People are the most important asset of any business, and they sit at the core of the ‘social’ pillar of ESG. When developing an ESG strategy or rethinking how your business impacts society, it is crucial to consider all your stakeholders’ interests, from investors to employees. This will help secure a sustainable and inclusive future for your business, which is fundamental to an ESG strategy.
Measuring social impact isn’t a new concept, there have been policies and measures which some businesses have been engaging with for some time. However, individual policies and activities are not substantial enough for a robust ESG strategy. In order to evolve you need to consider the bigger picture, looking at the entire social ecosystem.
This is a move away from the ‘tick box' type of social impact exercise that has previously been the standard expectation for businesses. You need to have a more in depth, holistic view of your businesses impact and commit to a shift towards genuinely understanding the value it brings. This can be at a project, initiative, or individual strategy level – but critically you must look at the bigger picture - what footprint does your business leave on society?
Can your business prioritise social impact, value and wellbeing when you also need to succeed financially?
There are many studies that show having a happy and supported workforce helps foster a culture of productivity, loyalty and positivity, which only helps businesses thrive. For a growing number of organisations this is enough of an incentive for them to invest substantially in the welfare of their staff and wider communities.
The key things to consider for your social impact and value strategy are:
The social aspects of ESG are not limited to your standalone business. Supply chains have never been under more stress than they are in today’s complex and highly pressured global market. It is a difficult time to be considering anything other than keeping your supply chain moving but the benefits of thinking ahead now, will help protect your supply chains - and business - for its future.
Some of the legal considerations
- Modern slavery
Modern slavery is often overlooked and not perceived as an issue for the UK. This is a dangerous mindset to have for an organisation, especially when looking at supply chains. The Modern Slavery Act 2015 addresses the offences of slavery, human trafficking, servitude and forced or compulsory labour in businesses and, crucially, their supply chains. We have seen some high-profile organisations face some media scrutiny over this in the last two years and it is a key milestone when you think about your social impact and value.
- Payment practices
In response to concerns that smaller business and suppliers are suffering because larger companies do not pay on time, the UK government have introduced a duty to report on payment practices and performance. Introduced in 2017, this payment practices directive has reputational and criminal ramifications if not complied with.
- Gender Pay Gap Reporting
This obviously also has strong links with the governance element of ESG, but it is also important to consider it as part of proactively shaping your social impact. Watch our video here where our HR experts discuss the importance of revisiting your gender and ethnicity pay gap reporting.
Want to find out more?
Our experts are well placed to talk through where your business currently sits on its ESG journey, and the next steps that you should take.
Contact Jenny Irwin, social impact specialist, to discuss your challenges.