Purpose-driven marketing and stakeholder relationships to ESG have seen
escalating evolution through the pandemic — with increased challenges and
opportunities this year. In 2022, we saw brands double-down on purpose-driven
initiatives as they worked to drive consumer loyalty, retain top talent and
create exponential impact — all amidst a rise in consumer skepticism and
politically motivated attacks on ESG.
Below are a few of the notable trends from 2022 that the Allison+Partners and Headstand Purpose Center of Excellence is
tracking, and what they might mean for 2023:
Anti-woke ESG backlash — Jamie Berman, VP, Boston
Politically motivated backlash against climate-smart investing and corporate
climate action reached new levels in 2022, with at
least 17
states
adopting anti-ESG regulation. Legislative blockades, state-driven boycotts (such
as those against
BlackRock
and others) and other political targeting of net-zero and related climate
initiatives have set up a potential blockbuster year in 2023.
The new year will certainly be a reckoning of sorts for ESG, as a GOP-led
US House of Representatives comes into power and begins probing investors’
and companies’ ESG commitments. We’ll see more conversation around the role of
ESG within investors’
portfolios
and its effects on the bottom line as ESG-minded organizations push back on
conservative criticism, and the US Securities and Exchange Commission’s
pending mandatory climate disclosure
rule
will also bolster this narrative, especially where allegations of
greenwashing
are concerned. Even with political headwinds, hope remains strong that ESG
investments trends will continue their upward trajectory: In 2021, 49 percent of
institutional investors
reported incorporating
environmental and governance factors into their investment decision-making
processes, up 7 percent from the previous year, and ESG investments are
predicted to more than
double
over the next three years, showing a continued momentum for ESG causes moving
forward.
New chapter in capitalism — Katy Mendes, VP, San Francisco
Corporate political responsibility: Lessons learned in 2024 and support for 2025 and beyond
Since 2021, the SB community has explored what it means for companies to use their political influence responsibly in an increasingly polarized world. What have we learned? Join us for an interactive "community café" to dive into this — as well as the Erb Institute's new CPR Decision Tool & Executive Conversation Guide and related case studies — Monday, Oct. 14, at SB'24 San Diego.
2022 was the year that Yvon Chouinard donated 98 percent of his $3 billion
company,
Patagonia
to a new organization, Holdfast Collective — which he said will be
“dedicated to fighting the environmental crisis and defending nature” — with no
tax deduction, because Holdfast isn’t a normal nonprofit. The entirety of the
company’s voting stock, equivalent to the rest of the shares, went into a newly
established entity known as the Patagonia Purpose Trust. A statement from
the new company shared, “Every dollar that is not reinvested back into Patagonia
will be distributed as dividends to protect the planet.”
This incredible move, where Patagonia became a 100 percent-for-the-planet
business, signals that a profit-for-purpose business model is entirely possible.
While not every executive is positioned to be as transformative as Chouinard,
this reimagining of capitalism can hopefully inspire more purpose-driven
companies and business leaders to redefine their profit models to more directly
and aggressively address urgent social needs in the face of an accelerating
climate crisis.
Climate impacts to frontline communities — Megan Rufty, VP, Washington, DC
This past year, we saw the very visible impacts of the climate crisis — from
floods to drought — to record-breaking temps and every natural disaster in
between. With clear signs pointing to the impacts of climate change, 2022 also
saw a growing understanding from activists, government and corporations alike of
the frontline communities of the environmental crisis — those that experience
the “first and worst” impacts of our rapidly changing climate. Frontline
communities are disproportionately carrying the burden of climate change, are
more exposed to the physical impacts from natural disasters and pollution, and
are often underserved communities of color, without access to protection.
While the direct impacts of the climate disaster were harsher than ever, we saw
this year more concerted efforts to protect these at-risk communities. The US
passed the Inflation Reduction Act,
which will make much-needed funds available to in part serve frontline
communities. For example, the Act will invest directly in programs to reduce
pollution in these areas. This includes the creation of climate and
environmental justice block grants to support community-led projects; and
funding for fence-line monitoring near industrial
facilities,
air-quality sensors, new and upgraded multi-pollutant monitoring sites, and
monitoring and mitigation of methane and wood-heater emissions in disadvantaged
and disproportionately impacted communities.
