In marketing, ESG refers to a set of principles that companies follow to ensure that they conduct their business in a socially responsible and sustainable way, while minimizing any negative impacts on the environment.
Marketing based on ESG principles involves communicating to customers, stakeholders, and investors how a company is managing its impact on the environment, treating its employees, and adhering to ethical business practices. It focuses on promoting the company's positive contributions to society and the planet, as well as its commitment to transparency and accountability.
ESG marketing can be an effective way for companies to build trust and brand loyalty with customers, especially those who are increasingly concerned about sustainability and social responsibility. It can also help companies attract and retain talent, as many employees are now looking for employers who share their values and commitment to making a positive impact on the world.
ESG in Marketing | Classifying the brand archetypes -
There are basically 3 classical archetypes of firms, trying to utilise ESG in their marketing strategy or for corporate communications - Brand Archetype 1 – The products / services are not sustainable for the end consumer or for the environment. Here firms generally will utilise offsetting and abatement mechanisms such as CSR, social benefit programs and other external measures to create a positive brand image. Companies in this segment run the highest risk of greenwashing. E.g. – Leading cola firm | Key considerations - the products, packaging and water intensity of operations
Brand Archetype 2 – The products / services are partially sustainable for the end consumer Here firms will utilise elements such as energy efficiency, packaging, waste reduction and other operational mitigation measures to minimize the impact areas of their products / services. Companies in this segment are also susceptible to greenwashing but relatively lesser than Case 1. Here we would find maturing firms transitioning to facilitate ESG integration as part of their business strategy E.g. – Electric vehicles | Key considerations – Sourcing for lithium ion batteries, less circularity
Brand Archetype 3 – The products / services are founded on sustainable principles, and the sustainable attributes / measures needs emphasis through marketing communication The most ideal case scenario for a firm wherein all relevant stakeholders to the product / service are acknowledged, leading to an end to end sustainable outlook which reflects in the product / service philosophy. Companies in this field create extensive attribution to their sustainable practices with a focus on sourcing, biodiversity impact, work environment and communicate the same to their customers.. E.g. - Biodegradable straw | Key considerations – Natural materials, lifecycle of product, circularity
How can firms do responsible ESG marketing?
ESG marketing requires clear and transparent communication to stakeholders, including customers, employees, and investors, about the company's ESG initiatives and progress. This helps build trust and credibility with stakeholders and reinforces brand perception.
The first step for firms here would be to understand the impacts associated with their products / services. These impact areas would be the baseline for a firm to understand the ESG narrative that the product / service should have.
The ESG narrative should ideally have actionable insights through inputs from all relevant stakeholders which should then be integrated into the traditional marketing plan. This is a crucial step to avoid greenwashing in your communications and achieving a narrative that outlines your areas of improvement or excellence, which would then be drafted into a marketing communication.
To be effective, ESG based marketing must be more than just a PR campaign. Hence it should be aligned and based on actual sustainable practices or the mitigation measures done by a firm.
Generally mitigation measures have an outlined hierarchy as per the following - Avoidance: Measures taken to avoid creating impacts from the outset Minimization: Measures taken to reduce the intensity / extent / duration of impacts that cannot be avoided Abatement: Measures taken to undo the impacts or rehabilitation Offsetting: Measures taken to compensate for any residual adverse impacts It is self-evident that Avoidance is the best mitigation measure and other measures are set in descending order.
Thus firms in the avoidance zone would be able to create more impacts from a responsible marketing campaign due to a stronger brand-ESG synergy than let’s say a market rival who is in the abatement / offsetting zone.
There may be instances wherein a brand has a mix of mitigation measures. Following is a pictorial representation of how marketers could frame their marketing-mix based on their firm’s mitigation planning.
However, ESG-based marketing should not be viewed as a standalone strategy, but as part of a broader sustainability strategy. Companies must also focus on delivering genuine impact through their actions and not just greenwash products with incongruent labels. This requires them to have an internal understanding of - - Their product or service life cycle - Their operating influence within their stakeholder groups, - Associated ESG risks (water, carbon, plastic, human rights, climate, biodiversity..) - Mitigation plans / targets to achieve them (net zero, carbon positive, water positive, plastic positive, ethically sourced, cruelty free…) - Core impact areas and outcomes to be communicated - Translating outcomes from a marketing perspective in a relevant format (sustainability disclosure, annual report, whitepapers, information campaigns..) - Communicating to target group, through brand appropriate channels and mediums.
On a concluding note, there are enough levers available to marketers on the ESG front, but it needs organisational support for the right empowerment. Companies can leverage technology (such as blockchain) to provide a secure and transparent way to track and report on environmental and social impact data. Transparency, data management and reporting on ESG practices can create organic insights for marketing / corporate functions to integrate in their traditional marketing brand guidelines / marketing content.
In the end it would require the marketers to understand their brand’s current paradigm from the ESG context and facilitate relevant communications through curated marketing and branding initiatives.
By adopting responsible ESG marketing practices, companies can not only contribute to a better future for the planet and society but also preserve and build on their brand reputation.