ESG reporting does not foster trust. In fact, it could hurt it.

As companies think about how and what they will communicate on sustainability/ESG in 2022, it’s worth a taking a second to consider a staggering statistic–86% of investors don’t trust corporate reporting on ESG.
 

• “Eighty-six percent of U.S. investors believe that companies frequently overstate or exaggerate their ESG progress when disclosing results, and seventy-two percent of investors globally don’t believe companies will achieve their ESG commitments.” Trust Barometer Special Report: Institutional Investor, Nov. 2021 

 
Three ways to build trust with your ESG stakeholders

• Say less, do more–Share what your company is focused on; don’t simply produce a lengthy yearbook describing every activity that might relate to environmental and social activities. If it’s not important to your company, it’s truly irrelevant to your ESG audience.
• Set near- term targets–What are the company’s ladder-up targets to get to some long-term ESG goals? If you don’t have any yet, explain how you plan to put some in place; make them achievable to be believable (per the majority of investors who don’t believe ESG commitments).
• Tie targets to compensation–If a company doesn’t tie performance to compensation, the performance is not going to happen. Customers, employees and investors know this, too.

ESG stakeholders’ expectations have matured over the past several years. In 2022 companies have an opportunity to build trust through their ESG communications. Let’s make the work of ESG credible, useful and worthy of both your effort, and your stakeholders’ trust.