Doing well and doing good: clearly communicating sustainability

It also underlined how any organization determined to grow, attract top talent and play a positive role in the world needs to act sustainably – and communicate their achievements clearly.

Traditionally, sustainability information was communicated when necessary to investors, suppliers, subcontractors and customers – essentially those who had direct contact with the business in question. However, as media, investor and social scrutiny has risen, businesses now need to target a much broader range of stakeholders, including employees, regulators and pension funds.

Doing good, doing well

The businesses that will win over the long-term are those that wake up to this new world and are able to effectively communicate their commitments and achievements. In Denmark, for example, a recent survey showed that business owners will take steps to improve sustainability even though it can mean decreased earnings (1). Similarly, we are seeing business after business place sustainability at the heart of their brand so they can attract the best employees, who increasingly want to work for companies that ‘do good’ at the same time as ‘doing well.’ 

ESG redefined for growth

A company must make its sustainability information clear to banks and pension funds if it wants to grow. Until recently, financial reporting used for credit ratings and loan approvals focused on traditional metrics of success. However, there are growing calls for the introduction of a wider set of metrics that would consider a company’s sustainability record, for instance, in Denmark, new, voluntary environmental, social and governance (ESG) definitions were introduced in June 2019 to increase commercial transparency. If universally implemented, these definitions – and the numbers that go with them – would help investors, analysts and other stakeholders understand the future direction of a company in a wider sense. In addition, they would create a uniform method across industries and companies of various sizes.

Green interest rates

Submission of these new ESG figures is, at present, voluntary but there is a growing trend for financial institutions to offer new loan types to companies with sustainable activities, and the reporting to match. A prime example is a new loan with green interest rates (lower interest rates than normal business loans) given to sustainable companies(2) in Denmark.

Pension funds also underline the importance of effectively reporting sustainability information – for both a business and consumer audience.  As Fink demonstrated in his CEO letter, major funds are now led by investors searching for sustainable investments on behalf of investors. The latter do not want to invest in companies that have a negative global impact. Businesses that make positive ESG contributions, and ably communicate their achievements, will be the ones that stand to gain.

Targeting and communications advice

Companies not currently running or communicating sustainable strategies should begin by focusing on two or three key areas. Do not try and do everything at once as the lack of focus will shine through to the very stakeholders a company is trying to impress. And as for first steps on measurement, ensure figures are reliable, transparent and hold a company to account. 

Mazars can provide a company with an independent auditor’s opinion regarding CSR reporting, assist with the management review, and offer advice to ensure sustainable initiatives are expressed in a clear way.

Commercial fortunes and reputations can be built and broken on the back of CSR achievements and missteps. Sustainability information has never been more important to the future progress of a company – any leader that wants to do well, and do good, needs to know their audience.

[1] https://www.nykredit.dk/din-virksomhed/Ejerleder/ejerlederanalysen-2019/

[2] https://danskebank.com/news-and-insights/news-archive/press-releases/2019/pr05032019