The ESG News Review: With COP26 looming, it’s time for the S factor

We are now just - as everyone who works in corporate communications or has an ESG focus doubtless already knows - less than 10 weeks from the start of COP26 in Glasgow.

It will dominate headlines around the colossal threats of climate change, and action required to tackle it, like never before.

But while the environment will rightly be the focus, the need to understand how important social factors are to long-term sustainable change and ESG-led value remains. And with so much attention at the moment on the E in ESG, we need to make sure we’re giving appropriate attention to the S factors too.

The case for social was outlined in this opinion piece in Forbes a few weeks ago. Having worked on several reputation data analysis assignments over the past year, one consistent theme is that while rightly having climate change-related environmental drivers high on the agenda of ESG materiality, businesses often didn’t give enough prominence to social ones, or had a less connected approach to them.

And while the stark realities of our changing climate have become ever-more apparent, social factors have undoubtedly been brought forward by COVID-19 too, as the impact of the pandemic on society has been laid bare, and businesses have grappled with employee engagement issues that have also come to the fore. Expect these and other priorities to be discussed at PRMoment’s event on good ESG reports next week.

While the degree to which each social factor has a bearing on reputation - and stakeholder value - of course varies by sector and by company, many are gaining ground in the public eye:

  • Employee health and safety: a topic dominated by discussion and decisions about when and how employers set policies and timelines around increases in office-based working, with CNBC covering how many businesses have informed their workers of their plans, and again Forbes highlighting how approaches vary widely
  • Diversity of senior leadership: Harvard Business Review this week urging genuine diversity rather than tokenism after a US Stock Exchange ruling
  • Affordability: while this week’s news focus has been housing, with pieces in the likes of Reuters and The Independent, an issue that runs to food, clothing, healthcare, online services and much more
  • Human rights: a factor many corporate ESG agendas have prioritised, but that evolves at pace, with a draft United Nations treaty revealed this week
  • Data security: always an arms race, but with the added complexity of a planned overhaul of UK data protection rules post-Brexit

In light of COP26, companies will invariably and rightly be looking long and hard at their commitments and goals around climate change, and be asking very tough questions of themselves. But social factors should be questioned too, and kept under regular review to understand their impact on business, and the impact business can have on them.

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

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