.Our mi
183、ssion is to provide critical insights and advice that helps our clients build resilient reputations and stronger stakeholder relationships.And,we deploy a unique blend of traditional and digital research techniques delivered by dedicated reputation research specialists across the world.Our approach
184、includes:Measuring overall reputation performance Identifying the drivers that shape a robust ESG strategy ESG and reputation risk assessment Advising on stakeholder engagement Measuring and managing the impact of a crisis Please get in touch if you think we can help.FURTHER INFORMATIONMilorad AjderGlobal Service Line Leader Ipsos Corporate Reputatione:Simone WilliamsMarketing and Communications DirectorIpsos Corporate Reputation e: Ipsos|ESG Council Report 2023-About Ipsos Corporate Reputation