How ESG improves brand health and purchase preference.
Deputy Managing Partner
Deputy Managing Partner
The need for business leaders to do more on ESG (Environment, Social and Governance) in addition to driving the traditional commercial shareholder value imperative has grown steadily in recent times.
Much has been written and observed in relation to ESG, but many organisations are still relatively early in their journey to fully understand what ESG means for them in a practical sense. Organisations are simultaneously digesting the wide and growing expanse of ESG as an overall topic whilst also seeking to translate this into specific areas and actions under E, S, and G, which are appropriate for them to focus on.
Leaders within organisations are also trying to ensure that the investment and effort that goes in to ESG creates value for all stakeholders, from colleagues and staff, through to customers, communities and shareholders. As with any investment that leaders make, it must be justified.
At Genesis, we have sought to contribute to this discussion by conducting research to better understand the dynamic of ESG as a potential driver for business performance, and to understand what dimensions have the largest positive impact in areas such as improving brand equity and consumer purchase preference.
The research consisted of a nationally representative survey of 1,000 Irish adults deep diving into a wide range of attitudes. motivations and perceptions related to ESG, and also looked at how a range of well-known businesses operating across 7 specific sectors perform.
Firstly, and perhaps unsurprisingly for those who have been paying attention to wider ESG thinking, the research shows that businesses who focus on ESG do see an uplift in reputation and purchase intent.
However, our research goes further and identifies which ESG activities move the dial most significantly among consumers in terms of increased brand equity and increased purchase preference. These cluster under 5 ESG pillars as follows:
Fair and ringfenced profit: this includes paying a fair share of tax on profits, and ringfencing tangible share of profits/reserves to support good social causes and/or ringfencing profits/reserves to increase the pay and benefits of its workforce.
Fair to suppliers and communities: This is all about focusing on being fair and equitable in dealing with supplier and vendors, but also about being fair and supportive towards the local communities where organisations operate and run their business.
Inclusive and fair workplace: fundamentally about being an employer that treats its employees well but also an employer that promotes and supports diversity and inclusion in the workplace.
Organisational ESG culture: this is about sincerity of the organisation, its leadership and people to wanting to do business in a way that is more sustainable and that they are ethical and principled in how they go about their business.
Practical actions and interventions: this has two important dimensions, firstly making real changes to reduce the carbon footprint of the business itself, and secondly giving customers options and solutions for them to make more climate friendly and sustainable choices.
The research gives direction and clarity on ESG activities that drive brand health and consumer purchase preference, but the overall connective thread through the findings and these specific pillars is the need for an authentic and honest approach to how organisations show up in the ESG arena. Purposeful organisations, or those with clear purpose at the heart of their organisation are best placed to have clarity on which of these ESG pillars fit with what they stand for and believe. This flows through to meaningful behaviours that have impact in ESG terms, but also in how they are perceived and received by consumers.
Deeper dive by sectors, brands and consumer segments:
The research asked Irish adults to think about ESG performance of 36 well known businesses operating in Ireland across 7 sectors. The sectors covered are:
We have a measure of how well-known brands in these sectors are perceived to perform on the criteria ESG criteria above and how they are performing versus peers.
The research also segments Irish adults based on their attitudes towards a wide range of ESG issues, with 6 specific segments emerging below. These segments are useful in understanding more about how Irish people think about ESG.
If you are interested in finding more about the ESG drivers above, how sectors and brands perform, or our ESG segments please get in touch directly:
Mark Nolan: firstname.lastname@example.org