From CSR to ESG: How ethical and transparent communication has evolved

By Karen Clark, Head of External and Sustainability Communications – Scotland, at Knights Media & Public Relations

In recent years, we have seen a three-letter acronym become embedded in strategic business documents, and a frequent topic of discussion within the boardroom. We are of course referring to; ESG.

Commonly used as key performance indicators that go beyond the bottom-line for businesses large and small around the world, environmental, social and governance (ESG) factors allow key stakeholders to assess a company’s sustainability and ethical impact on the world.

The sustainability landscape has evolved incrementally since the 1950s, but never have we seen so much change in such a short time as we have in the period 2024/2025.

From the government of a large world economy upending its support of diversity and inclusion policies to unprecedented mandatory sustainability reporting coming into effect, a tidal wave of change is coming our way. We ask, what does this means for corporate communications in 2025 and beyond?

ESG’s history and future

Did ESG really just pop up overnight in the corporate world? It might feel like it did, but the answer is no, it’s been around for some time.

ESG can be traced back to 2004 when the term was coined in the UN Global Compact report called ‘Who Cares Wins’, which was endorsed by the World Bank, the Swiss Federal Department of Foreign Affairs, and the United Nations.

This closely followed the launch of the UN Principles for Responsible Investment (PRI), which provided a global set of standards for ESG linked to investment practices. This only boosted ESG’s credentials with international business leaders.

At one time, another acronym was used within the corporate world for its links to social impact: corporate social responsibility (CSR). CSR was used to describe positive activities within local communities, for example charity work or donations.

However, CSR never really took off. Not as comprehensive as ESG, CSR failed to hook investors, and without the backing of financial institutions to propel it into the mainstream and corporate strategy on a global level, it’s use fizzled out.

A UN report in the 2000s attempted to reframe the principles of CSR, and under the new moniker “ESG”, there was a heightened focus on risk management and shareholder value.

Since the launch of the UN’s PRI, there have been spikes in ESG’s popularity with it being used for performance reporting, but today we have seen this plateau with a general acceptance that the factors are important.

The Association of Investment Companies (AIC) recently published an ESG tracker which found that almost half (48%) of investors and advisers considered ESG when investing in 2024. Interestingly, this increased to 53% for those under the age of 45, which suggests the next generation of investors may put even more emphasis on ESG than their predecessors did. This suggests ESG is here to stay and will remain high on boardroom agendas.

ESG’s changing shape amidst tense geopolitics

Political shifts at the start of 2025 have seen conversations around Diversity, Equity and Inclusion (DEI), which strides both the ‘S’ and ‘G’ of ESG, evolve across both sides of the Atlantic, with varying levels of commitment.

Under the Trump administration, we may have reached a tipping point after years of quiet discourse. It is thought that many DEI programmes will be discontinued or redesigned, but how this will impact ESG longer-term remains to be seen.

However, it is worth noting that with a lack of global regulatory oversight across DEI, new opportunities arise for proactive businesses who want to do the right thing to create a diverse, equitable and inclusive culture. In doing so, they are strengthening their reputation and boosting their employer brand to attract the socially conscious workforce of the future.

Mandatory reporting changes the game

KPMG analysis found that 96% of the world’s largest 250 companies already publish a report on sustainability which includes their environmental and social impact. More than half of those surveyed publish a carbon target, have appointed a sustainability leader, and consider sustainability within leadership pay.

Beyond an ethical duty to lower their carbon footprint, and to leave a positive mark on communities, companies are faced with non-financial reporting obligations for the first time in their history. This is a minefield for many when it comes to compliance and how to communicate it. You could say non-financial reporting is a game-changer.

The Corporate Sustainability Reporting Directive (CSRD) is a great example, which came into effect in 2023 to enhance the transparency of corporate sustainability reporting in the European Union (EU). This unprecedented set of standards is expected to bring clarity around disparate guidelines and provide uniform benchmarking, which could be adopted globally.

CSRD can enhance corporate transparency and accountability in ESG factors, and with the first set of companies required to submit reports under its regulations this year, its impact is wide-reaching. It aims to streamline the way that companies report on sustainability, ensuring that transparent, consistent and reliable information is accessible to all stakeholders.

On a global level, standards issued by the International Sustainability Standards Board (ISSB) provide a comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets.

Communicating purpose over profit

The gap between profitability and purpose really is closing. Companies have been called out, and rightly-so, for greenwashing. It undermines the good work of others and falls short of the criteria within these new mandatory reporting frameworks. For most companies, they want to do the right thing and want to reap the rewards of the recognition that comes with it.

Effective, strategic communication plays a significant role in ESG, which can include;

• From distilling key messages into easily digested narratives and frameworks used to inform the business, its investors and regulators;
• Enhancing the company’s reputation through proactive commentary around ESG matters and its own impact;
• Through to the creation of key sales and marketing documentation, as well as communication training and crisis support.

Interestingly, the AIC annual report also found that the investment community were more likely to associate ESG with positive words and phrases than with negative ones, in particular with positive words such as ‘sustainable’ and ‘responsible’. This only emphasises the importance of strategic communication linked to ESG when it comes to attracting investors.

And it’s not just investors who are judging a company on its ESG credentials. A survey published in January 2025 found that Gen Z workers (people born between 1997 and 2012, and therefore the future workforce) will consider quitting their job or refusing roles with prospective employers because they are not “ethical” enough.

The survey found that almost two-thirds of Gen Z believe that their employers’ values, which include green credentials, honesty and social responsibility, are as important as the pay packets on offer. Furthermore, research by the consultancy Global Tolerance showed that 62% of millennials want to work for a company that has a positive impact on the world, and 53% would work harder if they felt they were making a difference to others.

We at Knights MPR also hear time and time again that ESG has steadily crept into Request to Tender documents in recent years, with businesses around the world increasingly under pressure to ensure there are no unethical practices within their supply chains. Failing to prove transparency and effectively communicate your ESG credentials as a business could lead to loss of significant contracts, resulting in economic pressure and reputational risk.

Companies without a strategic communication plan that considers sustainability risk eroding the trust of key stakeholders, missing out on investment opportunities, and may even fail to attract the new generation of talent and lose out on new business. Communication aligned to ESG will never go out of fashion unlike that other acronym which is long forgotten.