So much of the focus on how to measure ESG credentials and achievements has been on environmental factors, particularly the reduction of carbon emissions.
But with a profound social crisis brought about by the spiralling cost of living, and continued economic and geopolitical uncertainty, the question of how to measure progress towards S goals meaningfully and accurately is rising up the agenda. And with greenwashing a hot potato on the E side too, and many companies committing to action to ease burdens in people’s daily lives, maybe ‘socialwashing’ will become the next criticism thrown in the path of ESG.
In the drive for hard metrics and the application of clearer standards across the ESG spectrum, ways to use data to chart the impact of corporate action are increasingly being explored, as this Raconteur article outlined this week. Broadly, it makes the case for big data being used to understand everything that is referenced in the public domain about a business regarding ESG factors, including individual Social drivers. That way, a business can see how its content around specific issues and initiatives is resonating and what people really think about it.
According to The Economist’s Impact sustainability initiative, human rights and the drive to make supply chains more ethical given post-pandemic shifts is a prime example of a S priority that companies will need to demonstrate clear progress on. “Human rights issues have become a material focus for ESG investors, and organisations risk serious reputational damage from failure to both monitor and report on these concerns,” it says.
But there is surely a limit to what being able to correlate content with individual ESG drivers can tell you, even if those drivers are standardised. It can deliver a form of measurement and give some metrics to work with, but the ability to ask questions of the data - comparing the data for one driver to the overall picture, being able to identify keywords and contract with competitors, for example - is going to give a more meaningful read on how the action is perceived in the round.
Media data has its limits too. Think of a company having committed to help society by making a certain product or service available in the short-term at enormous discount, or even free. The number of people taking up that offer is surely going to be one important metric. But so is the real difference it makes to them at a very tough time, so associated impacts - and online conversations about them - will likely need to be considered as well.
As so often with ESG, there is no silver bullet. Measurement of S action needs careful thought, and communications teams will need to understand not just a clear picture of what earned, social and owned media data is indicating, but the part that plays in broader measurement of what is being achieved.
As FT Adviser put it recently in making the case for clear, singular measurement approaches that are understood internally and externally, “Beneficiaries, in fact, feel that this way of gaining impact measurement feedback makes them feel consulted, and not “researched,” which makes them feel respected by the company. After all, language is a critical part of people’s lives – being encouraged to express oneself in one’s own language is an immediate form of empowerment, making even the process of impact measurement impactful itself.”
Of course, social media ‘bubbles’ and echo chambers will always need to be considered. Tribal behaviour online and the impact of external events can always skew sentiment readings - with Elon Musk’s Twitter takeover and the current debate raging about the medium itself a case in point.
Again, no silver bullet. But a combination of data sources, a singular measurement method and the ongoing engagement of those involved in delivering action or change will be needed to ensure that a clear picture can be gained, and reported meaningfully. And measure it we must, as a Lexology column pointed out: “Harder to define social concepts often deal in grey areas which, if not managed, could result in serious reputational challenges.”
The ESG News Review is written by Steve Earl, a Partner at BOLDT.
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