ESG 101: What Is Covered in Social?
- ESG Consulting Services
Recently, ethOs President Ali Payne took a look at the overall concept of Environmental, Social, and Governance (ESG) and our own Lou Raiola dove deep into what falls under the umbrella of the “Environmental” aspect of ESG.
While Environmental has been driving the ESG movement, over the last two years, there has been an emphasis placed on the Social aspect. Why is this?
Well, in 2020, both COVID-19 and the political and social injustice environment changed how we think about the health and safety of our employees and customers. So, if you’re a company that has employees or serves customers, it’s important to understand how the Social category of ESG can impact your business.
‘S’ is for Social, But What Does that Really Mean?
You might have heard of “corporate social responsibility.” Think of Social as a way to qualify and quantify the impact you make in this space. Social takes into consideration how you deal with:
- Employee-employer relations
- Working conditions
- Living wages
- Health and safety, including mental wellbeing
- Cyber and data security
- Diversity, Equity, and Inclusion (DE&I)
- Local community support
- Philanthropic giving
- And so much more
Why Does ‘Social’ Matter?
I’m going to quote the legendary management consultant Peter Drucker — “culture eats strategy for breakfast.” To be clear, he didn’t mean that strategy was unimportant. Instead, he meant that a powerful and empowering culture was a surer route to success.
Social gives us the framework to better understand what makes a positive culture that aligns to values, allows us to report on topics that are important to stakeholders, and helps us create plans for improvement. It is bringing purpose into action, and this is important because 86 percent of employees prefer to support or work for companies that care about the same issues they do.
Looking ahead, Millennials and Gen Z are due to make up more than 70 percent of the workforce by the end of this decade. These age groups place more importance on ESG than their predecessors and, coupled with younger investors, are more likely to take action and voice their ESG frustrations. This means we’re likely to see corporate culture impacted and backlash instigated if this isn’t a top priority in organizations.
The Demands of the Workforce Are Changing; Are You Ready?
As a company, you might already be focusing on several of the topics under the Social category of ESG; however, you may just not be measuring the progress and communicating what you’re doing with employees. So, do you know if you’re missing out on aligning values with employees? Could you bring more awareness to the impact your company is having with all stakeholders? The answer is likely yes.
At ethOs, we embrace ESG as a guiding framework to always do what’s right, and our ethOs business is built on the foundation of helping you in all areas of your organizational and engagement journey.
In fact, when it comes to Social in ESG, we specifically focus on data and work with our clients to understand the risks and opportunities in today’s culture and help design a plan to move forward. If you’re interested in learning more about this, don’t wait to start. Reach out to us today for a consultation!
June 8, 2022