2024 PEC_The Return on Responsibiity Reframing corporate climate messaging around materiality not morality

Briefing Document: The Return on Responsibility

Date: September 2024

Subject: Reframing Corporate Climate Messaging Around Materiality, Not Morality

Executive Summary

In a polarized political environment, publicly traded companies often find it risky to communicate about climate issues. However, research shows strong support among various stakeholders for businesses to reduce carbon pollution and invest in clean energy. This document argues that companies can broaden their appeal by framing climate action in terms of materiality—emphasizing the business benefits of such actions rather than their moral implications. Consumers and investors recognize the financial risks associated with climate change and see companies addressing these risks as leaders poised for long-term success.

The report is based on extensive research, including surveys and focus groups with nearly 15,000 participants across multiple countries, primarily the U.S., and provides guidance for corporate communicators on how to effectively convey the benefits of climate action.

Methodology

The research involved several phases, focusing on various audiences, including skeptics of Environmental, Social, and Governance (ESG) practices, U.S. consumers, and investors. The studies tested messaging effectiveness, consumer perceptions, and the relationship between climate action and business success. Key surveys conducted included:

• Focus groups with skeptics of ESG practices (June 2023)
• Randomized control trials on climate investing (July 2023)
• Consumer surveys assessing public perceptions of ESG (August 2023)
• An investor survey focused on climate and financial performance (April 2024)
• A global consumer survey across multiple countries (July 2024)

Key Findings

1. Consumer Expectations on Climate Responsibility

A significant majority of consumers across various countries believe businesses have a responsibility to act on climate issues. Approximately 80% of consumers view climate change as a serious concern. They expect companies to not only pursue profits but also contribute positively to society, especially regarding climate action. The research indicates consumers are more likely to support brands that actively reduce carbon emissions and invest in clean energy.

2. Investor Perspectives on Climate Action

U.S. investors show a pro-climate sentiment, with a notable preference for financial services firms that incorporate climate factors into their strategies. Although there is a political divide, a majority of investors, including Republicans, favor pro-climate actions. For instance, 60% of investors agree that climate change can harm financial performance, indicating that investors see climate risks as integral to business success.

3. Effective Messaging: Materiality Over Morality

The report highlights the importance of framing climate action through the lens of materiality rather than morality. Consumers are wary of companies taking overt political stances, and messaging that emphasizes climate action as a rational business strategy tends to resonate better. Consumers perceive climate actions as less political when framed as responsible business practices rather than ideological positions.

4. Avoiding "Forced Morality"

The backlash against perceived "woke" business practices highlights the risk of alienating consumers who feel that companies are imposing beliefs on them. The report emphasizes the need to avoid messages that come off as morally prescriptive, as these can lead to increased unfavorability among skeptical audiences.

Recommended Messaging Strategies

To effectively communicate climate action, companies should adopt the following strategies:

1. Frame Climate Risks as Business Risks: Highlight specific financial and physical risks posed by climate change to the business and its operations.

2. Emphasize Clean Energy as an Opportunity: Position clean energy investments as innovative business opportunities that can lead to growth and competitive advantage, rather than merely ethical choices.

3. Promote Responsible Business Practices: Use the term "responsible business" to convey a balanced approach to profitability and climate action, which is more relatable and less politically charged than "ESG."

Language Matters

The document stresses the significance of simplifying corporate climate vocabulary. Terms laden with jargon often alienate consumers and detract from the message. Instead, using clear, straightforward language can enhance understanding and engagement.

Conclusion

The research confirms that there is a clear return on responsible climate action when framed appropriately. By focusing on materiality and the business benefits of climate initiatives, companies can engage a broader audience, minimize backlash, and enhance their reputation. The recommendations provided in this report serve as a guide for corporate communicators seeking to navigate the complex landscape of climate messaging effectively.

Organizations Behind the Study

This report is published by Potential Energy Coalition, a nonprofit organization focused on climate solutions, in collaboration with the We Mean Business Coalition, which works with influential businesses to combat climate change. For further inquiries, please contact info@potentialenergycoalition.org.