Tokenism: When companies spend more time on marketing their ESG interests rather than implementing them

The perception of ESG as a marketing activity has led to a greenwashing predicament where many brands are guilty of tokenism and others are fearful to speak on ESG topics, leading to the emergence of a new term – greenhushing.

In short:

  • Brands are under pressure to improve Environmental, Social, and Governance (ESG) outcomes
  • Brands perceived as disingenuous risk being labelled as tokenistic
  • ESG activities need to be a business strategy, not a marketing strategy

Regardless of industry, sustainability and inclusion are hot topics. Businesses in Australia and around the world are under increasing pressure to improve ESG outcomes as a result of economic and policy changes and shifts in societal expectations.

ESG activities were once confined to corporate reporting, but the term is now used more broadly. Standards Australia defines it as “…the movement for businesses to operate in a transparent, environmentally and socially responsible way and to practice good governance”.

ESG activities should be tangible actions rather than brand-building activities, they may include programs or initiatives like:

  1. Energy efficiency and renewable energy adoption
  2. Waste reduction and recycling
  3. Water conservation
  4. Supplier sustainability assessment
  5. Diversity and inclusion initiatives
  6. Community engagement and philanthropy
  7. Ethical governance practices
  8. Employee wellbeing programs

Marketing activities may identify the need for an ESG strategy and can help to drive interest in it but an ESG strategy should complement the marketing strategy, rather than be contained within it.

Brands can no longer get away with leveraging social or environmental causes for marketing and brand-building

Many are called out for leveraging socially driven observances like International Women’s Day and Pride Month to drive brand awareness. Each year, conversations online and in the media acknowledge that such activity, even if it’s well-meaning, can distract from change rather than contribute to it. Frances Crimmins, YWCA Canberra Chief Executive spoke to the ABC on International Women’s Day “They don’t really have any connections with the global feminist movement… they are often sort of traits, catchphrases and hashtags which don’t do anything.”

Due to climate instability and greater transparency around social issues(see: WGEA data explorer), the need for businesses to advance ESG interests will increase. Business leaders can either follow, take the lead, or be dragged along.

  • Recommendation: Companies must ensure they are genuinely implementing tangible actions rather than just speaking about or promoting social and environmental causes

Customers want to see an alignment with their values

ESG is a critical component for businesses striving to stay relevant and competitive. Many organisations seek guidance to identify and implement ESG goals due to pressure from disclosure standards, fear of perceived greenwashing, and because it’s the right thing to do. Today’s consumers, particularly Millennials and Gen Z, are more likely to support brands that demonstrate a genuine commitment to environmental preservation, social justice, and ethical governance. A study by Cone Communications found that 87% of consumers are more likely to purchase from companies that advocate for social or environmental issues.

  • Recommendation: Marketers must ensure any claims are fact checked and backed up with evidence

Build longevity through the genuine incorporation of ESG

Companies can’t afford to overlook their environmental and social impact. Missteps can lead to public backlash, loss in profitability and reputation damage. Repairing trust after controversy can be an uphill battle that requires strategy adjustments. ESG should be a pillar of your business strategy before being incorporated into your marketing strategy.

  • Recommendation: When tackling environmental and social issues, the question companies should be asking is “How can we do this?” rather than “How can we show we’re doing this?”

Consumers are quick to recognise when companies exploit social or environmental issues for mere marketing purposes, without tangible efforts to enact change. In an increasingly conscious marketplace, ESG isn’t just a nice-to-have. As consumers demand more ethical and sustainable products and services, and government reporting and regulations tighten, companies that take the lead on ESG initiatives will reap the rewards.

Talk to us to align your marketing strategy with ESG best practice