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July 6, 2022

How to include social criteria in your ESG strategy

Putting the ‘S’ in ESG

Environmental, social, and governance (ESG) issues are top of mind for many businesses today. You’re likely familiar with environmental issues in the context of ESG, but what about social criteria? These encompass a business's internal and external relationships. Think of it this way: How does a business treat its employees? How does it interact with and support its community?

While these may be broad questions, there are specific and measurable categories when it comes to social criteria. These include:

  • Labor standards, wages, and benefits offered by an organization
  • Diversity and inclusion practices
  • Community relations
  • Privacy and data protections
  • Addressing of health, safety, and social justice issues

Social risks for middle market companies

Businesses in the middle-market may not be subject to stringent ESG standards (yet), but there’s still good reason to implement an ESG strategy today. Consider your stakeholders: your supply partners, your customers, your employees, your investors, and your insurers.  What do these individuals and organizations seek in their business relationships?

Your business’s approach to social criteria has the potential to forge valuable relationships and achieve a competitive edge in the marketplace. Organizations typically choose to partner with and invest in businesses that reflect values like their own.

That said, no stakeholder is more impacted by a company’s social strategy than its own employees. After all, employees are the direct beneficiaries of their employer’s commitment to health and safety in the workplace.

As more businesses embrace ESG criteria in their corporate strategies, socially conscious companies could appear more reputable and sustainable.  

How to include social criteria into your ESG strategy

There’s a chance your organization already has a few social criteria pillars in place. After the pandemic put a spotlight on societal and racial inequities, many businesses took a closer look at their own policies to ensure a safe and equitable workplace.

So, what do socially conscious businesses look like? For starters, they have DE&I policies that support diverse recruiting, hiring, and retention initiatives. They also often offer inclusive benefits. They operate using fair labor practices and strive to make their work environments safe for employees and customers. Finally, they provide opportunities for their employees to volunteer and serve, dedicating resources to support the communities where many live and work.

A large part of an organization’s ESG strategy is being able to measure and communicate your performance in any given area. It's ok if you’re just starting to focus on these issues. Every journey starts somewhere. A great way to get started is to find out where your company stands with ESG best practices today with the Marsh ESG Risk Rating tool.

Don’t stop there, though. Reach out to us today and see how we can help your organization not only gain a competitive advantage, but, more importantly, become a more equitable place for all.