The UK’s largest firms are overlooking poverty among their workforce, supply chain and communities, according to analysis of FTSE 100 companies’ ESG (environmental, social and governance) statements.
Public policy think-tank The Social Market Foundation has found that FTSE 100 organisations are 64 times more likely to address environmental issues than to discuss poverty in statements highlighting their ESG work.
Keyword analysis of the statements found that firms were largely ignoring the ‘S’ in ESG; the word “governance” appears 176 times in the average ESG annual report, “environment” appears 64 times; and “poverty” is mentioned only once.
Words associated with firms’ plans to help tackle climate change – including “sustainability”, “environment”, “climate”, and “environmental” – are found to occur frequently, according to the Capital concerns report.
Across the 100 reports analysed, “poverty” is mentioned 101 times, while “governance” is used 17,600 times.
Fifty-three FTSE 100 firms made no mention of poverty in their reports, even though all had committed to tackling ESG issues.
An estimated 8.5 million working-age adults and 4.5 million children were in poverty in the UK before the Covid-19 pandemic, according to the report. More than 600,000 working adults are expected to have fallen below the poverty line in 2020 and 2021.
The SMF, which carried out the research in partnership with grant-giving body Trust for London, urged businesses to pay more attention to poverty among their workforce, supply chain, and communities.
SMF director James Kirkup said: “Companies that want to do good should start by ensuring their own people aren’t living in poverty.
“If companies are seen to promise to do good but won’t address something as fundamental as poverty among their workers, suppliers and neighbours, the public and those who invest their money will start to wonder if ESG really means anything and lose trust in business.
“Ignoring the S in ESG could be very expensive indeed.”
Manny Hothi, chief executive at Trust for London, said: “Businesses play an important role in tackling poverty in London, especially when we look at the ongoing increases of in-work poverty.
“It’s disappointing that many companies do not yet see poverty as part of the responsible business agenda. We want to see all businesses in London taking action to tackle poverty, and a natural starting point is by becoming accredited as a Living Wage employer.”
The report finds that tackling ESG issues is important to London-based large employers; 97% of larger businesses in the capital say that ESG issues are “important” to them.
Six in 10 large London employers that say ESG is “important” report that environment is a “focus of their current ESG efforts”, while 26% report prioritising in-work poverty in their own workforce.
The report suggests that businesses are not focusing on in-work poverty because there are no immediate incentives to encourage interest in it, and the potential longer-term commercial benefits of addressing poverty “have not always been clear and widely understood”.
The SMF was considering how it could design a new poverty benchmark that would enable businesses to demonstrate what measures they are taking to help reduce staff poverty.