The engine that powers sustainable organisations
ESG refers to the environmental, social, and governance aspects of a business. In this article, we explore the 'S' in ESG and why it's an important consideration for businesses and investors.
The 'S' in ESG stands for 'social', referring to the people-related impacts of a business's operations. Under the social sphere, companies measure and report employee and community risks and opportunities against a set of criteria.
Social criteria deal with the human aspects of a business. Understanding these impacts help companies manage the potential risks and opportunities that are material to their human capital and the community in which it operates.
Below is a non-exhaustive overview of social criteria that are common material to many businesses.
The social part of the ESG equation is frequently mistaken for CSR. While corporate social responsibility can be a part of a company's social management plan, it does not directly address the various risks and opportunities that could significantly impact business. The human factor in business relationships can be highly volatile, requiring systematic management and effective engagement. By minimizing the risks to the community, businesses can gain support and build goodwill - a valuable asset to have especially where community support has a strong bearing on local politics. At the same time, positive community engagement is an opportunity to create value for stakeholders.
The Daato software is a powerful ESG data management system that enables mid- to enterprise-level companies to collect, organize, and understand data on the various social criteria relevant to their business. Our customers use Daato to exchange data with stakeholders, keep track of changes to their data repository, and even auto-generate framework-compliant reports.
Having a handle on your data is key in managing social risks and opportunities. The Daato software helps you to make sense of social criteria and the associated indicators that are relevant to your business and supply chain. The ability to allow third-party information exchange on the platform while protecting confidential information is a major asset for companies working with an extended supply chain or multiple community stakeholders. The system requests information from suppliers on behalf of users, facilitating data collection from multiple sources and ensuring compliance with disclosure requirements.
Understanding the 'S' in ESG is a process involving extensive stakeholder engagement, which in turn requires dedicated resources. Leveraging the functionalities of ESG data software can really give your social management plan the lift it needs.