Environmental, Social and Corporate Governance (ESG) is a methodology that opens organisations up to a more client-centric way of doing business, with client being an umbrella term covering employees, shareholders, clients, vendors, suppliers and the wider community.
While the Environmental and Corporate Governance elements are pretty straightforward when it comes to developing strategy, the Social factor tends to remain quite elusive in terms of definition. Just what does ‘social’ cover in terms of business culture, direction and function.
‘Social’ aka Corporate Social Responsibility covers a multitude of business elements ranging from HR/personnel to Health & Safety to inter-community relations. It can be loosely defined as covering those factors which can act as boom or bust in respect of corponomics.
In an age when social media, especially cancel culture, can instantaneously sully a company’s reputation, it has become increasingly important for businesses to lock-in their hard-won name and standing both across markets and within their industry. The greenwashing, rainbowising and shamrockification of multiple brands at specific times during the year serves to clearly highlight how significant a part the ’S’ plays in terms of brand awareness and more importantly, acceptance.
Modern day businesses want to be seen to be completely in-the-round when it comes to inclusivity, diversity and equality. They tap into social media trends and shape-shifting ‘mood music’ of the internets, a landscape which is permanently changing key. Sustainability today, gender pay gap tomorrow, employee wages vs cost of living crisis and rising inflation next week.
Getting how they communicate, interact and support both employees and communities, of all types, to hit the right notes has become increasingly important to businesses seeking to break down barriers whilst simultaneously forging the business building blocks on which their tribe, local community and wider society can grow and thrive.
“Charity begins at home” as they say. By taking care of their employees, ensuring their wellbeing by providing a clean and safe environment, advocating clear communications and honest interactions, implementing employee-centric policies and protocols, business leaders can create a positive culture of inclusivity and integrity. In return, employees will reward people-led businesses with loyalty, drive and good morale.
As part of a wider package of measures to drive support for positive, people-centric corporate cultures, the EU has mooted the introduction of a Social Taxonomy. “A planned classification of economic activities”, the proposed regulation aims to help EU member states to achieve their social commitments whilst simultaneously setting out clear guidelines on ‘social sustainability’ for financial stakeholders and regulatory authorities alike.
In other words, a list of sustainable business activities.
Currently on the back burner, the EU legislation, which is wrapped around the three pillars of community, consumer and worker, provides guidance on corporate policies that drive social sustainability. Sidelined in Autumn 2022, the Social Taxonomy is expected to made a resurgence once the EU moves out of the Energy & Inflation danger zones later in the year. For now, it’s not a priority.
Closer to home, the Irish Government is set to introduce the Right to Request Remote Working Bill (2022) which will provide guidelines on worker/employer rights on remote/hybrid working policies. Once enacted, the impending law will clearly lay out rules for making, processing and deciding on applications for remote working and relative arrangements.
In addition to making provision for remote working, employers will soon be mandated to roll out ‘family friendly’ policies on working arrangements such as the introduction of Flexi-time for those with caring or family responsibilities. Other areas under review are employee contracts, with the EU zoning in on Zero Hour Contracts, Gender Pay Gap & Fair Wages, Probationary T&Cs and restrictive clauses in employee contracts.
Another focus point for ‘social watchdogs’ is that of diversity, with more businesses seeking to draw up robust Diversity, Equality and Inclusivity Policies. Promoting a fair and equitable working environment in which everyone feels equal, valued and ‘part of the team’ is fast becoming a HR priority for Irish corporates and it won’t be long before this practice becomes the norm across the wider Irish business landscape.
ESG Social Factors aren’t simply about supporting the local community, charity or club. It starts with supporting your own, and then moving beyond the corporate four walls out into the wider social-verse.
Consumers and investors alike are wanting the companies and organisations they deal with to show their sustainability and social hands, with transparency and commitment being central to garnering loyalty, securing investment and bolstering reputation.
Leadership naturally starts at the top. And leaders need to show leadership when it comes to ethics, fairness, parity of pay, transparency and sustainability. Participating in a fun run in support of the local charity organisation and hosting ‘wellness’ fora for social opps only scratch the surface of consumer expectations.
Prospective employee, customer and partner expectations have raised the bar when it comes to Corporate Social Responsibility. That responsibility is now a catch all for employee wellness, equality, sustainability and social conscience. Those businesses that fail to see that, will soon find themselves on the wrong side of cancel culture.
Fail to get social, prepare to be sidelined.
‘ESG’ is fast becoming the beating heart of corporate strategy. Environmental, Social and Corporate Governance policies are best delivered when aligned to standard-based processes and systems.
One supports the other. ISO Standards are the bedrock of corporate operational performance and service excellence. At the heart of ESG are the ISO Standards of 9001, 14001 and 45001; Quality, Environmental & OH&S.
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