Over three years ago, I wrote an article reflecting on a piece of research Cognito conducted on media analysis around ESG investment. This looked at how some of the world’s biggest asset and money managers have communicated about ESG investment and how this is evolving.
While we drew on many different insights, one resonated the strongest: that media coverage of ESG investment had exploded.
That was then. A simple analysis on Signal from 1 August 2023 to 31 August 2024 shows that mentions of “ESG investment” are actually now decreasing – with a drop of 17% in the past six months, versus the previous six months.
Why? Yes, the backlash on ESG politically is a concern for many investors who are stepping back from how they communicate about ESG investing.
But that’s only part of the story. The broad topic of ESG investing is being unpacked and reshaped by those providing the finance.
I want to talk about how the narrative around the “E” – namely climate investment – is evolving. Not just from the perspective of the asset management sector, but also factoring in private markets, impact investors, multi-laterals, the private sector, governments, banks, and many others operating in and around capital and climate finance markets.
This is in the face of real market and communications pressures from many sides. The need to do more, the need for greater quality, integrity and accountability, the need for wider and deeper finance, the reputation dangers of being caught in the crosshairs.
Our own sustainability practice at Cognito has continued to evolve and expand its remit. We still work with traditional lenders and asset managers at the sharp end of financing the climate transition, but also many others, including NGOs directly involved in climate finance, carbon market practitioners, data businesses and professional service firms.
From our work across many different communications channels, and from helping clients stand out in the melee of noise and communications moments around climate transition, here are some learnings on how the communications of climate investing is changing:
- The need to jump from talking about commitments and targets, to action
To communicate effectively and authentically about the climate transition, you need to demonstrate the concrete steps you’re taking to combat climate change. The brands that make tough decisions, and showcase investments and solutions with actionable and measurable plans will stand out in the crowded climate communications space.
- Strive for greater and deeper levels of financing
Climate transition is all about finance – and we don’t have enough. Stakeholders and audiences want to know how green initiatives are being funded, how and where we can raise more finance from, and that these essential climate finance channels are operating with transparency, integrity, and efficiency. As communicators, that presents a significant challenge and an opportunity.
- The role of private markets
Related to this point, many have cited the importance of private capital, including private equity and more traditional asset managers diversifying into this space. These organizations can provide equity and debt financing to their portfolio holdings to allow them to transition their businesses, and many are well-entrenched in financing (and owning) renewable energy businesses. Governments around the world are expected to draw on private capital to bolster national net zero strategies. From a communications standpoint we expect the noise to explode – we are running research on this very topic due to be published in Q4 2024.
- The pivot to nature
The World Bank found in 2021 that the collapse of a handful of services provided by nature and biodiversity could result in a decline in global GDP by $2.7 trillion USD per year by 2030. And boardrooms are starting to get to grips the concept that healthy nature, is essential for healthy businesses to thrive, with many now reporting on nature-based risks through the Taskforce for Nature-related Financial Disclosures (TNFD) guidance. While TNFD reporting is not mandatory, it is expected that the first mandated reporting could start in 2025, and many sustainability reporting standards such as the EU’s Environmental and Sustainability Reporting standards (ESRS). There will be a premium placed on those investors and businesses that are ahead of the curve and demonstrate – and communicate – a real comprehension of their exposure to nature and what they are doing about it.
- Scrutiny is fierce
Greenwashing is still a massive issue – holding back demand in carbon markets and stifling corporate ambition and action to do more in the face of reputational concerns if they get called out for missteps or miscommunications. Some governments have even brought in legislation to punish and prevent any misrepresentations of climate progress. Communications need to play a central role in corporate strategy planning around sustainability – to ensure that all audiences, voices, issues, channels and the regulatory landscape have been considered.
As we approach a critical moment in the climate calendar – with COP16 in Cali, Columbia, COP29 in Baku, Azerbaijan, and the Desertification COP in Saudi Arabia all taking place over a two-month window – we expect all of these themes to play out.
Clear, authentic, and effective communications with clear calls to action remains the name of the game for those organizations looking to stand out.
Charlie Morrow is Cognito’s Global Head of Sustainability
