ESG or Environmental, Social and Governance is a framework for doing ethical 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 impact on society 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 no point having perfect environmental and governance policies if the company has a terrible relationship with their workforce and consumers. A measurable social policy will improve your company processes.
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, equity and inclusion. There are many reasons why diversity and inclusion is so important. These include bringing new skills, perspectives and experiences into the company. At a base level, it is a key reflection of a company’s commitment to tackling social issues.
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 factors 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 long-term 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 where their money goes. This constant influence on investing strategies can alter individual company financial performance.
It is also important for companies to pay attention to geopolitical concerns which can create material risks. Boycotts can impact a company’s performance and disruption to supply chains may complicate distribution of products or services. In this case, the S in ESG is an essential part of risk management and it is always important to balance risks and opportunities.
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. Valuing health and safety has had a positive impact on their 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.
Alongside this, we've been working on our own ESG reporting tool, so you can monitor your journey. Every aspect of ESG is interlinked and our aim is to alleviate the challenges of data gathering, performance tracking and reporting.
With Convene ESG, you can compare your ESG efforts with your peers, so you can see where you need to improve most and which areas you are already successful in. This will help your whole industry move towards effective change.
We are currently working with a number of existing Convene housing customers as part of our early adopters programme. Through their valuable feedback, we will together continue to develop and fine-tune our platform, delivering a robust end-to-end ESG experience.
If you'd like to learn more about how our Board Portal or ESG reporting software can make your governance more sustainable, contact us today to book a free trial.