Social issues may take a backseat to environmental issues in ESG priorities, but both are intertwined and important issues for organizations to consider.
Most of the attention and regulation surrounding corporate environmental, social, and governance (ESG) goals Eor environment area. nevertheless, S or socializing This proves why this category is gaining so much attention. E.
The main reason, of course, is that humanity continues to thrive with clean air, land and water that produce enough oxygen and food and provide the means to make a living on Earth. Indeed, the environment is the habitat that enables the survival of all living things.
understand all the different parts of S To summarize, it can be broken down into different elements, from product liability elements to workforce issues, community issues, and human rights.
Clarification of human rights
The relationship between business and human rights is defined in the New York University Stern Center for Business’s 2017 White Paper as “the impact of a company’s operations on the labor and other human rights of the people and communities with which it interacts.” has been established. Another white paper published by the ESG Working Group (of which the Thomson Reuters Foundation is a member) highlights the foundation.
Indeed, a multilateral approach to the business-human rights nexus dates back a decade, with the adoption of the UN Guiding Principles on Business and Human Rights in 2011 and the UN Sustainability Goals by UN Member States in 2015. The establishment of the Corporate Human Rights Benchmark will see investors and civil society organizations work together to create public and performance benchmarks for corporate human rights.
Since then, many countries and states have introduced legislation to ensure that companies do not engage in labor exploitation or coercion practices, such as the UK Modern Slavery Act 2015, Australia’s Modern Slavery Act 2018, and California’s Supply Chain Transparency Act. Passed “transparency regulations” such as sex laws. The workforce within your own organization and the workforce within the organizations of your suppliers and vendors.
Part of the need to increase the visibility of the social aspects of ESG is to break the myth that ESG cannot be quantified. Matt Friedman, CEO of the Mekong Club, a private sector-based membership organization dedicated to bringing sustainable practices to the fight against modern slavery, encourages busting this myth. and proposes two ways to quantify slavery. socializing ESG aspects include:
- Conducting supply chain audits — Supply chains account for up to 40% of a company’s ESG impact, according to an ESG Working Group white paper that includes analysis of 1,600 MSCI World Index companies. Friedman suggests companies submit and collect surveys from suppliers and vendors during the procurement process. These surveys can be analyzed and audited to identify potential incidents of modern slavery.
- Establishment of a grievance mechanism — One of the latest ways that companies are leveraging technology is through the use of apps to create grievance mechanisms. For example, Friedman said, on the Mekong River, auditors asked factory floor workers (in their native language, using mobile devices and headphones) a series of questions about potential exploitation (whether they owed work-related debt or not). They say they are using an app that allows them to check things like whether or not they are there. , and whether modern slavery violations are occurring.
Know where to start with DEI
When it comes to issues of diversity, equity, and inclusion (DEI); socializing The first step in indicator disclosure is determining what parts of the indicator. S is important to each company’s various stakeholders, including shareholders, customers, employees, and residents of the communities in which the company operates.
common area S For any company, it means a higher level of internal representation for individuals from underrepresented identities and backgrounds. Indeed, at the beginning, socializing For any company, understand the current state of representation at each level by underrepresented identities based on gender, LGBTQ+ status, race or ethnicity, disability, veteran status, etc. It is important to do so. Additionally, knowing the median promotion and promotion timing and pay for each underrepresented identity compared to the timing and median pay for comparable professionals will help ensure fair promotion and appropriate pay equity. Important for determining gender.
Understanding how companies improve the social mobility and advancement of their employees and contractors is another area of societal impact. S, but can vary considerably depending on what you use as your key performance indicators to measure impact. Fortunately, there are companies that are taking on this challenge. Just Capital, for example, provides easy-to-use data and insights that detail company performance on a range of issues, including social, pay and diversity issues, according to the ESG Working Group’s white paper.
Too often, social performance considerations have been ignored as unimportant or a low priority. However, numerous research efforts over the past decade suggest the opposite. These include a 2014 report called Stanford University’s Social Innovation Review, which identified positive environmental and social performance and overall This shows that there is a positive correlation between financial returns. And McKinsey & Company’s longstanding research on ethnic and gender diversity shows that being in the top quartile of diversity is increasingly correlated with superior financial performance. ing.
Additionally, regulators around the world are focusing on the interaction between social considerations and financial risk. For example, the European Union (EU) has introduced the following concepts: double materialitywhich requires companies to disclose financial risks posed by social and environmental issues.
Fortunately, many global companies, their suppliers and vendors are not waiting. “In Asian factories, you see the writing on the wall,” Friedman says. “We had a factory representative basically say that he understands that ESG is important to a large company.” So in order to be more competitive, many suppliers and vendors are We are collecting the necessary data in anticipation of a supply chain survey.
October 26th and 27th will be the year for the Trust Conference, the Thomson Reuters Foundation’s annual event aimed at addressing critical issues at the intersection of socio-economic inclusion, sustainability, media freedom and human rights. Please join us.