Five Use Cases Of Sentiment Monitoring Tools For ESG & Sustainability

Five Use Cases Of Sentiment Monitoring Tools For ESG & Sustainability

ESG risk exposure is a constant battlefield for organizations seeking long-term value creation. As public attention to social and environmental topics evolves, so too do threats to firms’ reputations and the credibility of their sustainability programmes. At Verdantix, we have increasingly noticed a growing corporate interest in sentiment monitoring tools to keep up with public opinion towards ESG. 

The recent Verdantix report Strategic Focus: The Role Of Sentiment Monitoring Technologies For ESG & Sustainability explores the value of this technology for corporates seeking to understand the social sentiment towards their brands, products and services regarding ESG issues. Sentiment monitoring analysis leverages natural language processing (NLP) or AI technology to categorize data inputs as negative, positive or neutral. This allows firms to understand topical ESG concerns both outside and within their organizations, and access information on how their competitors perform on ESG issues. 

Sentiment monitoring analysis can help corporates plan efficient communication strategies, resource allocation and corporate involvement in sustainability matters. Throughout our conversations with vendors offering sentiment monitoring tools – including C3.AI, QIMA and Peakon (Workday) – we identified five use cases of sentiment monitoring tools for corporates looking to strengthen ESG and sustainability management:

• Social media monitoring: Sentiment monitoring analysis can help firms identify rising ESG issues and evolving expectations of organizations’ involvement in social, political and environmental issues. This way, firms are better equipped to assess the effectiveness of their marketing campaigns and adapt their communication strategies on and involvement with ESG topics around the dominant public sentiment.
• Employee engagement: Sentiment monitoring tools can help HR decision-makers understand employees’ priorities on certain ESG-related issues, including DE&I and mental health and wellbeing. By doing so, organizations can design better employee-centric engagement strategies that support talent retention.
• Brand monitoring: Sentiment monitoring solutions allow firms to access real-time information to identify ESG issues before they escalate globally. This helps organizations monitor exposure to direct and indirect reputational risks, and manage any linkage to industry-wide greenwashing accusations. Sentiment monitoring tools can be key allies in protecting firms’ credibility and customer trust in their sustainability efforts.
• Third-party risk analysis: Sentiment monitoring tools offer firms insights into public sentiment on specific regions and their potential risks to suppliers. This way, organizations are better equipped to address rising social and political issues across their supply chains, building resilience and protecting their social license to operate.
• Due diligence materiality assessments: Sentiment monitoring solutions allow investors to track stakeholder’s priorities on ESG issues, and identify factors that will impact a firm’s stock price. This way, organizations operating in investment and financial markets can gauge market awareness of ESG, identify improvement opportunities and assess threats early in the due diligence process.

These five use cases highlight the benefits of leveraging sentiment monitoring tools to identify and measure the impact of ESG issues on firms’ value creation. However, it is also important for organizations to be aware that ESG and sustainability topics are highly volatile, and sentiment monitoring analysis might reflect a limited context. To counteract this narrow view, and ensure the resilience of their ESG strategy and long-term value creation, businesses must seek to complete their understanding by drawing on expertise from ESG consulting services.

As interest around ESG and sustainability evolves, the value of sentiment monitoring tools for corporates seeking better ESG management is clear. At Verdantix, we’ll continue to explore the value-add of these digital tools and other AI solutions for ESG. For now, to learn more about the use of sentiment monitoring tools for ESG & Sustainability, as well as the key steps to manage ESG risks, see Verdantix Strategic Focus: The Role Of Sentiment Monitoring Technologies For ESG & Sustainability and Verdantix Strategic Focus: How Corporations Can Leverage Software To Manage ESG Risks.