How Brands Should Communicate about ESG to Consumers

ESG – environmental, social, and governance – isn’t just a corporate buzzword. While investors increasingly use ESG to judge companies beyond the balance sheet, consumers are also watching closely, letting a company’s actions shape their buying decisions and brand loyalty.

Yet, when companies roll out ESG initiatives, they face a fraught landscape. Not only have efforts become politically polarizing in recent years, but they also require a delicate balancing act: communicating their efforts clearly to both investors and consumers, without making it seem like publicity is the main motivation.

Social media is a key source of ESG information for consumers

Companies that enact ESG initiatives typically want credit or recognition from consumers for doing so, especially given the importance that shoppers say they place on brands being good corporate citizens. However, despite saying they pay attention to brands’ actions, overall awareness of ESG initiatives is low, with less than half  of U.S. adults saying they have seen, read or heard about them in the past month across all major consumer categories.

Those who have seen, read or heard about an ESG initiative are most likely to have done so via social media – and there is little difference between the type of social content, including ads, posts on brand-owned profiles or posts from influencers and other creators. This suggests that consumers don’t really delineate between different types of social content when it comes to learning about ESG.

The fact that brand-owned media channels like newsletters, store signage and packaging are comparatively low as sources of information suggests that consumers are often not seeking out information proactively, and rather are more likely to come across it when engaging with various media types for other purposes. 

However, consumers vary across demographics in terms of not only where they have learned about these initiatives, but also where they want to learn about them.

Websites are a preferred source of ESG information overall, but generations differ 

Despite having mostly heard about efforts through social media, U.S. adults overall are most likely to want to learn about a company’s ESG efforts from a brand’s website. But generations differ greatly, particularly when it comes to communication via social channels. Half (50%) of Gen Zers and 46% of millennials say they prefer to learn about companies’ ESG efforts via social media, while only 35% of Gen Xers and 21% of baby boomers say the same. Younger generations are also more likely than the older ones to look to social media ads.

While many brands leverage their direct communications with consumers such as email and newsletters to share information about corporate initiatives, this approach is among the least preferred by all generations, suggesting that companies should utilize other channels to disseminate this type of messaging.

No matter the channel, brands must consider consumer expectations of corporate priorities  when crafting messaging around ESG initiatives. The generations are all aligned on the expectation for companies to be people-centric, prioritizing customers first overall in their ESG initiatives, followed by employees. However, when it comes to their perceptions, Gen Zers and baby boomers are more likely than millennials and Gen Xers to say that, in general, companies prioritize profit over everything else. A combination of this nuance plus the differences in preferred method of communication can inform consumer and channel-specific strategies for ESG messaging.

Preferences of high-income consumers reflect outsized engagement with ESG messaging

Generational differences aren’t the only demographic considerations brands must be aware of when it comes to ESG information preferences. In general, higher-earning consumers are more likely to want this communication digitally, like through a brand’s website, social media or email. Middle and low-income consumers on the other hand are nearly as likely to prefer more traditional methods of communication like television ads and physical stores as they are digital means. Across the board, low-earners are less likely than others to classify any particular channel as a preference.

This is likely due to lower interest and engagement with what brands are doing in the ESG space. They’re less likely than middle and high-earners to say they pay close attention to brand actions ranging from environmental programs to worker treatment and ethical partnerships, and are also less likely to say they’ve seen, read or heard anything about corporate ESG initiatives recently.

But that doesn’t mean brands should ignore this consumer group when it comes to ESG communication. They may be less likely to boycott or “buycott” than other income groups, but even so, more than 1 in 5 (21%) said they have avoided purchasing with a company in the past year because of ESG issues, and 20% have specifically supported a company that was aligned with their ethical stances. While their purchase priorities may often be more functional than emotional, targeting ESG communication via their preferred channels may help to raise awareness of brand efforts and encourage engagement.