Is ESG Philanthropy?
Environmental, Social and Governance (ESG) has been the leading approach to corporate sustainability for a number of years. And the reason is clear: it works. Companies that successfully implement and manage ESG strategies perform better on multiple metrics, including overall profitability, attraction and retention of talent and net promoter scores. Doing good is good for business. However, there’s still a lot of confusion out there. Many people who don’t live and breathe ESG aren’t aware that it differs vastly from corporate philanthropy.
If you have an ESG strategy, read on, because there’s a good chance that this confusion has a home with your most important stakeholders, including your clients and employees. And if you’re confused yourself, you’ve come to the right place! Let’s clear a few things up.
What is Corporate philanthropy?
Corporate philanthropy is any activity that raises funds for a charitable cause – it could be writing an annual cheque to the children’s hospital, organizing a fun run, or a subsidized employee giving program.
Corporate philanthropy is firmly rooted in Corporate Social Responsibility (CSR), a traditional approach for organization’s to do good and it may be the cause of the confusion out there. And who could blame people – there have been so many different models for good corporate citizenship over the years. Ultimately, though, philanthropy is a relatively one dimensional approach. It might form part of an ESG strategy, but it’s never the full picture.
What is ESG?
So that leads us to the next question – what is ESG? Environmental, Social and Governance is a holistic approach that looks at every aspect of a business’s operations with a sustainability lens. It considers everything from working conditions for employees, to supply chain transparency, to environmental impact. It’s a model designed to help businesses do the right thing across the board, not just because it’s good for business (although it’s that too), but because the business is driven by its purpose and values to live up to the standards it has set for itself.
Can ESG and Corporate philanthropy coexist?
Corporate philanthropy has developed somewhat of a contested reputation, having been used by more than one nefarious organization or individual to launder a blemished image. Consider the Koch brothers, architects of some of the most insidious contributions to climate change, who donated billions to the arts. Or Jeffrey Epstein, who funded MIT’s media lab. Writer Anand Giridharadas has even argued that all philanthropy is “fake change”.
Here at LittPark, we’re not so pessimistic. We believe that there is still a place for philanthropy as part of a wider ESG strategy, and that it can have an impact beyond the value of the cheques you write. For example, an employee giving strategy can help to cement a culture of generosity and caring, a fun run can help to increase awareness for a cause or create a sense of belonging. The key thing is that philanthropy contributes in an authentic and meaningful way to the communities in which your business operates.
Communicating your ESG strategy
For your ESG strategy to deliver the benefits you expect, you need to tell people about it. Seems obvious, doesn’t it? However, many organizations under-communicate their ESG activities – maybe because they feel uncomfortable talking about the good work they’re doing, or maybe because they’re not sure how to integrate ESG communication into their wider communication planning.
Whatever the reason, it’s important to realize how valuable communicating your ESG strategy is. In our hectic lives, with so many demands on our attention, it’s almost impossible to over-communicate when you have something important to say.
Why does it matter so much? Because your most important stakeholders want to know that you’re a sustainable business. They want to work for, buy from, supply to a sustainable business. But you need to show them how you’re achieving this, to help them understand what sustainability looks like for you, and to separate your ESG work from basic philanthropy, which may invite cynicism on its own.
The best way to do this is to regularly tell authentic stories of how you are making an impact thanks to your ESG strategy, and be open about your journey (and the occasional stumble). Using a variety of channels and approaches will reinforce your message, and boost the number of people who want to help you achieve your sustainability goals.
