When people talk about ESG or Sustainability, often it is the Environmental aspect that gets the focus. However, the Social piece is arguably the largest and most evolving part of the equation.
The S in ESG stands for social, and it is important because it encompasses a wide range of factors that affect a company’s relationship with its employees, customers, suppliers, and the communities in which it operates. These factors can have a significant impact on a company’s financial performance, both in the short-term and long-term.
Here are some specific examples of how the S in ESG can impact a company’s financial performance:
Employee morale and productivity
Companies with a strong commitment to ESG tend to have higher employee morale and productivity. This is because employees are more likely to be engaged and motivated to work for companies that are aligned with their values.
Customer Loyalty
Customers are also more likely to be loyal to companies with a strong commitment to ESG. This is because customers are increasingly looking to support companies that are making a positive impact on society and the environment.
Risk Mitigation
Risk mitigation: Companies with a strong commitment to ESG are better positioned to mitigate risks such as supply chain disruptions, reputational damage, and regulatory changes. This is because these companies have stronger relationships with their employees, customers, suppliers, and communities.
In addition to these financial benefits, the S in ESG is also important because it helps to create a more just and sustainable society. By investing in their employees, customers, and communities, companies can help to improve the lives of millions of people around the world.
Here are some examples of how companies can improve their social performance:
Invest in employee training and development
This can help to improve employee skills and productivity, and it can also help to create a more diverse and inclusive workplace.
Provide fair wages and benefits
This can help to attract and retain top talent, and it can also help to improve the financial well-being of employees.
Implement sustainable sourcing practices
This can help to reduce the company’s environmental impact and improve the lives of workers in its supply chain.
Support local communities
This can involve donating to local charities, volunteering employee time, and hiring local suppliers.
By taking these steps, companies can improve their social performance and make a positive impact on society.
Diversity, Equity and Inclusion (DEI) is vital to the Social element of any companies ESG strategy. It can help your business in a number of ways, including:
Increased innovation and creativity
A diverse and inclusive team brings a wider range of perspectives and experiences to the table, which can lead to more innovative and creative solutions to business problems.
Improved decision-making
A diverse and inclusive team is more likely to consider a wider range of options and make more informed decisions.
Better problem-solving
A diverse and inclusive team is better able to identify and solve complex problems.
Increased employee engagement and productivity
Employees who feel valued and included are more likely to be engaged and productive at work.
Improved customer service
A diverse and inclusive workforce is better able to understand and meet the needs of a diverse customer base.
Enhanced reputation and brand image
A company with a strong commitment to diversity and inclusion is more likely to be seen as a desirable employer and a responsible corporate citizen.
In addition to these benefits, improving diversity and inclusion can also help your business to:
- Attract and retain top talent: In a competitive job market, companies that are committed to diversity and inclusion are better positioned to attract and retain top talent.
- Expand into new markets: A diverse and inclusive workforce can help companies to better understand and serve new markets.
- Reduce risk: A diverse and inclusive workforce can help companies to reduce the risk of making decisions that are discriminatory or biased.
By taking these steps, employers can improve employee wellbeing and create a more productive and engaged workforce.
Obviously the ‘S’ is broad and includes many aspects. Social Purpose is a term used often, but what is it?
To create purpose in your business, you need to start by understanding your company’s values and mission. What does your company stand for? What impact do you want to have on the world? Once you have a clear understanding of your company’s purpose, you can start to develop strategies to achieve it.
Here are a few tips on how to create purpose in your business:
Identify your company’s values
What are the core values that your company is built on? Your company’s values should be reflected in everything you do, from the products and services you offer to the way you treat your employees and customers.
Define your company’s mission
What is your company’s purpose? What impact do you want to have on the world? Your company’s mission should be more than just making money. It should be something that is meaningful to you and your employees.
Create a purpose statement
A purpose statement is a short, concise statement that communicates your company’s purpose to the world. Your purpose statement should be clear, inspiring, and authentic.
Communicate your purpose to your employees
Once you have a defined purpose, it is important to communicate it to your employees. Make sure that your employees understand what your company stands for and what impact you are trying to make. The even better approach is to include your employees in finding ways to deliver that purpose!
Align your business strategies with your purpose
Make sure that your business strategies are aligned with your company’s purpose. This means making decisions that are good for the environment, your employees, and your community, as well as for your bottom line.
If you have any queries regarding the above, please get in touch with Richard Singleton, or contact us using the form below: