ESG Explained: What’s the “S” in ESG?

Environmental, Social, and Corporate Governance (ESG) provides a roadmap for companies to implement a well-rounded and sustainable approach to their business. While conversations often lean towards the “E” and “G” components, the often-overshadowed “S” in ESG is equally important. The Social pillar encompasses considerations such as health and safety in the workplace, how companies treat their employees, and their greater social impact. In recent years, the Social pillar has gained traction due to the increasing demand for companies to address these social issues.  

The Social pillar presents a unique challenge because most social metrics yield qualitative results, making measurement and reporting more challenging. According to a 2021 Global ESG Survey conducted by BNP Paribas, 51% of the institutions surveyed cited the “S” as the most challenging aspect of Environmental, Social, and Corporate Governance (ESG) assessment.  

Below, we offer insight into how to conceptualize the Social pillar in concrete terms and explore the best ways to implement social strategies.  

Employee Well-Being  

The first step in integrating the “S” in ESG into company practices begins with focusing on the employees themselves. Employee well-being encompasses fair pay and employee benefits. Companies can conduct routine wage assessments to compare salaries with industry averages, ensuring fair and competitive compensation. The pandemic has also highlighted a growing demand for increased flexibility, with the availability of remote or hybrid working modes improving employees’ work-life balance.  

Supporting employees’ physical and mental health is another critical facet of employee satisfaction and can take many forms. These initiatives can range from simple actions like holding meetings outside on a sunny day to more deliberate measures, such as encouraging employees to take their vacation time. A great way to assess employee well-being is by conducting both qualitative and quantitative surveys, which can help identify areas for improvement. In this way, employees can offer suggestions for creating a better work environment and finding solutions tailored to their specific needs.  

Attention to employee well-being can lead to decreased employee turnover rates. Satisfied employees are more likely to be productive and motivated in their jobs. Prioritization of employee well-being not only fosters a more positive work environment for current employees, but can also attract prospective employees.  

Company Culture  

A positive company culture is cultivated through a collective effort aimed at valuing and implementing social strategies. One important aspect of company culture is the promotion of diversity, equity, and inclusion (DEI). DEI initiatives include recruitment strategies that reach a larger and more diverse pool of candidates. Equity in the workplace ensures that employees have equal opportunities and are treated fairly. A more diverse and inclusive workforce benefits the company by creating an environment conducive to new and innovative ideas. 

Employee training and development play a pivotal role in establishing and sustaining a positive company culture. Through training and development programs, companies can convey their values and articulate their vision for the company culture. In turn, employees can offer input and raise awareness of any issues that deviate from these goals. The longevity of a positive company culture depends on the shared responsibility of all employees to uphold and support it.  

Health & Safety in the Workplace 

An important aspect of the Social pillar involves providing a safe and healthy work environment for employees. Proactivity is key to workplace safety. Capaccio can assist companies in developing strategic plans for workplace safety, as well as in collecting and managing data to provide insight into areas for improvement. Companies must foster a culture of safety by providing employee training, which serves to minimize workplace accidents and ensure appropriate responses to any near-misses or accidents that do occur. At Capaccio, we assist companies in conducting near-miss and root cause analyses for EHS incidents, enabling companies to take preventive actions for the future. Additionally, we offer services such as air sampling, chemical and gas exposure assessments, air quality and ventilation system evaluations, and more to ensure safe working conditions.  

The enhancement of health and safety in the workplace is integral to the Social pillar because it extends beyond the company itself. The careful management and storage of chemicals, toxins, and contaminants not only protects the employees within the workplace, but also safeguards the broader community.  

Supply Chain  

Companies committed to addressing the “S” in ESG must carefully examine how social issues and opportunities present themselves throughout their entire supply chain. Health and safety procedures must be enforced for the safety of supplier employees, as well as for the safety of communities surrounding the supply chain. Companies can promote the adoption of social strategies by providing training resources to their suppliers. Maintaining transparency in supply chain operations is crucial as it holds both companies and their suppliers accountable for their social commitments. 

Community Outreach & Engagement  

Community outreach is another vital part of a company’s social responsibility because giving back to and making a positive difference in the community helps boost company morale and cultivate a culture of care. Community outreach can take many forms, including volunteering and collaborating with non-profit organizations. By actively engaging with the community, companies can develop stronger relationships with their customers and bolster their reputation as a positive influence in the community.   

Next Steps 

Capaccio is committed to helping our clients implement Environmental, Social, and Corporate Governance (ESG) strategies to enhance their resilience. We guide our clients in identifying concrete ways to achieve social objectives, beginning with a materiality assessment that pinpoints ESG issues and growth opportunities. Specifically, our assessment covers social evaluation topics such as employee health & safety, DEI initiatives, and community outreach.  

The materiality assessment serves as the initial step in establishing ESG metrics and targets tailored to your company’s needs. Our EHS-Dashboard™ simplifies the tracking of ESG metrics, enabling you to seamlessly monitor your company’s progress in real-time toward ESG goals, and model the impacts of proposed projects to meet environmental targets. Schedule a demo to find out more about the EHS-Dashboard™. The Social pillar of ESG plays a crucial role in companies’ journeys toward a sustainable future.