Sunset on COP28:
What next for business?

Last week, the gavel came down on a swift agreement at COP28. Whilst questions remain on how robust the final text is, seen from the reaction to an ‘abatement’ loophole for carbon capture, progress around the transition away from fossil fuels is significant nonetheless. A muted reception from the media on the substance of the agreement was perhaps inevitable. Business, too, seemed cautious. But the few days spent at COP are a snapshot, a weathervane.

As delegates return home and businesses reflect on how to support government commitments, it is vital that the paradigm shift seen in ESG communications throughout 2023 is not forgotten. The reasons for this change are numerous, but three stand out; political and socioeconomic context, intense consumer expectation and the pursuant regulatory and shareholder scrutiny.

To the first point, the underlying global economic picture, especially for those with HQs or significant operations across Europe, has had a wide-ranging impact on business operations. Combined with the ongoing cost-of-living crisis and geopolitical factors, pressure has ramped up on the leadership of organisations not only to communicate, but in some cases, justify their ESG activity. For brands, this pressure has also been combined with a need to demonstrate financial resilience in a difficult time for markets. This arguably began from an investor perspective, but has morphed, for some, into an existential “culture wars” issue. The once stalwart of purpose, Unilever, even raising the prospect of purpose as an “unwelcome distraction”.  

Secondly, consumer and customer perspectives on the impact organisations are having in the world around them seems to be increasing exponentially. Where it was once sufficient to publish commitments and targets, compelling transition plans and tangible, real-world action is now under the microscope. Such scepticism has always existed, but public action from charities and NGOs such as Greenpeace “calling out” organisations on their communications has emboldened consumer activists and inevitably impacted B2C corporate comms. Through social media and even through direct actions, consumers are demanding evidence for how organisations are making an impact, rather than simply reaffirming longer term commitments.

A tightening of standards on any external corporate communications has also been accompanied by a deluge of reporting requirements at national and supranational level. From the SEC in the US subpoenaing asset managers on their environmental claims to the onboarding or reporting standards under the EU’s Corporate Sustainability Reporting Directive (CSRD) and first set of European Sustainability Reporting Standards (ESRS), 2023 has been especially demanding for organisation’s compliance with environmental and wider sustainability frameworks. The impact? Unchecked “creativity” has been reined in by compliance. Previously bullish communications around ESG commitments are now tested and tested again, with transparency, credibility and clarity as guiding principles.

Alongside these three catalysts, the intense debate around purpose vs capitalism – “woke capitalism” – and the economic reality impacting organisations only exacerbates an already difficult context.

As the sand settles on COP28, there are lessons to be learnt for organisations seeking to effect change. For those working in ESG communications, COP has highlighted several critical considerations for any future interventions. Perhaps most importantly, that public appetite for action has not subsided and the tolerance for incremental change has worn thin. Any approach must be both radical in their ambition yet considered in their content, substantiated and sensitive to what can be shifting sands in social and corporate perceptions. COP28 only went to underscore the central role corporates must play in a new age of public/private cooperation. It is incumbent on the private sector to now offer clarity as a progressive partner to government to ensure targets are replaced with impact. They must also be unequivocally human, storytelling via impact to people and planet to remind audiences of the true goal of ESG endeavours. And finally that ESG communications are robust, able to stand the test of time. Correctly judging the tone, tenor and ultimate target of your intervention has never been more important.  

COP marks a moment. Now business has the opportunity to pick up the mantle and forge a clear path ahead before delegates regroup in Azerbaijan next year. Context, though, is key and 2024 is set to be no exception when the sands of ESG inevitably shift once more.