The sustainability script has changed

There has been a marked shift in how people discuss sustainability. Current regulatory, political, and economic factors are reshaping established concepts. Reading the room is essential in communication, and corporate narratives must demonstrate an awareness of the evolving expectations. Here are three ways the script is changing right now.

Environmental: Impact vs box-ticking

The wave of sustainability regulations is receding. Businesses have been quite vocal about the complexity of the rules, high compliance costs, insufficient investor engagement, and tight timeframes. It was too much, too soon. Their argument is that red tape renders them less agile and competitive.

Over the past two decades, the EU has struggled to keep pace with productivity growth compared to other major economies. The recently introduced EU Omnibus Simplification Package, which aims to ease the burdens associated with the CSRD, CSDDD, and the EU Taxonomy, underscores the ongoing debate regarding the continent’s economic and environmental future.

Historically, the EU and the UK have employed a dual approach to enforcing sustainability regulations. The “carrot” was a better understanding of non-financial risks and opportunities, which is essential for informed sustainability strategies. The “stick” was the threat of substantial legal penalties, which heightened the significance of sustainability on corporate agendas.

Many argue that the regulatory backwash is short-sighted. Reporting and compliance, once handled by budget-strapped sustainability teams, were shifting to departments such as legal and audit, enabling sustainability professionals to concentrate on strategic initiatives.

Communicators should recognise that the narrative is evolving. The numerous acronyms are cumbersome and misaligned, and UK firms with international operations face difficulties navigating an overly complex regulatory landscape.

Rightly or wrongly, there is a growing consensus among audiences that compliance can hinder authentic ESG efforts and limit the resources necessary for achieving genuine impact. This uncertainty challenges established narratives.

 Social: Meritocracy vs DEI

The phrase “meritocratic culture” is a mainstay of corporate narratives, much like “diversity, equity, and inclusion.” These concepts often intersect on websites and annual reports. Until recently, the prevailing argument was that a meritocratic culture was essential for sustaining a competitive business. Diverse teams are better at problem-solving, enhance skill transfer, and are more impactful. Corporate channels flaunted DEI policies, arguing that if merit is gender-neutral and colour-blind, positive-discriminant policies are necessary to address unconscious bias.

However, the rhetoric is becoming increasingly anti-woke. Companies are now reversing DEI policies, which are seen as contrary to individuals advancing based on their capabilities. Any form of discrimination, even positive, hampers businesses and, as a ripple effect, the economy.

Most companies share a common goal: to create excellent workplaces where individuals can thrive, thus ensuring the business’s success. However, defining excellence and evaluating workplaces is challenging. Employees perceive the drivers of performance to be a skilled team, stable leadership, and reward. For leaders, however, the key factors include operational excellence, prompt decision-making, and attracting the best talent.

Pitting DEI against meritocracy, implicitly or accidentally, is a trap to avoid in future-focused performance narratives. People are anxious that eliminating diversity policies could reawaken biases that society is striving to eradicate. Audiences expect companies to uphold fairness “and” meritocracy. Narratives are evolving accordingly. The script should demonstrate commitment to DEI transparency and data-driven performance decisions.

Governance: Insight vs trust

It had been a long time coming. The updated FRC Corporate Governance Code now requires governance reports to emphasise board decisions and outcomes in the context of strategy and objectives. The general idea is that stakeholders want to see strategic stewardship in action, and corporate communication should exemplify this.

Companies’ stewardship, accountability, and assurance become increasingly crucial during challenging and unpredictable times. The public holds little economic optimism and sees business as the only institution capable of bringing about positive change. Society demands that organisations have a strong purpose. Financial Reporting Council CEO Richard Moriarty highlights how businesses are called upon to improve the outlook, help create prosperity and protect the planet and society.

This backdrop drives companies to provide more information about the strategic nature of their decision-making. Governance reporting is becoming more comprehensive and analytical, akin to strategic reporting. This changes how companies can and should talk about stakeholder engagement. An empathetic business has always been a hallmark of trustworthiness, and stakeholder-related communication has always portrayed businesses as close to those impacted. The emphasis is now shifting to how engagement delivers insight.

Demonstrating mutually beneficial partnerships is considered more substantial and more sustainable. Building trust is now less about being friendly than showing that you integrate what stakeholders say into your strategies.

Sustainability stories are expected to acknowledge the big picture and show how firms add value. The picture, however, isn’t static. Yesterday’s truths are being challenged. Communication should respond accordingly.

Get in touch

If you’d like to discuss this, or any other subject, please get in touch with Richard Costa, Consultancy Director, at richardc@gather.london

We’d love to know what you think.