Direct communication with customers through branding and other marketing materials can be a fraught area. The Federal Trade Commission (FTC) first issued the Green Guides in 1992, particularly in response to the widespread use of terms such as “environmentally friendly.” The early guides prohibited the use of these broad claims including “good for the earth,” “ozone-friendly,” “environmentally friendly,” and “green.” Many companies had to re-tool and learned to put the emphasis on relative terms – being greener or more sustainable or less toxic – while also specifying the environmental improvement in that product or package. The guides were last revised in 2012 and now summarize principles that apply to all green marketing claims, how to substantiate them, and how to avoid deceiving consumers. The 2012 Guide also clarified the use of specific terms such as “non-toxic.” On this particular phrase, for example, the Green Guides note that, “…marketers making non-toxic claims should have competent and reliable scientific evidence that the product, package, or service is non-toxic for humans and for the environment, or should clearly and prominently qualify their claims to avoid deception.” Another common term, “recyclable,” was allowed if the product or package met certain conditions. “When recycling facilities are available to a substantial majority of consumers or communities where the item is sold, marketers can make unqualified recyclable claims. The term ‘substantial majority,’ as used in this context, means at least 60 percent.” Any questions about appropriate language on a label need a legal review, which often catches improper language. On this point, I’ve most often seen competitors bring violations to the attention of the FTC, rather than the FTC leading enforcement. But, once armed with research from competitors, the FTC tends to quickly issue notices of violations and subsequently impose fines. (Note: The full guidance can be found in the federal register: https://www.ftc.gov/sites/default/files/documents/federal_register_notices/guides-use-environmental-marketing-claims-green-guides/greenguidesfrn.pdf)

Think like a lawyer. By that, I mean be precise in the initiatives underway or completed, the resulting impact, and quantify the outcomes whenever possible. Document claims with strong evidence. If quantifiable metrics aren’t easily obtained, quotes from third parties verifying impact, or customers acknowledging benefits, can act as substitutes. Another closely related risk is failing to communicate ESG information with the proper context. As most companies aren’t static, ESG data needs to be normalized by revenue, units, weight, or volume. The appropriate metric for normalizing is very case-by-case. The Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI) are two good resources for sorting through different options of what “activity metric” to use. Effective metrics often rely on percentages or calculate an intensity score. Of course, if plants aren’t running at full capacity, it can hurt intensity metrics because emissions, waste, or energy consumption become normalized over fewer products, and the carbon or other metric per unit of product can go up. Unfortunately, that’s simply unavoidable. On climate, the field has reached the point that managing climate impacts exclusively through offsets is risky for communications. Ideally, a company is communicating a climate strategy that represents a mix of efforts to reduce energy use, shift energy purchases towards renewables, and then use offsets to make up the difference. The one exception is scope 3, where a company can’t directly control their carbon. For example, firms that do a lot of travel for business can’t control the carbon footprints of airline tickets, so offsets make sense in this context.

It’s critical to understand which issues are important to different stakeholders. Materiality assessments, which define the most material ESG issues for a company, integrate feedback from investors and customers so that a company has a 360 view of what issues are most important to stakeholders. At the same time, sustainability messaging should represent the individual company’s viewpoint on how its initiatives, new products, or services will add value. It’s a balancing act. For investors, I think messaging should highlight what is most distinctive about a company’s efforts, and how they address a need in the market. Data that demonstrates customer demand for sustainability attributes is useful, but rates of revenue growth associated with more sustainable products or services is even better, provided traditional products or services aren’t growing as fast. Investors also want to hear about existing or potential breakthroughs and how those solve customer problems. Companies may even work to educate investors on why certain sustainability initiatives add value, or might address an emerging issue. The ability to point to examples of how a company is a first-mover, or ahead of its competition will be useful in investor calls. Similarly, if companies are active members of industry-wide sustainability initiatives, this demonstrates a certain level of maturity in managing key ESG issues and should be highlighted to investors. Sustainability communications geared toward government organizations or civil society, require a different approach and can be more effective in the context of dialogue and exchange of ideas. Sometimes companies make assumptions about what’s important to these stakeholders when it’s preferable to ask directly. Conferences, multi-stakeholder dialogues, and so on are all places where these conversations can take place and be used as key input to shape communications.

To effectively partner with other departments requires three key elements in my view. First, clear messaging on goals – what issues and/or goals is the company working towards? Defining material issues and key focus areas that are core to the business is the responsibility of the sustainability leader. Taking steps to narrow focus on 3-5 impactful areas—from what’s often a long list of ESG issues and initiatives—is critical to support other departments. Second, each focus area needs authenticity – what is the company doing, how is it measuring progress, and what wins can be discussed? All of that material needs to be teed up for colleagues so they have a clear message. Companies ideally have ESG KPIs to provide concrete evidence of progress. The most mature companies have an ESG Dashboard updated annually. (Note: in my view, annual KPI tracking is a good match for ESG initiatives and keeps the workload focused on action steps, not constant data collection.) In terms of communication material, fit for purpose is important here. Sales teams will probably need at least a one-pager highlighting new products or services, ESG wins, and KPIs. Marketing may want to jointly develop language that supports a brand without violating FTC guidelines. Finally, as the SEC focuses more and more on ESG data, sustainability leads will need to make a decision on what data needs third-party verification or detailed internal verification and auditing. Sustainability leads should advise CFOs and CEOs whether any quantitative information can be used in an SEC filing or investor deck during a quarterly investor call. Short of verified data, investor communications can include a discussion of focus areas, goals, types of KPIs, and specific wins.

All existing channels of external communication can be reviewed to define opportunities for incorporating sustainability information. Public companies should be issuing annual sustainability reports because rating organizations use this information when compiling their scores, and according to PWC, 97% of all public companies now issue sustainability reports. SEC filings are also becoming increasingly important, as are investor relations more broadly. For all companies, the usual channels of website, social media, etc. are already in use, but media coverage can be invaluable as an outside view for sharing successes as well. I also see key conferences, such as GreenBiz, VERGE, or BSR as important channels. In recruiting, sustainability can be very effective in attracting talent. Overall, I’ve observed that communications and marketing teams will take advantage of sustainability wins; the challenge lies in the CSO’s role to develop the right action plans and the best metrics for communicating progress.