What is Governance and What Role Can Marketing Play?

If you feel like you’ve seen the term “ESG” pop up more lately, you’re not wrong. Google Trends has shown increasing search popularity in the term, peaking most recently at the end of January 2022. So, what does ESG mean? What is governance in ESG? And, most importantly, how can marketing help an accounting firm reach its governance goals?

ESG stands for Environmental, Social, and Corporate Governance reporting. Depending on your firm size and the size of your clients, you may think that ESG is a sustainability topic that is still in the distance. However, this reporting is likely much closer than you think. According to RSM, the time to talk about ESG reporting is now.

Out of the businesses they recently surveyed, half with revenues between $10-50m had some kind of formal plan or strategy regarding ESG initiatives. This percentage was higher with businesses whose revenues were between $50 million and $1 billion (72%). On average, two-thirds of businesses had some kind of ESG plan.

It may be your natural inclination to think about the “E” in ESG most frequently. However, environmental metrics are really just the sprout of a much bigger tree that a company can report on.

Governance is one leg of sustainability that often gets overlooked, but it is foundational to any organization’s success. It is concerned with how the firm is run, which can include its structure, culture, engagement and disclosure practices. It’s hard to tease out individual parts of a sustainability plan in an organizations. A quality of sustainability is that everything is interconnected.

Take, for example, Certified B Corps. These are businesses that have achieved high standards in 5 areas – environment, workers, community, governance, and customers. The mission & measurement and ethics & transparency set by the governance piece ripple out to the actions taken in all other parts. Think of governance as part of a whole.

A governance plan could include ethics statements, diversity policies, codes  of conduct, anti-harassment and non-discrimination statements, privacy policies, and more. Good governance creates good policies, and sets the foundations for all other ESG-related projects. These policies will tell clients, prospects, referrals, and employees about who you are as a firm, and what your culture and priorities are. Being transparent on sustainability goals and progress can also be part of your governance plan.

There are several different guides you could use to report on sustainability goals for your own business. For example, the Wisconsin Sustainable Business Council has The Green Masters Program, a program designed for self-reporting on sustainability progress. Firms may also want to assess their progress using the Sustainability Accounting Standards Board (SASB) or Certified B Corps criteria.

SASB, the Sustainability Accounting Standards Board, is one of the organizations working on establishing standards for sustainability by industry. Businesses can use

the standards to evaluate where they stand in terms of sustainability topics that are most material to their operations. For example, when evaluating professional & commercial services, operational matters, such as carbon or water, are not mentioned on the list. However, topics such as data security, professional integrity, and diversity & inclusion are listed. Oftentimes, engaging in sustainability doesn’t look like recreating the wheel. Instead, it looks like refocusing efforts already in motion and setting clear and transparent goals to improve in these areas.

Like many good initiatives, governance isn’t successful without a top‐down strategy and messaging echoed by leadership. Your leadership should personally engage with ESG, drive sustainability company wide, and set the tone from the top down with commitments and initiatives for the company.

This doesn’t need to look like grandiose statements or lofty, unrealistic plans. Leadership in governance can look like risk management that thinks about how ESG ties to an existing strategic business plan. It can look like prioritizing the long-term over the short term, creating stretch goals, and promoting transparency for activities related to sustainability in the firm. It can also look like realizing and acknowledging the innovation that can come from thinking sustainably.

Sustainability initiatives like governance in ESG aren’t just important for the environment. They are also key to a long-lasting business. Employees want to work at a company that is more socially engaged. It can also serve as a differentiator to separate you from competitors.

A strong governance plan rooted in sustainability can be beneficial from a hiring and business development standpoint. By 2025, 75% of the workforce will be Millennials, and they are looking for socially responsible companies. You may close the door to them without a ESG or corporate social responsibility (CSR) policy – 64% of Millennials won’t take a job if there isn’t one. In four years, Gen Z will make up 30% of the workforce, and it is anticipated that they will prioritize purpose above salary. Creating a foundation now is an investment in the future of your workforce.

Marketing professionals have worn many hats over the past several years. The multi-faceted roles of marketing can come in handy when it comes to aiding in ESG initiatives. You may want to:

Several great resources are available for businesses that are thinking about ESG but not sure where to start. In a previous role, I enrolled in 21st Century Pathways, a training program hosted by the Wisconsin Sustainable Business Council. The design of the program helps companies figure out how sustainability can improve their profitability. It was a helpful program in expanding the definition of sustainability and what it can look like for a professional services firm. Companies can also review standards via SASB, Certified B Corps, and the myriad other standards popping up in recent years. RSM and AICPA also have materials on ESG. I’ve also referenced a sustainability book by Gilbert Hedstrom to make evaluations.

Remember to start small. Revise your mission statement to incorporate sustainability. Create an ethics statement. Make one plan to improve sustainability in the coming year by a certain percentage. You don’t have to take it all on at once. ESG is about making small, lasting changes to improve your firm.