It means protecting employees’ physical and mental health, but also ensuring that suppliers’ working conditions and workforce composition are sound.
Getting the S in ESG right means supporting diversity and inclusion; black, Asian and minority ethnic (BAME) equality, LGBTQ rights and social mobility. These create long-term social benefit and diversity of thought.
And they bring commercial advantages, too. There’s plenty of evidence that socially responsible companies are better equipped to deal with major crises, such as the Covid-19 pandemic.
Companies with a strong ESG focus continually assess long-term and emerging risks, helping them to draw up contingency plans. As part of their focus on the “S” they also engage more regularly with their stakeholders, understand their needs and communicate purpose. All this improves business resilience and attracts customers.
Ignoring stakeholder risk, on the other hand, can turn out to be costly. Boycotts and social-media storms destroy sales, reputation and recruitment.
That is why it is so important to get the S in ESG right