When we talk about social aspects within ESG criteria, we refer to organizational policies and practices related to human rights, business ethics, supply chain management, inclusion, worker health and safety, and social impacts resulting from corporate operations.
Many of these issues are considered in SASB (Sustainability Accounting Standards Board) standards, which establish a framework for decision-making within companies. Depending on the industry, these issues may be related to occupational health and safety, discrimination, information security, business ethics, or even financial inclusion.
In the context of the COVID-19 pandemic, these issues have become even more relevant, prompting organizations to start collecting data related to their social issues.
The Need for Measuring Social Criteria
Climate change is often front and center in the conversation about ESG concerns; however, social issues are becoming more prominent. These may be more difficult to define and quantify than environmental or governance, but they can certainly make a big difference in stakeholder trust, inclusion, and effective participation. Especially in times like these.
It is still uncommon to see companies reporting in detail on their social practices. Good data can be found on issues such as gender diversity and labor conditions, but it is still difficult to obtain robust data on aspects such as workplace safety or business ethics, among others.
Increasingly, investors are looking for quantifiable factors to evaluate these elements, and obtaining indicators of them has become a fundamental factor. Today there are software tools to track and measure ESG criteria, allowing to obtain a fairly accurate measurement of the performance of organizations in environmental, social, and corporate governance aspects.
New technologies can be very valuable tools in the design, implementation, monitoring, and evaluation of different strategies and policies to advance on the path of fair employment-based recovery. "Technology can facilitate greater coverage of social protection, simplify worker registration, improve access to financial services, strengthen skills development and improve apprenticeship systems, support labor inspection, and favor and facilitate compliance with labor laws" details the International Labor Organization in its Labor Outlook 2021 for Latin America and the Caribbean.
Companies that take the lead on social issues are more resilient in resisting general risks. One way to do this is through a management software that works in accordance with international standards and regulations for each industry.
In the case of the M-Risk software, it is possible to manage various social aspects of the business, such as Occupational Health and Safety, Risk Management, Communities, and Environmental Commitments.
The software allows to generate internal and authority reports, obtain indicators (KPIs), and data traceability. In addition, it includes mobile applications, which are essential for recording data on social issues, as they allow for on-site recording.
A Requirement to Capture Resources
The COVID-19 pandemic has been a turning point for the social pillar, as it exposed society's weaknesses in terms of health, community engagement, access to information, gender and diversity gaps, and more.
Today, elements such as diversity, equity, and inclusion play an important role in investor decision-making. The tools to measure when and how much companies are contributing to these criteria exist and are already part of the evaluation criteria for raising financing (debt and/or equity); but more importantly, it's essential to sustain them over time. It is the moment for their use to become a visible priority.