Amid growing public scepticism about the authenticity of companies’ sustainability claims, businesses face the challenge of delivering meaningful impact through environmental, social and corporate governance (ESG) initiatives, says investment advisory Tshikululu Social Investments senior social investment specialist Graeme Wilkinson.

Therefore, companies must navigate communicating their efforts effectively without risking accusations of reputation laundering, Wilkinson adds.

Scepticism stems from the perception that companies overstate their achievements or fail to deliver meaningful impact, which he partly attributes to the spectrum of approaches companies take in implementing initiatives.
To varying degrees, companies perform significant, meaningful community work, but fail to communicate it effectively, or they overemphasise minor contributions, eroding public trust.

Wilkinson highlights instances where, for example, the financial value of the support is less than the cost of advertising the initiative, which can appear disingenuous and reinforce accusations of reputation laundering.

To navigate this balance, he emphasises the importance of clarity. Senior management must define the company’s brand and intentions and align in-house teams such as those representing social performance and communications.

“It then becomes easier for the communications and social performance teams to work well together, ensuring they do the important work and communicate it effectively.”

Further, companies need professional tools and robust measurement systems to assess their progress against goals, ensuring accountability to themselves and stakeholders.

Wilkinson also emphasises the importance of authentic communication, as businesses must convey their efforts transparently and proportionately.

He avers that striking a balance between under- and over-communicating is critical to maintain credibility, meet stakeholder expectations and fulfil ESG obligations.

Measuring Social Impact
Effective measuring and auditing of initiatives, and communicating such, become more pronounced in the South African context, where ESG is still perceived, to some extent, as a “box-ticking” exercise.

Unlike in more industrialised regions, such as Europe, ESG-driven investment strategies in South Africa remain in their infancy, with a growing but gradual uptake among investors.

Wilkinson adds that, historically, corporate social investment (CSI) was primarily measured by inputs – such as the amount of money invested – rather than measurable outcomes.

As a result, while businesses may publicise their investments and collaborations, stakeholders are increasingly demanding evidence of meaningful outcomes.

The acknowledgment that measuring CSI based on inputs lacks clarity on the tangible impact achieved has led to an increased focus on means of defining and measuring impact.

Doing so addresses external pressures while assisting companies in evaluating their progress, identifying shortcomings and adjusting strategies, he adds.

Wilkinson emphasises that achieving social impact involves building relationships and continuous learning from data, in addition to making financial contributions.

Various sectors are adapting strategies and measurement methods to ensure that social investment efforts result in tangible socioeconomic value, with companies building frameworks to compile reliable data for ESG disclosures, he notes.

Wilkinson suggests that a disciplined approach to social investment that mirrors good business practices can assist organisations in navigating and optimising their social impact over time.