Sustainability or ESG, as they popularly term it, has never been as relevant to investors and stakeholders as it is today. And the ESG agenda will become increasingly relevant in the coming years. Many associate sustainability with only environmental agendas. However, there is much more to it. The ‘S’ of ESG plays an equally important role when companies and organisations narrate stories about their successful social impact. The social strategies played out by companies leave a long-lasting impression on communities.
The relationship that a company bears with its workforce, customers, suppliers and communities is reflective of its social strategy. It gives an idea of what opinions stakeholders hold about a company. Social caters to human capital and social capital aspects ranging from D&I (diversity and inclusion), health and safety, product liability, consumer protection, human rights, community relations, workforce well-being and development and similar others.
ESG encourages companies to be socially considerate. It prompts companies to enact and implement social impact strategies. A social impact strategy can simply be defined as a process for planning, measuring and attributing positive social change to an organisation’s work and actions. It draws out a plan for the company after carefully understanding the relationships between various stakeholders and assessing the positive social outcomes. While making a social impact strategy, the organisation should consider its brand’s mission. It should also gain an understanding of the environmental footprint of its business. Other factors such as economics, social justice, equity and climate implications should also be considered.
A company can drive its social strategies by taking into account the most relevant social factors affecting the respective industry. For example, a company that is probably in a risky sector like chemicals may insert the best health & safety measures in its factory. The workers in the factory shall be well protected and it will save the company from a probable future accident. The company realises that failure to do so can have unending negative consequences and thus it decides to have a strategy in place that is socially impactful. Who will ever forget the Bhopal gas leak disaster when it comes to a company’s negligence in health and safety? It was a deadly accident wherein not only the workers working in the factory lost their lives but the communities surrounding the factory premises faced severe consequences too and many are still paying the price for it.
Health and safety is just one space but organisations can do a lot in other spaces as well to create social impact and boost their ESG agendas. For instance, if a company plans on launching sustainable food products, it can raise public awareness about organic and regenerative agriculture in addition to selling sustainable products. A bridge between this social impact strategy and positive social impact can easily be drawn. The company has already implemented its social impact strategy by bringing sustainable food products to the market. It will create a positive social impact by bringing better health outcomes for customers and by cutting down the carbon footprint of the business.
Corporate philanthropy is another key aspect when we talk about social impact strategies. CSR (Corporate Social Responsibility) is a popular term that is widely understood. It is a great initiative through which companies can directly impact social causes. In the present time, CSR can be witnessed to have a holistic approach towards ESG. It may or may not relate to a company’s mission but the aim is always to create a social impact. For instance, a fast fashion company may choose to contribute to plantations of trees or an automobile company may choose to contribute to sustainable farming. Many companies choose to affect the ecosystems that their respective industries cater to. For example, a consumer products company decides to contribute to plastic reduction initiatives. Whichever social cause a company chooses, it is surely doing something in the right direction. But primarily, it is important for organisations to choose social causes and focus on action-orientated plans to make a difference.
These strategies, in many cases, combine the ‘E’ and ‘S’ of ESG and are thus bound to create a very powerful impact on society. Having these strategies is also important because they will improve and upgrade a company’s ESG ratings and ESG performance. These ratings and performances are of utmost importance to investors and consumers today. A survey by Agility PR Solutions highlighted that 92% of consumers wanted companies to incorporate socially responsible practices fully into their business identity. In 2015, a survey conducted by Cone Communications revealed that "91% of global consumers not only expect companies to do more than make a profit but also operate responsibly to address social and environmental issues".
The executive leadership should create a socially supportive ecosystem between all the stakeholders. A positive social impact should matter to all people in the company, from the founders to employees and customers. Companies could create social impact on a wider scale and employees too would find meaning and impact in their jobs. It is a win-win model for companies, communities and the environment. Demand ensures supply. ESG awareness is already creating demand for positive social impact worldwide. And this has been the driving force behind a company’s execution of social impact strategies. It definitely boosts a company’s ESG agenda, thereby creating an impactful impression.
You can become an ESG expert and raise awareness on this subject through CPD-Accredited ESG Expert Certification from Directors’ Institutes, which is one of the leading organisations in the ESG space.