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  • Directors' Institute

Addressing the S in ESG

Updated: Apr 14, 2023

As companies seek to improve their environmental, social, and governance (ESG) practices, the "S" aspect is often overlooked. However, it is just as important as the other two components. The "S" stands for "social" and focuses on a company's interactions with its employees, local communities, and governments.


The social aspect of ESG is concerned with the impact a corporation has on its stakeholders, including its employees, local communities, and the wider society. The success of a company is often determined by how well it is able to meet the needs and expectations of these stakeholders. In the past, this aspect may not have received as much attention as it deserved, but it is increasingly becoming a crucial factor in a company's overall ESG performance.


To effectively handle the "S" in ESG, there are some key guidelines that companies should follow. First, companies should prioritize the protection of the rights of their employees, local communities, and other stakeholders. They should also identify all the stakeholder groups affected by their operations and communicate with them to understand their expectations and needs.


It is important for companies to have the necessary expertise to manage the social side of ESG effectively. This may require specialized training or the appointment of individuals with the required expertise to handle this aspect of ESG. Companies should also select the appropriate metrics to track their progress in meeting their social responsibilities and report on them in a concise, verifiable, and easy-to-understand manner.


Finally, companies must stay up to date with existing and proposed regulations that relate to the social aspect of ESG. This will help them to prepare for any new laws or regulations that may be introduced and ensure that they are in compliance.


In summary, the "S" in ESG is concerned with a company's interactions with its stakeholders and their rights. Companies that prioritize this aspect of ESG will be better positioned to build trust with their stakeholders, attract socially responsible investors, and maintain their social license to operate. By following the guidelines outlined above, companies can establish their role in the "S" side of ESG and improve their overall ESG performance.


Our Directors’ Institute- World council of Directors can help you accelerate your board journey by training you on your roles and responsibilities to be carried out in an efficient manner helping you to make a significant contribution to the board and raise corporate governance standards within the organization.


Our ESG Expert certification will help you to amplify your understanding of corporate governance in a detailed manner paving a way for you to become a globally recognized ESG leader.

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