Navigating “Anti-ESG” When Communicating Sustainability/ESG (2024)

To say ESG has hit a rough patch would be an understatement. Some even say it is in ‘recession.’ Saying too much about your ESG goals can leave you accused of greenwashing or “woke leadership,” while greenhushing—or not saying anything at all about your efforts—may be a bigger problem when it comes to effective long-term sustainability communications.

The sustainability/ESG landscape continues to evolve rapidly. While anti-ESG sentiment reached a fever pitch in 2023, recent data shows the movement losing steam legislatively in 2024. However, its chilling effect on corporate sustainability communications remains a challenge for companies to navigate.

Through June 2024, legislators filed over 160 “ESG backlash” bills across 28 states, compared to only 39 in 2022. Yet according to a recent report by Pleiades Strategy, only six of those bills actually passed this year—a significant decrease from the 23 that became law in 2023. Many of the bills that did pass were weakened versions of their original drafts. We’ve been tracking reporting trends for over 10 years (with an update to come soon), and we’ve seen an increase in rethinking of the title of “ESG” Report versus “Sustainability,” “Impact” or other options for 2024 reports.

Despite declining support for shareholder resolutions and fewer bills becoming law, the anti-ESG movement’s messaging is still having an impact. Some companies are walking back commitments on sustainability and racial equity due to threats of fines, litigation, and political harassment. Targeted attacks by activist investors have their own chilling effect. The full effects are difficult to measure, but it’s clear these actions are creating uncertainty and chilling corporate dialogue on key issues like climate change and diversity.

But, consumers are as dedicated as ever to supporting companies sustainability efforts—a recent survey by Propel Software found that 55% of consumers would stop buying from a company that wasn’t taking environmental issues seriously, and 65% seeking out environmental claims when purchasing. With tides rapidly changing, and no clear guidance, what’s the right course?

In this evolving landscape, here are five strategies for navigating anti-ESG sentiment when communicating your sustainability and ESG efforts at the end of 2024 and into early 2025:

1. Consider both sides of the debate when strategizing your sustainability/ESG communications plans.

The goal of sustainability/ESG communications remains to support companies in their long-term strategic plans, identifying and mitigating material risks, and recognizing growth opportunities. In 2024, we’ve seen fewer anti-ESG bills pass, but their chilling effect persists while pressure from stakeholders to weigh in on social issues continues to be high.

Securing more robust ESG data for the issues you choose to tackle can lead to a more holistic approach—enabling more informed decisions, better brand communications, and contribute to better public policy. But, evaluating how combative critics may be to these goals is crucial. Be prepared with responses that emphasize the business case for your initiatives, highlighting how they align with long-term value creation and risk management.

2. Get to know your core sustainability/ESG audience and what they care about.

Understanding your stakeholders’ priorities remains critical, but the landscape has become more complex. What do your investors, stakeholders, employees, and customers care about? What does current regulation mandate for your industry, and what’s on the horizon? What does your materiality analysis or assessment show? How about raters & rankers? It’s also important to recognize shifting demographics. The US is increasingly diverse in younger generations and companies need to consider how their sustainability and DEI efforts align with attracting new talent and serving evolving customer bases.

It’s also crucial to consider the potential impact of anti-ESG sentiment in your operating regions. While it’s unlikely you’ll appease all parties across all topics, if you are true to your purpose and core values, it is easier to stand firm. Ensure all your communications and disclosures align, not just once a year in your report, but across external and internal communications. The fastest way to lose stakeholder and customer trust is to say one thing in one channel and something else in another. Consistency is key in navigating the current climate of heightened scrutiny.

3. When you’re ready to share your sustainability/ESG progress, share what’s necessary.

In the current climate, transparency and precision are more important than ever. While explaining your hopes and ambitions may signal effort, making exaggerated or unverifiable claims about environmental benefits can be misconstrued as greenwashing, adding fuel to any potential anti-ESG fire. But, many sustainability efforts, such as decarbonization and shifts to renewable energy, are long-term initiatives that are difficult to halt once started.

To avoid this, share formal goals that are science-backed, or at the very least, concrete and measurable. Use your progress, as well as how your company responds to evolving situations, as an opportunity to build your brand’s health—with critics and key stakeholders alike. Address the priority issues you uncover, provide business rationale and the financial implications of your initiatives. It’s particularly important to be transparent about both progress and challenges. You don’t need to be perfect; you can and should talk about setbacks as well as progress. This balanced approach can help counter accusations of “virtue signaling” or greenwashing.

4. Engage proactively with key stakeholders.

Don’t wait for criticism to respond. Proactively engage with investors, employees, customers, regulators, and communities to understand their priorities and concerns. Use these insights to refine your strategy and get ahead of potential pushback. Consider scenario planning to prepare responses for various stakeholder reactions. And remember, reporting isn’t communicating. You need a strategy to talk about the important issues all year long.

5. Know the difference between a critic and a cynic.

Criticism can be a good thing, especially when it’s from your key stakeholders. It can help you understand your business’ blind spots. On the other hand, a cynic is someone who is diametrically opposed to your existence, no matter what you do. Or an activist investor with their own agenda. There’s a distinct difference between the two and while you can glean a greater understanding of what you shouldn’t be doing from both, it’s important to react to only to responsible criticism.

In the current political climate, you may encounter more cynical voices. It’s important not to let these drown out constructive criticism or deter you from your sustainability goals. Instead, use valid critiques to strengthen your approach and messaging, always tying your efforts back to long-term business value and risk management.

The Takeaway

Despite the current ‘sustainability recession’, the fundamental drivers of sustainability haven’t changed. Climate change continues to pose real threats and costs to businesses, clean technology is becoming increasingly cost-effective, and demographic shifts are reshaping talent pools and customer bases. Companies that continue to prioritize sustainability during this challenging period may find themselves better positioned when the next wave of sustainability focus inevitably arrives.

It’s never easy to address challenging issues in politicized times. But build trust through transparency. Using even one of these strategies, you’ll establish better communication and build trust with your stakeholders, and with luck, reach a few honest critics.

For more on effectively communicating your sustainability efforts, see our article: 7 Strategies for Effective Sustainability Communications.

Ideas On Purpose Can Help  

If you’re having trouble figuring out how to communicate tough topics to your stakeholders, consider engaging an expert. Communication, especially during challenging times, is integral to the work we do. Check out some of the stakeholder-pleasing sustainability reports and impact communications IOP has created — and email us to get in touch if you need help with yours.

Updated August 2024
Photo by Annie Spratt on Unsplash