ESG letters

The golden rule of ESG investment marketing

July 17, 2022

As the landscape and regulatory environment around environmental, social and governance (ESG) continues to evolve, the question marketers of financial investments must answer is not if they need to factor ESG into their products and messaging, but how to do it. Whatever approach you take, it needs to be accurate and credible if you want to deliver a convincing story to your stakeholders to assure them you understand ESG and are taking it seriously. That was a key takeaway from the Gramercy Institute’s 2022 ESG Marketing & Communications Awards in New York this past June.

New risks and new opportunities

The shift to ESG has created fresh opportunities for investment marketers, but it has also introduced new risks. The lack of common ground between how different regulatory bodies measure ESG and set benchmarks are some of the biggest challenges marketers need to overcome. Despite the ambiguities around some of these core elements, misleading stakeholders by making an investment sound more environmentally friendly than it actually is could be construed as “greenwashing,” which will quickly attract the ire of regulators and erode the trust of key stakeholders.  

At the Gramercy event, there was broad consensus that financial marketers need to take more time to understand what story they are trying to tell around ESG and why it matters, rather than using ESG as a marketing tactic.

Even amid the market uncertainty sparked by high inflation and rising geopolitical tensions, ESG isn’t about to fade from the conversation. Investors are concerned about returns, but, as many event panelists pointed out, ESG has become an important part of risk analysis and the due diligence process, even if it isn’t core to a strategy.

ESG is HTS (here to stay)

Institutional investors and other sophisticated allocators are increasingly asking ESG-related questions about non-ESG-labeled strategies. Measurement will be critical. Firms will be held accountable for measuring their progress to back up their messaging.

The best advice we can offer is to be authentic. Unlike the famous story of a large home improvement retailer that stocked its shelves with empty boxes in its early days to create the illusion they had lots of merchandise, fake-it-till-you-make-it won’t fly when it comes to marketing ESG.

Having supported a number of multinational financial firms with their ESG messaging, we can attest to this. How you message ESG can reveal a lot about how much an organization understands this issue. And never underestimate your audiences and stakeholders.

If you don’t have any ESG metrics you’re striving to achieve, don’t claim you do. It’s better to say you are developing your ESG strategy to set clear goals and benchmarks to track your progress than to get caught exaggerating your progress on the ESG front.

Don’t go it alone

As we noted in Five ESG trends every marketer should know, strong ESG reporting can offer an important competitive advantage in addition to being a powerful tool to mitigate reputational risk.

Just remember the golden rule of ESG marketing: If you want your messaging to be successful, it has to be authentic.

Looking for support in refining your ESG messaging? Ext. has the expertise you need. Contact us today at 1.844.243.1830 or info@ext-marketing.com.