New research from GSG and SEC Newgate polled Americans on their knowledge and opinion of ESG and the results show that generally, the American doesn’t know much about ESG terminology, but still expects more from companies on ESG issues. Starting with terminology, only around 22% of respondents could provide a definition of ESG. Another 31% had heard of ESG, but weren’t sure what it was. Finally, 47% had never heard of ESG at all. For those of us working in ESG these numbers aren’t surprising. I’ve had to explain what ESG is to family and friends more times than I can count.
After questioning respondents about their existing knowledge, researchers provided respondents with the following definition of ESG as a reference point for the remainder of the research:
“the term ‘ESG’ refers to standards, policies and behaviours that organisations have in relation to Environmental, Social and Governance issues.”
After respondents read that definition, they were asked to give their opinions on ESG. The results were mostly positive. 67% of respondents said that there should be a consistent approach for companies to report their ESG performance and 72% said they believed it was important for companies to take action on ESG issues. However, past greenwashing has left a mark on the American psyche and 52% of respondents stated that they do not trust what companies claim about their ESG activities or performance.
These numbers show some of the challenges that companies face in communicating ESG matters to the public and consumers – even though these audiences don’t know what ESG means, they still expect companies to meet undefined standards and – to make things worse – they don’t trust what companies say anyway. This broad distrust of disclosures/communications makes it difficult to explain successes, progress being made and opportunities further improvement despite best efforts. It is hard to say if the coming increased regulation of disclosures and greenwashing will move the needle of public opinion. In the meantime, it may simply be a matter of trial and error in ESG communications, along with balancing storytelling and facts and focusing on who are the most important audiences as Lawrence wrote about earlier this week.
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