Why Do Sustainability Leaders Struggle to Communicate Value?

Almost any way you slice it, data shows that a consensus has emerged in terms of consumers and business leaders understanding the importance of sustainability. Yet getting internal and external buy-in on corporate sustainability remains an uphill battle.

Most people globally recognize climate change as a serious threat to humanity, according to Our World in Data. And a majority of people in the world's seven largest economies think businesses should focus on tackling climate change as much as or even more than economic challenges, according to an Ipsos survey commissioned by Mars. 

In many respects, business leaders agree. Already, 51% of global CEOs say that changing weather patterns has caused or is causing them to plan operational changes, according to Gartner. And over two-thirds see sustainability as a growth opportunity.

Similarly, in an international Morgan Stanley survey, 85% of sustainability decision makers at companies with over $100 million in revenue see sustainability as a value creation opportunity.

With consensus like this, you would think that getting budget for sustainability strategies is easy and that companies could roll out almost any sustainability initiative to a welcoming audience. However, that hasn't been the case for many situations.

In the Morgan Stanley survey, 41% say they're not meeting expectations for progress on their corporate sustainability strategies.

A big part of the problem could come down to communication.

"What we have is no real agreement on what the word sustainability encompasses. And even if we can reach some type of understanding about that, there's no real agreement over which element of sustainability is a bigger priority than others," says Michael Kraten, director of accounting program initiatives at the University of Houston's C.T. Bauer College of Business.

"If there's no agreement at all over what the word even means, and what's important within it, then it can be very, very difficult, almost impossible, to find any consensus as you try to explain what you're trying to do to other stakeholders," he adds.

And because sustainability can be somewhat vague, it's hard to always draw straight lines to value creation.

"I believe companies are not making the necessary connections to the indirect value that sustainability drives. The direct value, such as reduced operating costs from increased efficiency, reduced waste, reduced emissions, reduced water use, etc., is tangible. However, the indirect values, like driving innovation, attracting and retaining employees, and enhancing brand loyalty, are harder to measure and connect directly to sustainability efforts," says Josh Prigge owner and founder of sustainability consultancy Sustridge, as well as North Star Carbon Management, a carbon accounting and management firm.

With sustainability being hard to define and connect to indirect value, companies are also worrying about getting backlash when attempting to talk about or launch sustainability efforts. Rather than boldly lay out their sustainability strategies and talk about how that can create both financial and social value, many companies are instead retreating.

The recent phenomenon of greenhushing means "companies are hesitant to publicize their sustainability efforts for fear of being accused of greenwashing or missing public targets that they set. Recent litigation against companies for deceptive sustainability claims has heightened this apprehension," said Prigge.

This fear has created a contradiction. A South Pole survey finds that 81% of companies think communicating on net zero goals helps their bottom line, yet a majority are reducing their climate communications.

Overcoming Communication Challenges

Despite the difficulties in communicating the value of sustainability, there are ways that businesses can do a better job in ways that ultimately help their finances along with the planet.

In many cases, that starts with using established standards to speak the same language on sustainability and have a more tangible roadmap to follow.

Although there are several different types of sustainability standards, there is much more consensus today than five years ago on which ones are relevant, says Kraten.

Ones like the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) Standard, and the UN's Sustainable Development Goals (SDGs) all provide useful standardization about which metrics to use, notes Kraten.

The exact standards to use depend on what's relevant to your organization, he adds, but in general it can help to have a common starting point.

In addition to using more shared definitions and metrics, being more open about sustainability journeys can be helpful. In many cases, consumers aren't expecting perfection. They understand that goals like transitioning to net-zero emissions or more compostable packaging often involves a process that can not be completed overnight.

So rather than boasting about unattainable goals or inflating the progress you're making, it can help to be honest about where you're at.

"It is crucial for companies to be authentic and transparent in their sustainability communications. By clearly articulating their material issues, sustainability goals, progress, impact, and even where they fall short, companies can build trust with stakeholders and avoid the pitfalls of greenwashing allegations," says Prigge.

