Over three-quarters (76.1%) of business professionals are sceptical of company motives for environmental, social and governance (ESG) commitments, according to a new survey.
GlobalData’s ESG Sentiment Polls Q2 2024 found that over half (52.4%) of respondents believe that “for most companies, ESG is just a marketing exercise,” while nearly a further quarter (23.7%) feel that “some companies take ESG seriously, but, for others, it’s a marketing exercise.”
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The question: “Do you think the business community is fully committed to improving its ESG performance?” was answered by 355 respondents across GlobalData’s network of B2B websites.
The level of scepticism is notable because it comes from within the business community and, in fact, has worsened over the last two years. The ESG Sentiment Polls Q2 2022 found that only 31% of 358 respondents believed that ESG was just a marketing exercise, while those who believed only some were taking it seriously were about the same level as now at around 23%.
Such scepticism is not without foundation either. While oil companies are perhaps most notable on this front, having walked back commitments to sustainability, businesses across sectors can routinely be seen providing support to causes like Pride Month despite offering no other apparent support for them at any other time.
ESG versus performative activism
In a recent briefing, GlobalData thematic intelligence analyst Carolina Pinto warned companies against publicly expressing support for ESG causes unless they can back up their words with action or at least a clear alignment of values lest they be accused of hijacking serious topics for financial gain.
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By GlobalData“How companies address social issues has become increasingly controversial,” explained Pinto. “Adverts targeting younger, more socially conscious customers, including Bud Light’s 2023 collaboration with transgender influencer Dylan Mulvaney and Oreo’s 2022 Coming Out Doesn’t Just Happen Once advert, can receive strong negative reactions.
“Some sections of the public perceive these marketing campaigns as corporate performative activism aimed at improving perceptions of the company and generating a false sense of relatability between the company and its customers rather than demonstrating the company’s actual devotion to any given cause.”
The impact of such missteps – whether well-intentioned or not – can be significant. The share price of AB InBev, Bud Light’s parent company, fell 17% between April and June 2023, for example.
“While market oscillations may be temporary, the reputational damage from these controversies has longer-lasting effects,” said Pinto. “The loss of trust between a company and its customer base can hurt long-term profitability. This is particularly relevant for smaller companies that rely on a positive brand-customer relationship to gain new customers and grow their business.”
ESG becoming more important
It should be noted too that ESG is becoming more important for businesses. Indeed, in its 2022-published ESG Framework, GlobalData, Just Food‘s parent, stated ESG would be the most important theme of this decade.
In the framework, on which the business intelligence provider bases its ESG research, it explained: “ESG will continue to drive strategic and operational decisions for all corporate boards in a post-pandemic world. Social inequality, corruption, tax avoidance, and climate change are all issues that companies must address head-on, in full public view.
“While some companies are making concerted efforts to improve their ESG performance across many areas, others are simply paying lip service to the concept of sustainable profits. The market is scrutinising corporate ESG strategies, making greenwashing increasingly difficult.”
Such considerations should not discourage businesses from supporting causes with which they are genuinely aligned, however.
Pinto advised: “When a social value is intrinsically linked to a company’s product offerings, it is acceptable for it to use social activism in its marketing …
“If a company engages in social activism, its actions should emphasise its social values without promoting its products. Getting involved in local community-based or government initiatives can be a meaningful way to support a social cause while avoiding accusations of engaging in performative activism. Additionally, companies should only participate in social movements if they can confidently defend their decision to support a social cause when faced with backlash for their participation.”
