ESG or Environmental, Social and Governance is a theory that there is an ethical way to do business.
Simply put, the S represents the ‘social’ aspect of the organisation and applies to any societal, political or communal impact. However, unlike environmental or governance concerns, it is hard to pin down what it actually means.
One problem is that the ‘social’ aspect is not easily quantifiable. While environmental and governance are clearly defined, societal impact is anything that deals directly with people.
This includes a much larger range of concerns including social trends, labour and politics. Unlike emissions or compliance, they are hard to measure and not always covered by the law.
Every aspect of ESG is linked. The environmental and governance practices of an organisation will affect their social impact. For example, the climate crisis will have consequences for supply chains and communities. Still, the social aspect has its own importance.
Why is the ‘S’ in ESG important?
Although the S in ESG is complicated, it is absolutely essential to every ESG strategy. There is little point in having perfect environmental and governance policies if the company has a terrible relationship with their workforce and consumers.
Sometimes, this can involve taking socially responsible measures. For example, a company might engage in fundraising efforts for a charity that reflects their values. Here at Convene, we have sponsored Herne Hill Velodrome’s Track League for several years. This is a simple way to give back to the community and make sure every kid has access to a sport they enjoy.
The S in ESG is also important from an economic perspective. Shareholders and stakeholders alike are growing increasingly concerned with a company’s Corporate Social Responsibility. Sustainable investment is a way for investors to prioritise their own values. They also will not want to invest in companies that have not got a clear understanding of their consumers.
It is also important for organisations to pay attention to future trends. There may be demographic changes amongst their consumers that influence the market. Without the S in ESG, every marketing strategy would be exactly the same. This is evidently not an effective way to do business.
How Should Companies Address the ‘S’ in ESG?
A crucial aspect of social ESG is diversity and inclusion. There are many reasons why diversity and inclusion is so important which include bringing new skills, perspectives and experience into the company. At a base level, it is a key reflection of a company’s commitment to social change.
Having an inclusive workplace isn’t just about ticking off a list of criteria, it’s about creating a work environment where your staff can flourish. In this way, the best talents will rise to the top. Paying attention to social concerns can support your team and as a result your organisation.
Socially responsible business can improve your relationship with your staff for other reasons. It can help avoid labour strikes and consumer protests. These can directly impact profitability as they impact the reputation of the company.
Social media has accelerated this transparent relationship between organisations and their shareholders. Movements such as #MeToo and Black Lives Matter have meant consumers and investors are reevaluating who they give money to.
It is also important for companies to pay attention to geopolitical concerns. Boycotts can impact performance and disruption to supply chains may complicate distribution. In this case, the S in ESG is an essential part of risk management.
During the Covid-19 Pandemic, we have seen a new side of social responsibility. Companies that have made an active effort to minimise the exposure of their workforce have seen benefits. By valuing their staff, they have created a more positive company culture.
Some companies have introduced virtual meetings to reduce exposure and safeguard their team. However, this is not only a great practice for the pandemic. There are many advantages of virtual meetings that can improve your relationship with the S in ESG, even after the pandemic.
How Can a Board Portal Support Your Social Responsibility?
A Board portal like Convene is designed to improve your organisational practices. With enhanced communication, you can save time on useless tasks and focus on the important things. The all-in-one solution will improve your relationship with your team by showing you value their contribution.
From planning the agenda to establishing an audit trail, our comprehensive software is there for every step of the journey. When communication can flow seamlessly, different people can come together and speak with one voice.