Businesses can win big by embedding ESG in customer experience

By implementing eco-friendly practices, such as reducing waste and carbon emissions, companies can not only attract eco-conscious consumers but also enhance their overall brand image. [iStockphoto]

It’s an exciting time for businesses, not just for the local market but for the world. Environment Social and Governance (ESG) considerations have never been more relevant and important for companies, and this is increasingly the case as consumers become more conscious of matters sustainability.

Latest Ipsos Global Trends, a 50-country study on how global values are shifting, shows people do have clear expectations of brands and business when it comes to ESG. Most believe business can be a force for good, with 80 per cent agreeing that brands can make money and support good causes at the same time.

Almost two-thirds say they try to buy products from brands that act responsibly, even if it costs more (64 per cent). The public expects organisations, public and private, to give equal priority to improving society and to environmental issues.

By implementing eco-friendly practices, such as reducing waste and carbon emissions, companies can not only attract eco-conscious consumers but also enhance their overall brand image.

In terms of social considerations, it has also been found that customers appreciate companies that demonstrate a genuine concern for the well-being of employees, communities, and society.

Companies that prioritize strong governance practices such as transparent and ethical decision-making, are also able to easily build trust with customers and win their confidence. This trust contributes to a positive customer experience and fosters long-term loyalty.

It is not just right to do this, but there is also a reward that comes with it and businesses that embed ESG in their operations have recorded positive performance while at the same time endearing themselves to customers, employees, and shareholders.

This is why organizations are coming under pressure to do business more sustainably. Indeed, 81 per cent of Ipsos Reputation Council Members say that poor ESG performance now has material consequences. As a result, ESG considerations are a key part of companies’ strategic plans and roadmaps.

We have seen many companies designing and implementing communication campaigns to draw attention, create positive perceptions around ESG agendas and address growing concerns among citizens. Many of these campaigns are, however, similar in nature, making it very difficult for organisations to cut through the clutter.

Part of the reason many organizations’ ESG initiatives fail to make an impact and stand out is because it is considered a cost or requirement. However, this should not be the case as it is possible to operate a business sustainably by doing the right thing for the people, planet, and society/ prosperity and still create value and benefits for the organisation. 

For businesses to achieve this, there is need for a shift in paradigm when it comes to designing and implementing ESG strategies. It is my view that ESG commitments, if grounded in the reality of customers, can translate into opportunities to create value, and can drive stronger and mutually profitable relationships that lead to improved business performance.

The connection between Customer Experience (CEX) and ESG lies in their shared objective of creating long-term value. By aligning business practices with ESG principles, companies can enhance their CEX and build stronger relationships with their target audience.

In this article, I propose three ways through which businesses can embed ESG principles in CEX and impact the people, planet, and society/ prosperity and at the same time realize value for shareholders. By grounding these efforts, brands will be able to create meaningful connections with their customers.

First, brands need to go beyond the ESG fundamentals if they are to cut through the sustainability clatter. Almost everyone in the market is focusing on reducing waste, using renewable energy where possible, reducing inequality, and paying their fair share of taxes.

Although these are essentials that every brand must address, they only lay the groundwork for a better relationship rather than engaging customers to feel truly connected.

Delivering on promises

ESG commitments can be thought of as brand promises, indeed, they are part of the overall brand promise. Brand promises come from marketing and communications activities, what is said or written about brands, and importantly from customers’ experiences or interactions with brands.

A brand promise can create a connection and nurture trust between a business and its customers, as it guides customer interactions. Employees, shareholders, and other stakeholders can also use the brand promise to manage their expectations of the business.

If there is a gap between what the brand says and what it does, customer expectations are violated, and cognitive dissonance takes place. When CEX consistently fails to meet expectations, customers will most likely become less affectionate about the brand and stop using or use it less.

It is also true that where the experience consistently reinforces the brand promise, customers are more likely to grow closer to the brand and use it more in the future. Ipsos Global CEX Voices study shows that closing the gap between promise and delivery is a top priority for organizations globally (47 per cent agree). When building sustainable initiatives and communicating them, brands should consider how they will deliver on their promises and, importantly, avoid accusations of greenwashing.

Last, concrete engagements that are in line with a brand’s core offering, and can be demonstrated through experience, are more likely to be impactful than broader, more remote and disconnected commonplace engagements. It is therefore crucial for organisations to ensure that the promises made are grounded. ESG commitments need to be tangible and related to an organisation’s offer for the brand to be able to deliver and demonstrate them via CEX.

The writer is a Senior Research Manager, Customer Experience, at Ipsos Kenya.

 

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