Is anyone listening to your ESG story?
Well, here’s an interesting conundrum. It seems that while FTSE 100 companies regularly share information about ESG topics such as product design and lifecycle management, stakeholders would much rather hear about their GHG emissions, the physical impacts of climate change and business ethics.
A new report by Dentons Global Advisors, entitled Talking in tune with your stakeholders, analyses what FTSE 100 companies have said on ESG topics, in their annual and sustainability reports and earnings updates, and compares this with what stakeholders talk about. (Mettle Capital, who conducted the research, uses AI-based sentiment analysis, and apparently machine-read 12 years’ data involving 1.6 trillion articles.)
It found that the top ten FTSE 100 companies talking the most about ESG (a list heavily weighted towards the extractive industries) are not actually the ones that stakeholders are most talking about, with the exception of Shell, BP and Rio Tinto.
Dentons suggests that ‘these [seven] firms are not so interesting to stakeholders as perhaps they think they are’, which I think the young folk might describe as ‘throwing shade’.
Interestingly, Unilever – which is arguably the most recognised purpose-led business in the FTSE 100, is not as talkative about ESG, failing to achieve a top ten position, but rates as the ninth most talked about!
The research does, however, identify ten FTSE 100 companies who are aligned with the issues in which their stakeholders are most interested. Topping the list is packaging company DS Smith, scoring 89 per cent, which seems to have successfully tapped into the conversations that stakeholders are having.
This doesn’t surprise me. Group director of corporate affairs Greg Dawson, and last year’s Communications Professional at the CorpComms Awards, is a storyteller at heart. After joining, he spent 12 months analysing traditional and social media coverage of the packaging sector, looking at the policy landscape, and interviewing 100 customers, from Heineken down to small strawberry farmers, to understand the themes that resonated, and in which DS Smith could have a voice.
DS Smith’s competitor Smurfitt Kappa is similarly well aligned, as are three other companies in the resource transformation sector. Does this all matter? The report suggests that it does. In fact, when sentiment is added to the mix, companies with the highest correlation between the topics they talk about, and their stakeholders’ conversations are the most highly regarded in this space.
When analysts suggest that, by improving ESG scores, companies can add a few percentage points to their share price, that’s a powerful argument for getting it right. The key to improving ESG scores is storytelling – but only if somebody is listening to the story you’re trying to tell.