2023 proved a tough year for environment, social and, governance (ESG), as organisations, boards and investors pulled back from a range of commitments previously viewed as imperative.

Political, social and economic headwinds, fuelled by a stream of media reporting on greenwashing, environmental disasters, data leaks, and record profits, have stirred an “anti-woke” backlash.

In the face of this eroding trust, the risks of pursuing and publicising an ESG agenda have started to outweigh the perceived opportunity in the eyes of many businesses, boards and investors.

The big issues affecting consumer perceptions of ESG and purpose

In an age of media and social fragmentation, many consumers are struggling to believe what they’re being told, with distrust in corporations peaking in 2023, ranging anywhere from 40% to 60%.

The issue of sustainability is proving particularly problematic. While most consumers want to “do the right thing” and buy “green”, many are confused about what “sustainability” actually means, compounded by the perception of “green-washing”, and now “green-hushing”.

And of course, there's the rising cost of living crisis. Stretched consumers resent the idea of subsidising businesses’ ESG pursuits, when their own budgets are squeezed, making the conversation around sustainability even more contentious.

Yet business purpose and impact continues to fuels growth

The picture is complex. Despite the challenges, data shows that business purpose and impact is more critical than ever for future proofing the reputation, performance and profitability of organisations.

Over half of consumers globally still preference brands demonstrating purpose and ESG commitments, while a third of Gen Z are ready to divest from those with poor DEI and social records.

Further, businesses demonstrating higher purpose value, and embedding this within their operations, product and communications strategies, continue to outperform, attract talent and grow revenue at up to five times the rate of those who don’t.

Authenticity and a measured approach is key

Knowing that communicating purpose and impact is vital for brand reputation, customer goodwill, and when times get tough, resilience, what should organisations do to win over stakeholders?

Start with the consumer, who asks four key questions when assessing a company’s purpose and impact-led efforts; these questions can guide how an organisation communicates with success.

Is it genuine? What does it make sense for my organisation to take a stand on, and talk about it? Is it innate to our reason to be?

Is our organisation committed to it? Can my organisation show a long-term and long-standing commitment to doing better and right by the community and our commitments? Can we show our progress towards our goal that is meaningful?

Will the actions we take make a difference? Can our organisation show that our strategic actions are actually making an impact beyond our own interests and bottom line?

Where’s the evidence? Can my organisation show evidence of impact that is meaningful to customers and trustworthy?

On top of all this, organisations must take a measured approach, because any whiff of inauthenticity or virtue signaling in the eye of a skeptical consumer, will always do more damage than good.

Taking inspiration from those leading the way

Finally, as we all navigate this complex and rapidly evolving challenge, looking to other organizations for inspiration and shared learnings provides an invaluable source of insights.

If you’re interested in hearing from some industry leaders who have broken paradigms to accelerate social change through Systems Thinking, Technology and Communications strategy, join Deepend Group’s online panel session ‘Practical Strategies for Sustainable Social Impact and Business Growth’, on 21st March 2024.