For example, in an interview for another Carbon Neutral Copy article, Daily Crunch Snacks CEO and co-founder Laurel Orley explained how the company has been able to move to post-consumer recycled material for its snack packaging, but moving to compostable packaging has been challenging logistically and economically. 

Rather than that admission being viewed as a shortcoming, the reaction to the article among sustainability enthusiasts — anecdotally, at least — was admiration and understanding.

This type of openness can also apply internal communication strategies. Being transparent with employees about sustainability targets and progress, along with obstacles, can then make it easier to tap into the indirect value that sustainability can offer, such as by building employee engagement and facilitating innovation.

"Internally, we've found that engaging employees through clear and consistent messaging about our sustainability goals and achievements fosters a sense of pride and ownership. Initiatives such as workshops, sustainability training, and involving employees in sustainability projects have been successful," says James Beveridge, VP marketing at The Sustainable Agave Company.

Risk Management vs. Value Creation

When communicating on sustainability, some companies feel that framing the issues as a matter of risk management is more palatable to a wider audience. In the investing world, for example, environmental, social and governance (ESG) factors are often portrayed as risk management issues. Similarly, climate disclosure regulation is often framed as a way to disclose risks to investors.

For example, California's landmark corporate climate disclosure bills SB 253 and SB 261 both emphasize risk.

"Mandating annual, full-scope GHG emissions data reporting…will inform investors, empower consumers, and activate companies to improve risk management in order to move towards a net-zero carbon economy," notes the text of SB 253.

However, if companies solely focus on risk management when talking about sustainability, they could be missing an opportunity.

The Morgan Stanley survey finds that 53% of sustainability leaders see sustainability as primarily a value creation opportunity, vs. just 15% who see it as primarily about risk management. Granted, this view is less popular in North America, but 43% here still see sustainability as primarily about value creation.

"Sustainability is definitely a significant value creator for us. One of the top ways sustainability creates value for us is through brand differentiation. Consumers today are increasingly conscious of and interested in the environmental impact of their purchases, and by offering products made from upcycled agave waste, we stand out in the marketplace as a responsible and innovative brand," says Beveridge.

Yet to get more buy-in, sustainability leaders may need to work more on communicating these types of positive, brand-building values that sustainability can bring.

"Many American companies might feel that anything that doesn't directly contribute to the bottom line would be wrong for business. However, I think maybe they haven't been educated on the indirect value that sustainability has," notes Prigge.

Granted, it's not easy to draw straight lines when it comes to communicating how sustainability supports indirect value creation, as the name implies. But knowing your audience can help. 

To calculate value, "the essential model is assets minus liabilities, which if you think about it in a conceptual way, means you're trying to optimize the good and minimize the bad," says Kraten. That can be difficult to measure when bringing personal values and morality into the equation, he notes. But there are ways to make the calculations more concrete and bring value creation and risk management together.

"If I want to reach more customers and sell more of higher-quality, higher-sales-price items to them, that's creating positive value," says Kraten. At the same time, adjusting operations in response to environmental risk could mean lowering insurance premiums, he notes, thereby lowering the liability side of the equation.

In other words, the two work together, like the gas pedal and brake in a car, he says. 

"The more that you can raise the awareness of people to both the gas pedal and the brake and remind them that both have to be working interchangeably and simultaneously, the more successful the car will be in getting you to your destination, and pulling back away from that metaphor, I think the more successful those particular companies are going to be in achieving their own goals," adds Kraten.

Disclosure: Our parent company, JournoContent LLC, has clients involved in sustainability-related areas, among others. The owner of Carbon Neutral Copy, Jacob (Jake) Safane, has investments in sustainability-related companies, among others.

As such, conflicts of interest related to these and other investments/business relationships, even if unintended, may exist at times. Please email info@carbonneutralcopy.com if you'd like further clarification on any issues.