ESG criteria and application in the social 'S' field

The ESG (Environmental, Social and Governance) criteria in the social sphere include various practices, including: employee relations management; community impact; supply chain management; product and service impact; and shareholder and stakeholder engagement. The first criterion, employee relations management, assesses how the company manages relations with its employees, including employee recruitment and development policies, improving working conditions, equal opportunities, diversity and inclusion, occupational health and safety, and employee involvement in business decisions

The social criteria also assess how the company interacts with the local communities in which it operates. For example, involvement and economic impact in the local community, corporate social responsibility, support of charitable initiatives, management of relations with local stakeholders, and social risk management. While the criterion on supply chain management assesses how the company manages its procurement and the relationship with suppliers. The company to improve this aspect may include supplier selection criteria based on social, ethical and sustainability standards, ensuring respect for workers' rights, the elimination of child labour and forced labour, and promoting fair and safe working conditions throughout the supply chain.

The 'S' criteria also assess the social impact of the products and services offered by the company. In order to be able to provide a service in line with the standards, the company may include, in the company strategies and policies, the analysis of the impact on consumer health and safety, the sustainability of products, ethics in marketing and the promotion of products and services that bring social benefits. Finally, the company can implement transparency actions in its communication with shareholders, disclose relevant information on social impacts, risk management and stakeholder expectations.

The performance a company can achieve in the social sphere depends on its ability to effectively manage relevant social issues and create value for its stakeholders. Companies that successfully integrate social ESG criteria into their business practices can achieve several performances, including: improved reputation and trust; talent attraction and retention; risk management and resilience; access to sustainable financing; innovation and business opportunities.

Companies that pursue socially responsible and sustainable practices can gain a better reputation (Brand reputation) and the trust of consumers, employees, investors and other stakeholders. Following social goals can lead to a competitive advantage and greater stakeholder support. Furthermore, a commitment to inclusion, diversity, equal opportunities and a responsible corporate culture can foster staff retention and the attraction of new talent.

Companies that carefully consider social risks and take measures to reduce them can improve their resilience and mitigate unforeseen events such as litigation, scandals or reputational damage. The advantages of applying ESG criteria in companies are innumerable; moreover, they facilitate access to sustainable financing. Indeed, companies that demonstrate a solid ESG approach and a good track record in social performance may have a privileged access to sustainable financing. Investors are more interested in supporting companies that create social and environmental value in addition to financial value.

The application of ESG criteria in corporate social policies and strategies can stimulate innovation and the identification of new business opportunities. For example, a focus on social sustainability can lead to the development of innovative products and services that address emerging social needs and meet the preferences of impact-conscious consumers. It is important to emphasise that the benefits and performance derived from the application of ESG criteria, vary depending on the sector, size, nationality and specificity of the company. An important project not only in the environmental sphere, but also in the social one, is 3Bee's Biodiversity Oases. Each Oasis, in fact, is cared for and grown by Italian growers, responsible for the care of the species, who are true cultivators of biodiversity. This is a valuable project for the member companies, which help to support local growers.

Companies can use different tools and approaches to measure social ESG performance. Among the various methodologies, the sustainability report is of relevance. Companies through the sustainability report provide detailed information on their ESG performance, including social ESG performance. These reports often follow reporting guidelines such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB). To measure their social ESG performance, companies can usespecific key performance indicators (KPIs). For example, they can monitor absenteeism rates, the percentage of employees involved in training and development programmes and the level of diversity in work teams. These indicators can be monitored and analysed regularly to assess progress over time

An important aspect of assessing the social ESG performance of companies are the certification standards. For example, the B Corp Certification assesses the social and environmental sustainability of a company according to strict criteria. Other certifications such as ISO 26000 or the Social Accountability International (SAI) Standard 8000 can be used to assess specific aspects of companies' social impact and management practices. In addition, companies can compare their social ESG performance with that of other companies in the industry through benchmarking (benchmarking). There are several initiatives and platforms that provide comparable data and analysis, such as the Dow Jones Sustainability Index (DJSI) or the Carbon Disclosure Project (CDP). In this context, 3Bee is a global Nature Tech that supports companies in implementing regeneration projects to achieve ESG goals.

Companies can engage internal and external stakeholders to assess their social ESG performance. This involvement can take place through surveys, interviews, focus groups or public consultations. This practice allows the company to obtain direct feedback on its social performance and to identify areas for improvement. Also very important are external corporate assessments conducted by specialised organisations or ESG rating agencies. These assessments provide an independent analysis of a company's social ESG performance and can be used to improve the transparency and credibility of sustainability information. Are you interested in starting a journey towards biodiversity to improve your company's ESG rating?



Article edited by Angelina Tortora