In 1981, Jan Carlzon took the reins of struggling regional carrier Scandinavian Airlines and built a radical strategy on a simple insight: It was the brief, mundane interactions between his staff and the public, not their marketing messages, that demonstrated what the company really stood for. He called his approach “moments of truth,” and he used it to rethink every aspect of the business and empower front-line workers to deliver exceptional service. The airline went from $30M in losses to profitability within a year.
Covid-19 represents its own moment of truth for us.
Our actions in 2020 will reveal very publicly essential aspects of who we are—and intend to be going forward. The pandemic and its aftermath ultimately will likely not represent a single crisis, but a dynamic convergence of social, economic, political, and even environmental challenges playing out globally. Companies’ responses along the way will bring our core priorities into sharp focus and our stakeholder relationships under new scrutiny. And research indicates the impressions formed in this moment will last.
Accordingly, our narratives must be skilled, attuned to the moment, and deeply authentic. Companies are already finding their ability deliver for customers, employees, investors, and others constrained, forcing unappetizing choices. As ESG professionals, we’ll need to engage these shortcomings and changes as transparently and humanistically as possible.
Ensure Narrative Alignment
Quality communication is more essential than ever today. Rapid dissemination of accurate information can even be a matter of life or death. Stakeholders—regardless of which hat they are wearing—are seeking news, clarity and reassurance, and government’s ability to meet these needs has been uneven at best. That puts a pronounced onus on the private sector.
Since this unprecedented crisis has caught nearly us all of by surprise, it’s fitting that our stories convey humility, empathy, and candor. It’s also a time for organizational leaders to have more personal voices. While communications teams are on the front lines of creating unified messages, it’s important for environmental, social, and governance (ESG) experts to be informing those narratives. And part of the unique value of these professionals is attentiveness to consistency between message and action and where concerns could be raised by stakeholders. This is also a key area of focus for us at FrameworkESG.
The new company narratives will also be about ongoing change. As ESG experts we should therefore be supporting the evaluation and message planning related to emerging practices, given the lasting changes in expectations these events will create. Whom we’re becoming now and how it relates to our bedrock values will, in other words, become a piece of our evolving public stories. Especially since there will be new sustainability conversations taking place, such as: Is there a way we can maintain some of our recent decreases in energy use and emissions as daily activity ramps up again?
Look Stakeholders in the Eye
For most companies, key stakeholders comprise what we think of as the foundational triangle: customers, employees, and investors. To a large extent, these three groups represent the interests and expectations of a much broader universe of stakeholders, and companies are keeping them abreast of developments. By the beginning of April, for example, nearly 40 percent of U.S. companies were already referencing Covid-19 in 10-K filings, and countless companies have been communicating with customers and employees about their responses to the crisis.
In these times, however, the essential audience for company communications has expanded to include communities, supply-chain partners, and governmental entities involved in crisis response. And research suggests that the paramount concern for these groups is how companies are treating employees at a time like this. Communication to and about employees has ranged from highly compassionate to notably abrupt. Resources like JustCapital’s Covid Response Tracker provide useful perspective on the range of tools and policies companies have been implementing.
It’s vital that the tone, substance, and frequency of companies’ dialogue with communities and customers be right. Among those that stand out as authentic are the personal, unvarnished video updates that Jim Perdue, chairman of Perdue Foods, has posted via mobile phone.
Most of all, effective companies are finding ways to contribute truly useful resources to communities and explain their impacts and relevance to company values without seeming opportunistic. For example, since 2019, Land O’ Lakes CEO Beth Ford has been outspoken about the digital divide in rural America and how her company would help bring broadband to some of those communities. So the commitment the company has recently made in response to Covid-19 to accelerate this effort is not only timely and needed, but credibly aligned with company’s existing narrative.
As of now, there has understandably been little mention of Covid-19 in the emerging crop of annual and sustainability reports published this spring and covering 2019 events (one exception is Olam’s annual report). However, this will change as we get deeper into the year; companies are already revising their planned ESG reporting to address responses and anticipated impacts on stakeholders and business prospects.
We’re only beginning to come to terms with how this moment will change our organizations and society, much less how to explain to our stakeholders the complex and often painful implications. But here’s a start:
- Approach your new stakeholder dialogues with deep empathy and realism;
- recognize that what is needed from all of us is changing; and
- consider how your response to this moment of truth may come to be viewed in the years ahead.
To learn how FrameworkESG can assist with strategic planning, disclosure and communication needs, or evaluation of material issues, please contact Victor Melendez.