Environment – Social – Governance (ESG)

Being a good corporate citizen is no longer an option but a require­ment for large corpora­tions. The intentions behind the flood of corporate chari­table responses by corpora­tions to the Covid-19 pandemic have invariably been good, but donors aren’t always given due credit for their kindness. Public perceptions of corporate philanthropy can be quick and cynical and, if not care­fully considered ahead of time, can back­fire on the donor.

In recent years, ESG (Environment – Social – Governance) policy has become more and more important for companies. Most corporates are reviewing their ESG criteria very closely and are increasingly acting on it. In this time of the corona crisis, corporates can prove that they take ESG topics seriously, especially with regard to the S – social – and the G – governance. This is primarily true in these unpreceded times when it comes to treating employees fairly and regarding salaries for managers in light of wide­spread reduced working hours. The conside­rations behind a strong ESG policy have never been more pertinent than today, meaning that all corpo­rations need to keep a keen eye on the social and governance aspects of any chari­table action they undertake. At some point the crisis will pass, but ESG topics will remain and become more and more crucial for corporates in the future.

Key findings:

• Charity begins at home
  A lot of money is being given away currently. Media will focus on where the money is going, and the tangible impact it will have, more than the headline amount.
• Charity can’t sugar-coat your bad news
  An act of charity announced at the same time as, say, lay-offs will be seen as a cynical attempt to spin the news.
• Move quickly
  There is a first-mover advantage in times like this. “Follow-your-leader philanthropy” can dilute some of the credit for the donor.
• To thine own self be true
  Play to your strengths as a business and draw on your own resources in a creative way; try and match your efforts to the core mission, purpose and values of your business.
• Keep it simple
  Don’t over­shadow your intentions with an overly complex relief effort structure.
• Don’t forget employees
  A charitable act goes a long way, but if your company makes a large donation to an organi­sation without taking care of your own employees’ needs, it may be viewed unfavorably. Stake­holders are increasingly focused on corporate culture, and employee well-being plays a crucial role in that.

AMO Global’s international ESG Task Force compiled a list of 15 examples across the globe of how companies have been chari­table in the current pandemic. It is not ex­haustive, but it might generate discussion, seed ideas, and maximise positive impact for both the benefi­ciaries and the donors eager to help.

Methodology:

We assessed how acts of corporate charity are perceived by media and the public using a frame­work we call the 3-C checklist:

• Is it CORE?
  A charitable initiative should be related in some way to your corporation’s DNA or core business f you want the act to be perceived as coherent.
• Is it CONSEQUENTIAL?
  Your initiative needs to make a perceptible difference to the recipient. One way of achieving this is to keep the initiative local by supporting a community.
• Is it COMPREHENSIBLE?
  The initiative should be simple enough to summarise in a jargon-free sentence and shouldn’t have complex structures.

Our analysis is an informal, anecdotal review of a variety of solidarity initiatives from around the world focusing on how they were broadly perceived by the media.

Here you can view the analysis – 15 cases hand-picked from around the world.

For more information please contact Volker Heck or Daniela Münster.

© picture: iStock