A shift from centuries of shareholder capitalism to a more transparent one of stakeholder capitalism, with businesses having to make and meet public commitments across the breadth and depth of the ESG spectrum, was never going to be without its blind spots.
And while it was political leaders (well, one in particular) in the headlines this week over risks that came back to haunt reputation, the prospect of ESG-related risks to corporate reputation bubbling up, damping down or blindsiding communicators from seemingly nowhere is never far away.
Reputation has always had its blind spots, because people are human. Even if you adjust your focus to pay more balanced attention to your reputation across not only the positives and negatives, but the neutral and emerging issues, there will invariably still be things that you didn’t think were that important. But as the external environment changes, and as reputation evolves over time, the unforeseen can always creep up on you.
Visibility is crucial then. As those who joined this week’s PRmoment event on ESG risk heard, communications increasingly plays a role in a company’s ESG performance, so being able to foresee potential damage to reputation around ESG factors has grown in importance too.
The challenge tends to lie in having a framework within which to get to grips with those risks and manage them as they change. The good news is that as ESG investing has gained ground, so too have attempts to standardise definitions of ESG factors. At least communicators now have a way of gaining clear sight of the issues in hand, because they know which issues to look at.
The bad news is that addressing blind spots by tracking your reputation against those factors frequently, comparing your strengths and risks with others’ reputations and understanding how all of that plays out amongst specific audiences or stakeholder groups is a mammoth task.
It is a big commitment, but as ESG increases the stakes of reputation, being able to gain that level of visibility can also be a big step forward for communications because it can enable the value of what we do to promote and protect reputation to be better understood at the top of the company. And as methods improve, much of it is becoming possible.
Increasingly, businesses are looking to apply more rigour to how they understand ESG reputation risks, identify what matters most and unearth the blind spots. Track that over time, and there is the potential to spot forthcoming problems as they develop – not quite eyes in the back of the head, but the promise of an early warning signal.
As more ways of doing that start to emerge, expect communicators to be fielding more requests to gain visibility over reputation blind spots, and also sharpen the focus on the factors that can best build a positive, differentiated reputation.
This is the first of a new weekly ESG column on PRmoment. The column will review the biggest ESG stories of the week, from a communications perspective.
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