In the realm of Environmental, Social, and Governance (ESG) criteria, the “S” (Social) often receives little attention compared to its counterparts. However, the 'Social' aspect is crucial for fostering sustainable and ethical business practices. The S in ESG helps us focus on creating a positive impact on our people and community.
Social Performance looks at the relationships inside and outside our organisations.
This blog explores how organisations can achieve social performance measures that have a positive impact.
Understanding the “S” in ESG
The 'S' in ESG encompasses a wide range of factors, including labour practices, physical and psychological safety, diversity and inclusion, human rights, community engagement, and customer relations.
All these elements are integral to building a company’s reputation and fostering trust among employees and stakeholders. The social component of ESG speaks to the relationships a company, government or nongovernmental organisation has with people. It centers on the leadership of an organisation and their stakeholder and people capability. It looks at diversity, equity, and inclusion (DEI), human rights, physical and psychological safety, the work culture, and community engagement.
6 Key Strategies for Enhancing Social Performance
Define Clear Social Goals:
Establish specific, measurable, achievable, relevant, and time-bound (SMART) goals related to social performance. This could include targets for diversity and inclusion, employee and community engagement, safety, and employee well-being.
Engage with Stakeholders:
Regularly communicate with employees, customers, suppliers, and community members to understand their needs and expectations. Keep stakeholder and employees informed of your social initiatives, on what is working well, such as recognition programs and community service programs and new initiatives to improve social performance. This engagement helps build a consistent narrative about your brand, your culture and leadership. This attracts new talent, retains talent, and increases shareholder and external stakeholder engagement.
Promote Diversity, Equity, and Inclusion:
Implement policies that promote diversity, equity, and inclusion at all levels of the organisation. This will include recruitment practices, fair pay, equity in career opportunities, training, and a respectful, psychologically safe work culture. Such initiatives will increase innovation, adaptability, and positive work relationships and eliminate the risks of toxic teams, absenteeism, staff turnover, and poor performance.
Invest in Community Development:
Support local communities through initiatives such as education programs, healthcare services, sport and wellbeing programs, and infrastructure development. Create opportunities for employees to be involved in community programs or customer support programs. Ensure your customer loyalty programs offer services that help customers in their day-to-day life, helping customers live a sustainable and healthy life. Such investment in the community can enhance your organisation’s social licence to operate and build stronger relationships with your community and customers.
Ensure Fair Labor Practices:
Uphold high standards for labour practices, including fair wages, equity in pay, safe working conditions, and respect for workers’ rights. Build service agreements within your supply chain that ensure fair and safe labour practices with suppliers. This helps build constructive relationships with suppliers. Supplier actions can have a domino effect on your ESG performance and negatively impact your trust and credibility with stakeholders and the community.
Measure and Report Social Impact:
Develop robust metrics to assess the impact of social initiatives. A good approach is to align all metrics with international standards or industry benchmarks. Transparency in reporting on social performance helps build trust and credibility with employees, stakeholders, and the community.
Challenges and Solutions
One of the main challenges in achieving social performance measures is the lack of standardised metrics. To address this, companies can:
Adopt Industry Standards: Utilise frameworks such as the Global Reporting Initiative (GRI) or the Social Accountability International (SAI) standards to guide social performance measurement.
Leverage Technology: Use data analytics and digital tools to track and report social impact more accurately.
Collaborate with Experts: Partner with NGOs, academic institutions, and other organisations to develop and refine social performance metrics.
Conclusion
The “S” in ESG is a vital component of sustainable business practices. By setting clear goals, engaging with stakeholders, promoting diversity, investing in communities, ensuring fair and safe labour practices, and measuring social impact, organisations can achieve social performance measures that have a positive impact.
As organisations continue to navigate the complexities of ESG, a strong focus on social performance will be essential for long-term success and societal well-being.
For further information and insights on how to create and achieve social performance contact Paul Saunders, Organisational Psychologist – paulsaunders@LNC.com.au
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