Examples litter the news of companies who have pledged to reduce their carbon emissions. They know that reputational risk is high if they continue to emit carbon at significant levels. Consumers are expressing their preference for socially responsible businesses with their purchasing power. A beauty brand that commits to reducing its use of plastics will have a more positive image than one which keeps silent about the climate crisis.
Over the past decade, climate change has become a more high-profile topic: the world has moved to the era of the Paris Agreement where everyone – from countries to companies – is expected to have but, more importantly, to show their ambition on climate action. The Paris Agreement has changed the corporate climate journey from “aspiration to action" and ushered in the Decade of Action.
According to Edelman's Annual Trust Barometer 2022, media and government continue to decline as trusted sources. Instead, businesses are often held up as beacons of change: the spotlight can be good for business, but scrutiny around climate can also have a negative impact if not skillfully communicated.
One of the ways to build and develop trust is by communicating your climate action, but skillful climate communications bring about other valuable business benefits too.
The four key benefits are:
Making climate action central to a company's purpose is a powerful way of showing that an organisation is truly committed to its climate journey. The degree to which climate action is considered in a business strategy, the more credible a company is seen to be on issues such as climate change or sustainability. The reasons for this are clear: it suggests the organisation is not operating in a profit-first capacity, but that it considers society alongside its need to make money, which signals longevity and sustainability towards investors and consumers.
Research conducted by North Carolina State University shows that trust is boosted when vulnerabilities are exposed. This is why it's also important to be frank about the challenges along the climate journey – to transparently communicate both the good and the work-in-progress. No company can become fully net zero overnight. South Pole recommends that clients be open and honest about their successes, but also about the challenges along the way.
The Edelman Trust Barometer shows that the general public wants more, not less, attention paid to climate action. 52% of respondents flag that businesses are not doing enough, which shows expectations for action are high. 86% of respondents expect businesses to go beyond their core offering, and some countries, like the UK, will start making that mandatory by rolling out net zero policies and regulation.. This underlines the expectation that businesses must meet emission reduction targets, and that they should prioritise practical, physical changes in their ecosystem. Communicating these transformation efforts should be paramount to business, both to fulfil public expectations but also to get ahead of possible climate regulation.
Various initiatives have sprung up to encourage businesses on their journey, especially when it comes to addressing emission reductions across complex value chains (Scope 3), which many companies struggle with despite the tangible commercial incentives to reach corporate climate targets. The Race to Zero Coalition is a global initiative under the UNFCCC, which brings together more than 1,000 companies, 450 cities, 549 universities and 45 investors in an effort to spur a global, collective effort on emission reductions. . Another organisation, Climate Action 100+, launched in 2017, is composed of investors that encourage companies to take action on their climate journey.
When climate action is communicated well, a sense of purpose is felt throughout the company. Consumer data from PwC shows that purpose-driven companies evolve faster than others, while millennials working in organisations that have a clear purpose are over 5 times more likely to stay in their roles. Another study from the University of Pennsylvania's Wharton Business School reinforces this finding, showing that companies that define their long-term purpose as having sustainability front-of-mind tend to be the ones with more staff loyalty. In very practical terms, this translates into more output and less human turnover.
However, as UPenn's study points out, employees only feel motivated if their work is substantiated. Using case studies to show how organisations are achieving their net zero goals along their climate journey is an impactful way for organisations to demonstrate progress. Making every colleague feel like they're part of the sustainability agenda is critical – staff, equipped with the tools for change and understanding the need for it can make a personal contribution.
Brands and companies have a lot to gain by integrating the sustainability angle into their value proposition for consumers. Environmentally conscious households are worth US$ 446 billion to the Fast-Moving Consumer Goods (FMCG) industry, which increased by US$ 70 billion last year. Moreover, sustainable products' sales outperform non-sustainable alternatives in their category. In a vacuum, sustainability is an important purchase criterion for: 1) energy/utilities (74%); followed by 2) construction/home (66%), consumer goods (63%), travel and tourism (62%), automotive (61%); and 3) financial services (44%).
When it comes to communicating climate action, the benefits outweigh the risks.. However, companies must become smarter in talking about their climate journey, in making climate-related claims that resonate with and convince stakeholders, and, most importantly, in showing their progress as transparently and credibly as possible. South Pole can support companies wherever they are on their climate journey – from setting science-based targets, to using the right language, terminology, and information as they share their story.
If you'd like to improve your climate communications, and want to ensure the claims and information you're presenting is accurate and robust, South Pole can help.
Get in touch with our client communications team for more information