Madrid

28/06/2021 – 10:52

The return to normality after the stabilization of the coronavirus, has caused greater social awareness about the actions carried out by companies behind their fully commercial activities. The so-called corporate social responsibility, ESG for its acronym in English, is no longer secondary to the population, who now look more at the actions of their favorite companies before consuming their products and services. This situation can become a double-edged sword for companies if they do not meet the expectations of their potential audience, who can resort to other options in the market.

According to the latest report from the consulting firm Llorente y Cuenca, entitled ‘How to anticipate new reputational risks linked to ESG’, “The Consumer Confidence Index in the month of May grew 11.2 points over the previous month and is already above the results obtained since July 2019. The assessment of the current situation also improves, reaching 62, 4 points, which is 14 points more than in April “, this situation, as we mentioned, may cause a proportional increase in the reputational risks of companies. “The logic is simple: a strong increase in confidence, such as the one we are experiencing at the present time, is followed by a strong increased reputational risks if the expectations generated in public opinion cannot be met. The higher expectations, the greater the probability of disappointing those expectations as the coming months progress, “the report reads.

The question that companies are now asking is: How can I anticipate the situation of these reputational risks? Through the analysis of LLYC, a boom in ESG criteria can be observed that goes beyond a simple fad. According to this report, “media interest in these criteria has increased by 285% in the last six months in relation to the trend in the previous 5 years “, so it is expected that this trend will continue over time.

The growth of these expectations can be seen in all sectors. But in absolute terms, the number of mentions to these criteria of corporate social responsibility varies little between them. More than 30% of the coverage related to ESG criteria focus on the financial sector, which confirms the expectation within the investment world t transferred to the rest of the economic sectors.

This business concern quickly moves from consumer to consumer. According to this report, consumers are now more aware, much more committed to their environment and to the reactivation of local businesses and products, so we expect a change towards buying local products and the incorporation of sustainable products to your shopping cart.

Where are the risks?

The concern with the greatest impact on the media during the first half of 2021 has been job protection (more than 16,700 impacts registered until May 30). This concern grows especially in public opinion in the sectors of health, financial services, energy, technology and restaurants, which are some of the sectors most affected by the pandemic.

In absolute terms, concern about employment is especially focused on the financial sector (12.2% of impacts), transportation (9.4%), retail trade and May (9.4%), technology (8 , 3%) and leisure / restaurants (8%). These are the sectors that have accumulated the most information related to job adjustments or uncertainties before the end of the ERTES next fall.

The second of the relevant issues in public opinion both in terms of absolute mentions and growth (+ 70%) in the last six months is that of equal opportunities. In relative terms, the greatest growth in concern about this issue occurs in the sectors of the health, industrial goods and leisure / hospitality.

However, in absolute data, during the first semester the highest percentage of information related to environmental sustainability affect the agriculture sector (27% of impacts), water, gas and electricity public services (11%) and the real estate / construction sector (9%).

Finally, the aspects related to good corporate governance are also important, but they are mainly related to listed companies and especially those of the IBEX 35. News related to communication with the regulator has increased in the last 6 months a 97% compared to the average of the last five years, followed by concern about the behavior of the Boards (+ 68%) and Senior Executives (+ 62%).

Leadership in the face of risk

This increase in risks, which may increase if future trends continue, especially in relation to corporate responsibility issues, represent a challenge for company leadership, both in the markets and for their leaders.

For this, the companies should consider taking mediations, how to incorporate ESG strategies; involve the company in complying with ESG; or promote the corporate narrative with its stakeholders.

What benefits can a company like mine bring to society?

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