A relatively recent phenomenon, the ESG agenda has gained notoriety, attracted companies, and brought focus on the urgency of caring for the planet, human relations, and business with more attention.
As if by practicing ESG, reputation was guaranteed.
The harsh truth is that sales staff often failed to realize that when it came down to it, the deciding factors for closing deals were different.
Perhaps (or mainly) because of this, ESG started to be affected by a variety of factors, including the difficulty in making it clear that investments were yielding practical results capable of affecting the bottom line.
In a sort of ideological falsehood, much greenwashing was practiced and perceived as such. This resource used by companies to defend a sustainable profile since infancy with the disclosure of practices not so legal or concrete. There were geopolitical effects, such as the setback in the adoption of clean energies in Europe due to the war in Ukraine and the backlash from farmers facing blockades by more demanding buyers. Research published by the newspaper Meio e Mensagem brought to light the difficulty of marketing executives in dealing with the topic. Among the 106 CMOs interviewed, 90% recognize its relevance, but only 20% claim to have in-depth knowledge of the discipline.
The brand image is the main motivation for the group (76%), followed by the positive impact on society (74%) and reputation for the brand (63%). Trailing behind are more direct impact issues, such as talent attraction and retention (37%) and stakeholder pressure (31%).
Concern for image can cause distortions, such as brands responsible for environmental tragedies suddenly wanting to personify Artemis, the Greek goddess protector of nature. The positive impact for society is a diffuse concept and, in fact, is ‘inside’ what constitutes reputation.
It doesn’t help much for an investor to know if the brand sponsors the local community football field, just as it does for a consumer to know if the company is transparent in the stock market.
Reputation is built on the correctness of day-to-day actions. And many times, confusion also arises here. Many brands linked to the end consumer have suffered reputational scratches amplified by the increasingly digital world, caused by issues that touch on ESG, such as mistreating customers with a certain profile (the S, for social), or harming the environment (the E, for environment).
Let’s speak plainly: there is an impact with implications on sales even more directly – external pressure. In addition to end consumers, large companies, pressured by the capital market and other factors, begin to demand more ESG-compliant behavior from their suppliers. And this is where the greatest reputational demands come into play, supported by concrete actions.
Giants of Brazilian agriculture have started to face demands from European customers. Does it help to say they are green inside and out? Not at all. Misconduct is proven by instruments that even include satellite images provided by third parties.
There are not a few practical cases that require answers. The reputation built step by step on solid foundations (ESG being one of them, among many others) is one of the main pillars for likewise results. Apple can sell products at prices above average not only because of the quality of its products but also because of the reputation built over decades. As we said before, good reputation helps sell more and better and contributes to perpetuate favorable results.