In addition, at COP27, negotiators established a loss and damage
fund
to support the developing world as those communities face and try to rebuild
from the effects of climate change. In 2023, the urgency to protect frontline
communities will only increase. While 2022 saw government action, this coming
year companies have a major responsibility to use their power and platform to
advocate for and directly benefit the communities who need it most.
Caution: Greenwashing ahead — Norah Silverstone, Senior Account Executive, Boston
To capitalize on the growing consumer
demand
for environmentally and ethically sound products, several brands have engaged
in
greenwashing
through false or overstated claims on the ‘green’ credentials of a product or
service, in hopes to distract from the brand’s contribution to climate change.
While brand greenwashing may have flown under the radar in the past, consumers
and activists are increasingly skeptical and proud internet sleuths who can no
longer be easily swayed by misleading green claims. Due to increased skepticism,
we saw an uptick in criticism — and in many cases, lawsuits — in 2022 against
brands accused of false claims to wash themselves of pressure from third parties
to be more sustainable in their operations and products and use their scale to
lead the way for other brands. From pulling “sustainable” products to avoiding
sustainability marketing altogether, brands are becoming more aware of the risk
of engaging in greenwashing and the impact it has on their reputation and
success. And as more brands are called out for
greenwashing,
we expect to see an increase in lawsuits against the companies that don’t act
quickly enough to absolve themselves of any and all false green marketing in
2023. To avoid being under fire for greenwashing and earn the trust of
consumers, brands need to communicate transparently, authentically and regularly
about progress against science-based
targets
and sustainability initiatives — rather than overstate progress in this area.
Blurred line between politics and corporate action — Katy Mendes, VP, San Francisco
The decision to overturn Roe v Wade earlier this year uncovered an
uncomfortable truth — there are some issues that brands may feel are just too
political to weigh in on. When the SCOTUS draft decision was leaked, many
brands kept quiet; and less than 10
percent
of companies
commented
on the development.
Yet, the lines between politics and corporate action are increasingly becoming
blurred — with many consumers looking to business leaders to speak out and use
their platforms to advocate for them when their basic human rights are in
danger. A new
poll
from Axios and Harris Poll suggests that companies that are slow to
respond to political crises, or do it inconsistently, suffer the most in terms
of consumer reception and trust. In today’s world, “silence is complicity” is a
phrase we’re hearing more and more that underlines this new pressure on brands
to understand what they stand for, how issues intersect with their business
values, and to take action and communicate
accordingly.
Employees as critical stakeholders — Cassie Downey, Account Manager, San Francisco
Building upon the point above,
research
shows that employees who saw their employer’s values in alignment with their own
were more likely to recommend their employer as a great place to
work
(70 percent vs 25 percent); and a majority (84 percent) of employees
surveyed
said they would only work with purpose-driven companies and brands moving
forward. Throughout 2022, we saw numerous examples of employees being treated as
critical stakeholders as it related to impact and purpose commitments from
corporations — most memorable, perhaps, being the call from employees for
statements regarding the Dobbs v Jackson Women’s Health Organization
ruling
in June.
In order to ensure they are recruiting and retaining top
talent,
brands should confirm there is alignment between external communications and
internal
actions,
taking into account employee feedback and co-creating solutions and commitments
throughout the process. By demonstrating a commitment to the workforce, brands
can rally employees around the company’s purpose and ESG efforts to create a
more unified workforce that creates a sense of purpose and belonging. As we
enter 2023 with signs of economic headwinds ahead, it remains to be seen if
employees will retain the same sense of vocal advocacy for issues at work; but
many companies have learned the importance of the employee stakeholder, and that
is likely here to stay.
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, Allison
Published Dec 23, 2022 7am EST / 4am PST / 12pm GMT / 1pm CET