While ESG frameworks such as MSCI and Sustainalytics help investors spot and manage risks, the Brand Transformation Roadmap also helps companies account for social or environmental value and brand leadership — all are needed for a holistic sustainability strategy.
So, what is a sustainable brand, exactly? For many years, the answer would have varied, depending on who you asked.
That’s exactly why the Sustainable Brands (“SB”) team created the Brand Transformation Roadmap — which gives companies a guide for the journey from conventional business to sustainable brand, complete with a self-assessment tool that enables any company to see where they stand today and then chart the course forward. The tool creates a framework and definition for what a sustainable brand is, and companies can use it to see whether or not they’re a sustainable brand today (most aren’t) and compare themselves against each other. They can also simply use it as an internal tool for continuous improvement.
About the same time SB was perfecting that approach, the ESG ratings and rankings arena really heated up — so much so that I started fielding an increasing number of calls at my firm with the same request: “Help us improve our ESG scores.” And, indeed, an increasing number of companies were and are actively working to improve their ESG scores, and align their actions and disclosures with the ESG ratings/assessments their investors are looking to — all as a way of improving their outcomes with investors.
As a marketing practitioner supporting clients who are dealing with an overload of sustainability survey fatigue, I wondered, “Does a company need both? If they’re doing OK at the ESG ratings game, do they really need the SB Brand Transformation Roadmap? And do I need to go to my clients with one more tool to ‘deal with,’ when they’re barely keeping their heads above water completing all the other questionnaires for Wall Street, customers, etc?”
The answer is yes. And there are several reasons for that. This is also where my co-author and long-standing partner at S&Z North America, Christopher Haasen, comes in:
Chris and the S&Z team took a look at the dimensions covered by the SB Roadmap vs the dimensions covered by flagship ESG frameworks – namely the MSCI ESG and Sustainalytics ESG Risk ratings. The idea was to see how similar the scoring criteria were … so, if a company could score well on the SB Roadmap, would that be a leading indicator for earning a strong ESG rating? Could the SB Roadmap assessment tool be a proxy for good ESG ratings and create a shortcut for companies?
S&Z dug into scoring in the consumer goods sector. What they found is that, even though the way certain topics are addressed varies a bit, there is alignment between the SB Roadmap and ESG ratings on the importance of:
Impacts of operations and supply chain
Compliance and good governance
Tracking and reporting sustainability information
But in the consumer goods sector, MSCI and Sustainalytics appear to focus less on:
So, the conclusion here is that ESG ratings (mostly) help investors spot and manage ESG risk, not social or environmental value and brand leadership, which is what the SB Brand Transformation Roadmap is about. In other words, ESG ratings can help a company build robust ESG management practices and drive investor outcomes; but the SB Roadmap can help a company with decision-making around brand purpose and marketing influence to create industry-wide change and drive brand favorability and sales. Companies really need to pursue both for a holistic sustainability strategy.
So, how should a company use both frameworks? We see four steps:
Find out which scores matter to your investors and your board.
Use the relevant ESG scores/assessments to inform, but not mechanically determine, your company’s ESG roadmap and reporting.
Hold a workshop with a cross-functional team, take the SB Roadmap assessment and challenge each other on what’s really true and ways to improve. Leverage this session as a way to begin setting vision and purpose. Defining a clear purpose and building the right culture will make team members allies and accelerate your sustainability transformation.
Use the outcomes of that vision and purpose setting-work as a basis for internal alignment and brand influence going forward. While ESG frameworks lend themselves to reporting to investors and other expert audiences, the SB Roadmap lends itself to driving brand-led change with consumers and employees.
While the feedback you get through your company’s ESG scores helps improve your ESG management, this alone is not sufficient to fully leverage your environmental and social commitments and actions, especially for consumer-driven companies. The SB Brand Transformation Roadmap fleshes out the approach, ensuring the building blocks are in place to drive real change while also driving brand favorability.