The ESG News Review: The prominence of social as environmental takes centre stage

There will be few more critical spotlights for the environmental aspects of ESG than COP26.

With the event in Glasgow less than a month away, noise and news has been cranking up for some time and will only increase. For some businesses, it may also be a moment to restate, reflect on and even adjust goals, such as Mars resetting around net zero this week ahead of a full roadmap to be published next year.

Undoubtedly, much scrutiny will be poured over other net zero announcements and 1.5 degree warming limitations commitments in the coming few weeks.

But while the prominence of social ESG drivers has been growing in attention and understanding over the past year or more, the S of ESG is now in the foreground too. Understandably, it may not get the column inches or pixels of the environmental crisis and required action in the very short term, but expect social factors to be both centre stage themselves and a more joined up part of strategic ESG communications in the coming months.

This Hargreaves Lansdown self-published piece makes the case very clearly. It makes the point that social factors can often be overlooked because of the urgency and significance of environmental ones, and the corporate consequences - including reputational ones - of governance. Equally, without strong governance, environmental and social performance will never be as strong.

It also outlines both internal and external social factors. Internal ones, such as diversity and inclusion, may already be a large strategic focus and progress may be communicated regularly. External ones, such as community engagement, particularly on a very local level in places where the company operates, may be less structured, though they should always feature in an ESG framework, even if the risks may appear moderate.

This all underlines the need for a balanced, rigorous and objective approach not only to ESG strategy-setting and risk analysis, but to planning communication and assessing the ongoing reputation bumps along the way. ESG is, after all, largely a long game by conventional corporate timeframes, which in itself gives cause to reflect on the media attention that former Unilever CEO and purpose flagbearer Paul Polman’s new book received.

Titled Net Positive, co-author Polman outlines in it how hard it is for any business to be net positive, and how long that can take - and much media commentary has suggested how far off that mark many still are.

As the Financial Times review of the book put it: “These massive dual challenges - and other profound shifts, such as pandemics, resource pressures, and shrinking biodiversity - threaten our very existence. Other megatrends, such as the push for a clean economy and the unprecedented focus on diversity and inclusion, offer exciting new opportunities to heal the world, and prosper by doing so. Government cannot do this alone. Business must step up.”

Step up indeed. And while the environment may be the starkest of realities, social ones will need to be right in the frame too.

The ESG News Review is written by Steve Earl, a Partner at BOLDT.

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