The recently published KPMG 2023 CEO Outlook – a global survey of more than 1,300 CEOs and other senior executives from a wide range of industries – found that CEOs are increasingly seeing ESG (environmental, social and governance) as a critical component of their corporate strategy.
Nearly a quarter (24%) of CEOs surveyed believe that ESG will have the greatest impact on their customer relationships over the next three years, and a further 16% believe it will help build their brand reputation.
This is a significant finding, as it confims that CEOs are starting to see ESG as more than just a compliance exercise. Instead, they are recognizing that ESG can be a powerful tool for building stronger customer relationships and enhancing brand reputation.
There are a number of reasons why CEOs believe this.
- First, consumers are increasingly demanding that the companies they buy from be more sustainable and ethical. A recent survey by Nielsen found that 66% of global consumers are willing to pay more for products and services from companies that are committed to social responsibility. Kantar studies conclude likewise.
- Second, investors are also putting more emphasis on ESG factors when making investment decisions. According to a 2022 report by Bloomberg Intelligence, global ESG assets are on track to reach $53 trillion by 2025.
- Third, governments around the world are introducing new regulations and policies that are designed to promote sustainable and ethical business practices. The European Union e.g. has introduced a new taxonomy for sustainable activities, which will require companies to disclose their ESG performance in more detail.
What does that mean for the World of Advertising?
The growing importance of ESG is an important element for any advertising strategy. As CEOs look to build stronger customer relationships and enhance their brand reputation through ESG, investments in advertising and marketing campaigns that communicate their ESG commitments will increase, but their effectiveness will also need to improve.
Agencies will need to step up their game in terms of
- Identifying key messages and target audiences
- Developing creative, engaging as well as credible advertising campaigns that communicate their client’s commitments in a clear and concise way
- Measuring the effectiveness of their campaigns
Overall, the growing importance of ESG is a positive development for the advertising world.
From Bubka’s Point of View
From our point of view, this is all very good news. Agencies will have a significant responsibility to help develop and implement effective communication strategies for ESG-aligned marketing campaigns. It is clear that the growing importance of sustainability will demand from agencies to be able to bridge the credibility gap that exists between consumers and brands on sustainability.
Only advertising agencies that have developed the necessary expertise in this area will be able to deliver effective marketing communication and help brands grow through their sustainability efforts.