People and social impact: key areas for ESG success

Understanding ‘social’ in terms of ESG

Our  ESG snapshot research surveyed 800 mid-market business leaders to understand their ESG strategies and how close they are to achieving their ambitions. Among the six focus areas examined, people and social impact emerged as key pillars in creating a successful ESG agenda.

The findings highlight that companies are increasingly prioritising their employees. This raises important questions about how organisations should address the people and social element of their ESG strategy and what actions they can take to retain a competitive advantage.

Key highlights

• 74% of business leaders say prioritising their employees is a top priority
• 58% overall say their strategic goals are in line with the interests of their employees

Many businesses are now embedding relevant sustainability strategies and proactively addressing upcoming environmental reporting requirements throughout their organisation. However, addressing the 'E' in your ESG agenda without considering the 'S' in mind could result in duplicating efforts.

While the introduction of regulations for reporting social impact data might not follow the same timeline across the board, certain instances, like the CSRD, stand as examples of synchronisation.

In other cases, the intent has been expressed to introduce reporting requirements for the ‘S’ aspect.

Therefore, instead of building a strategy, approach and governance around 'E' reporting in isolation now and then having to do the same again when 'S' reporting comes in, it makes sense to address them both in one go.

A holistic approach that addresses both simultaneously offers several advantages, notably providing the opportunity to proactively lead the way in mandatory reporting and instigate positive changes that set the pace for progress well ahead of reporting deadlines.

But what does reporting on your social impact look like?

Prioritising employees: a focus for success

This area is essential yet challenging to quantify, as it significantly affects two critical stakeholder groups: your employees and wider society.

Understanding where to focus your attention and investment in terms of strategy and implementation is crucial. Companies need to ensure their people initiatives align with their overall purpose, values and what constitutes success for their organisation.

The challenge of quantifying social impact

You may have already implemented new working practices, established I&D frameworks, engaged wider society, or discussed well-being and social initiatives with your employees, or you might just be starting out. 

Either way, measuring the impact of these efforts and ensuring compliance with incoming regulations, especially non-financial reporting, can become complex.

Examples include measuring workforce diversity and comparing it to census data or pay gap reporting data, measuring engagement or how included people feel in work through employee engagement surveys.

The consequences of neglecting social impact

Mismanaging the 'S' in ESG can wield significant brand impact, affecting business valuation, client relationships and overall public engagement.

Getting the ‘S’ wrong often ignites substantial media attention as mistreatment of individuals is an emotionally charged issue that resonates on a global scale.

Many brands have suffered the consequences of being the latest organisation to fall foul of public and employee expectations on its ‘S’ agenda. This shortfall has far-reaching implications, affecting consumer choices and, consequently, both revenue and shareholder value.

This can be from the organisation itself or extend to entities within its supply chain, such as engaging in discriminatory practices or paying a fair wage.

From a talent perspective, the impact often results in increased expenses. Organisations find themselves compelled to offer higher salaries, as the alignment of values and reputation will no longer serve as enticing factors.

In some cases, you will struggle to attract any top-tier talent where people have the choice of where to work.

Many larger organisations, the public sector, and purpose-driven smaller organisations may choose not to use businesses at all in their supply chain based on their ESG credentials, potentially resulting in a loss of customers.

What can you do right now to address the 'S'?

Understand the breadth of the ESG agenda and realise the benefits of getting ahead of mandatory reporting. When delving into ‘E’ reporting, consider the 'S' to streamline your efforts in building a strategy, approach and governance, given that both aspects will ultimately require your attention. As well as time savings, this approach drives positive change, propelling progress in advance of reporting deadlines.

Outline your vision and your why, aligning your activities to your strategic priorities and business goals. In doing so, adopt a practical approach to distinguish between 'must-do' and 'should-do' activities.

Familiarise yourself with your current baseline – where are you now?

Build the pathway – prioritise and highlight quick wins and momentum-building steps, employing an evidence-based methodology for efficiency and accuracy.

Choose your approach - either undertake a comprehensive transformation all at once or be iterative and prioritise tasks within your process.