How can brands in APAC better embrace ESG to foster brand loyalty?

Environmental, social, and governance (ESG) has become a significant trend in recent years and it has raised discussions as to how marketers and advertisers can incorporate ESG considerations into their decision-making processes, reporting practices, and overall corporate strategies.

In fact, global business leaders are warned that public expectations for authentic action on ESG issues remain high even in the face of cost-of-living pressures. In Hong Kong, 85% of people are aware of ESG, up 15% since last year, and versus only 53% globally, according to the third annual SEC Newgate ESG Monitor.

The survey also found that HongKongers are leading the charge globally in terms of conscious consumerism, while ESG issues are influencing their decisions in a wide range of areas, in particular the types of products they buy (71%, compared to 62% globally) and the foods they eat (68% versus 62% globally). While in Singapore, about 60% of Singaporeans are incorporating ESG factors into their daily decision-making processes.

On the business front, industry players MARKETING-INTERACTIVE spoke to also saw a growing trend in Hong Kong corporations actively recognising their role as industry leaders in advancing the agenda of ESG practices.

Caroline York, director of marketing, Gusto Collective said over 90% of the brands the company has worked with have implemented ESG programmes, including industries such as hospitality, fashion, entertainment and retail. They have also incorporated ESG into their sourcing, community outreach, or environmental initiatives.

“These brands are dedicated to creating accountable methodologies and investing immense efforts in reporting and aggregating information on their ESG initiatives,” she added. 
 
On the other hand, smaller, more traditional SME brands face challenges in implementing ESG initiatives due to the costs associated with running comprehensive reporting and effectively communicating their efforts in the market, according to York.

“It is not a lack of awareness that holds them back, but rather the prioritisation of messages to deliver. During market downturns, Hong Kong consumers tend to prioritise frugality, and in survival mode, they are more likely to choose the cheapest alternative rather than a product that is ESG-friendly, even if they are aware of the importance of sustainability,” she added.

How can brands better embrace ESG to engage a wider audience? 

With the growing consumer interest in sustainability, having a compelling ESG narrative offers the potential for brand resonance and market appeal. According to the CGS Survey, a staggering two-thirds of customers globally are willing to pay an additional 25% for environmentally friendly products.

To effectively engage with a broader audience, companies should incorporate ESG into their marketing strategies through purpose-driven communications and creative community engagement, according to Brian Yeung, co-founder, Brandstorm Communications.

Purpose-driven communication is also key. This involves effectively conveying companies' social purpose and highlighting its significance to stakeholders based on shared values.  “Crafting humanised content that brings companies' community and philanthropic initiatives to life will enable them to forge emotional connections with key stakeholders, fostering lasting brand loyalty,” Yeung added.

To bring the impact brands are making to life, businesses should focus on telling a story from a human-interest perspective, said James Hill, managing partner at SEC Newgate Greater China.

"For example, instead of leading on the fiscal size of your commitment or the number of tons of carbon you have saved, produce a video or an advert that speaks to the impact your carbon reduction is having on a person, charity or business that has worked with you. And make sure it’s told from their perspective," he added.

In today's business landscape, the customer has undoubtedly taken centre stage. To better engage conscientious consumers, Hong Kong businesses should integrate ESG at every touchpoint, said David Ko, managing director, RFI Asia.

“This could mean highlighting existing green and inclusive initiatives through integrated marketing campaigns. Products or packaging could also be redesigned to exemplify sustainability attributes. Collaboration with ESG-focused social media influencers and NGOs helps build third-party credibility for efforts,” he added.

Events and community outreach presenting ESG values in a fun, lifestyle context attract younger audiences as well, he added.

Gamification has also emerged as an intriguing approach for delivering ESG messaging and education, said Gusto Collective's York. "While many listed companies publish their ESG findings on their corporate websites, these often fail to reach the end consumers. It is crucial to create awareness of these initiatives through effective marketing strategies that penetrate consumers' consciousness, fostering long-term brand loyalty," she added.

Avoiding greenwashing with authenticity 

While many brands in APAC are adopting an ESG-cantered approach to business, many still believe that the operational impact and costs involved in shifting the business to an ESG stance are too significant to incentivise change. 

This may lead to greenwashing or purpose-washing that consumers see through and could lead to long-term brand decline, according to Thomas Skelton, director, corporate strategy APAC, TEAM LEWIS.

In an era when authenticity is critical, Skelton said businesses should consider ESG as more than a tick-box exercise and instead lead with structural changes as much as possible to ensure that ESG becomes part of the brand's fabric.

“This will ensure real change and provides an authentic message to consumers that they can get behind and believe in,” he added.

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