framework for ESG (including social topics) explains the rapid adoption of the standard as a means of measuring social impact – 28% surveyed had SASB integrated in 2020, an increase of 7% from 2017 when the original framework was published.Investors are increasingly paying attention to social performance - how companies treat their employees, customers, and the society around them. Stefan Bojanic explains why measuring the 'S' in ESG is more than just a 'nice-to-have' as we emerge from the pandemic. Environmental, social, and governance (ESG) continues to be a critical consideration for investors, and therefore for businesses – and the ‘S’ is becoming a more significant pillar to focus on. Social performance evaluates the relations a company has with its workers, customers, suppliers, and its local community. This covers social capital and human capital, with the most important factors including human rights, diversity and inclusion, health and safety, and training and development. Unlike some other straightforward KPIs used to monitor sustainability performance, such as reduction of CO2 emissions, social aspects are not as easy to measure due to their intangible nature, making them difficult to quantify. For example, how do we appropriately measure inclusion? How can we best measure the performance of training and development initiatives? The complexity means that measuring social data change and translating them into meaningful KPIs for investors is difficult. The simplicity of the Sustainability Accounting Standards Board (SASB)
Coronavirus was a game-changerWe are just beginning to see the impacts of the pandemic emerging in today’s culture and Berenberg’s UK Exploring Investor Sentiment 2021 survey labelled the pandemic the biggest driver for the shift in focus on social issues. Some 47% of investors considered the ‘S’ aspect of ESG the most important when making decisions, overtaking ‘E’ at 35%.
Environmental, social and governance