Environmental, Social, and Governance (“ESG”) principles are becoming increasingly prominent tools for managing risk and creating value in the corporate world. ESG-focused decision making can define business priorities that support a company’s financial goals and long-term enterprise sustainability. ESG-focused leaders can help companies identify business risks and opportunities, then implement and maintain responsive, responsible, and measurable forward-looking business practices.
While the “E” and “G” in ESG have received much attention, the “S” factor is also significant for leading sustainable organizations. And employees, current and future, are important elements of the social aspect.
Identifying the business risks and opportunities within the social aspect of ESG includes looking at a company’s treatment of its employees (for example, education, advancement, compensation), its diversity, equity, and inclusion policies and practices, and its discrimination and harassment policies and practices. Businesses that rely on recruiting and retention of a human workforce face the risks of securing a strong team, maintaining it, and creating a pipeline of suitable workers. These same businesses can create opportunities to mitigate those risks with practices and policies that support a healthy workplace and prepare a pipeline of future employees.