Covid-19 Sustainability Insights: The supercharging of social sustainability
Our recent research into the implications of the pandemic on sustainable business and ESG uncovered four strong themes (see here for summarised findings). Each has important implications and insights for our sector. In this article, we look at another one of these in more detail – the supercharging of social sustainability.
The companies we spoke to were clear; this crisis has seriously tested the social side of their strategies, placing various interconnected social issues firmly in the spotlight – from employee welfare and the treatment of vulnerable customers through to supply chain sustainability and providing essential support to frontline workers and the most vulnerable in our society. Perhaps even greater tests are still to come when the impact of Covid-19 on jobs and incomes becomes clear.
And here’s the thing, the companies which understand the needs and expectations of their employees, customers, suppliers and communities have been better able to respond and adapt to this situation. They’ve found it easier to make decisions that protect jobs and income, transition to new ways of working, and employ existing structures, technology and resources to support employees from afar. They’ve taken proactive steps to protect their SME suppliers and customers who are isolated or in financial difficulty, and they are collaborating effectively with existing partners to understand local priorities and deploy resources and volunteers effectively.
As a result, these companies have been better able to weather these storms and are proving more resilient to the immense disruption almost every business has faced. At the same time, the crisis has highlighted the role of business in society and expectations are heightened as a result. There is increased scrutiny for how a company treats its stakeholders and serves local communities and society more broadly. For investors, it has highlighted why the ‘S’ in ESG really matters. A recent poll of UK Independent Financial Advisors found that over three-quarters believe investors will divest from companies that have failed to support their employees through the crisis and in a separate survey, almost nine in 10 wealth managers believe that the pandemic will result in increased investor interest in ESG investing.
This has significant longer-term implications for the social aspects of sustainability. Here we explore three key considerations.
1. Building a more stakeholder-centred approach to business
As we’ve seen, Covid-19 has highlighted the value of strong stakeholder relationships in overcoming challenges. Reputation and trust have been won and lost on how companies have treated employees, customers, suppliers and local communities, showing the importance of putting stakeholder needs at the heart of good business. And this will be as important, if not more so, as restrictions are eased, government support is withdrawn and businesses strive to recover quickly.
The impacts of the pandemic on stakeholder relationships also shouldn’t be underestimated and it is highly likely that many expectations of a business will have permanently changed. Lots of employees will have got used to more flexibility, greater autonomy and a better work-life balance. Others will have been away from the business for an extended period and will be anxious about their return, safety or job and income security. Customer circumstances will have changed, increasing the risk of certain vulnerabilities, the ability to pay for or access services. Their expectations about how services should be delivered may have changed. Key suppliers may be facing a cashflow crisis and risk going out of business. Community partners may be facing similar and will be grappling with increased demand for and how to deliver their services. The public has new-found awareness of how business can support those on the front line and the most vulnerable in our society, and stronger opinions on how it can act more meaningfully on the big social issues of our day. Investors will push for better governance and more action from those they invest in on issues like mental health, gender and race equality and sustainable supply chain, that impact long-term financial value.
In response, companies will need to develop and demonstrate a more stakeholder-centred approach to business to ensure long-term success. Proactive engagement strategies, designed to reach a broader range of stakeholders, will be needed to fully understand and respond to these new dynamics and evolving expectations.
2. Developing a relevant and integrated social strategy
This crisis, along with the rise of the Black Lives Matter movement, has again highlighted the inequalities and divisions in our society. Individuals and groups of individuals who – because of their race, gender, age, socio-economic status, a certain vulnerability or any other marker of difference – are not treated equally. They might be unable to access the same opportunities as others and subject to prejudice and discrimination. They are also more likely to be disproportionately affected by the kind of crisis we are experiencing now. For example, the ONS has found that black people in the UK are 1.9 times as likely to die as white people from Coronavirus, with social factors such as deprivation and occupation thought to play a big part in this disparity. There was also a stark reminder recently of the lack of progress in UK workplaces on equality issues, with new research from Business in the Community finding that Black employees hold just 1.5% of senior roles, an increase of just 0.1 percentage points since 2014.
The result is a growing expectation on businesses to lead on change. A US poll in June by Edelman for example found that 60% of Americans would now boycott or purchase from a brand based on its stance on racism.
Against this backdrop, it is becoming even clearer that many social aspects of sustainability strategies and commitments have not evolved sufficiently or kept pace with the issues we face in society. This includes racism, discrimination, poverty, inequality, mental health, obesity and social mobility. It is particularly stark when compared to environmental equivalents which have begun to advance in the face of looming threats such as climate change, biodiversity loss and resource depletion.
Added to this, in our experience, it is also common for companies to view and manage environmental and social considerations as separate entities when they must be seen as one: ensuring for example that the transition to a low carbon economy does not leave anyone behind or compound existing inequalities.
Faced with this reality, companies must now question whether:
- their social strategies are focused in the right areas. Are they centred around great jobs, opportunities for all, healthy, happy & fulfilled people, truly inclusive workplaces and diverse workforces at all levels?
- their commitments and goals are suitably ambitious. Will they drive urgent action that results in meaningful change?
- social and environmental considerations are full aligned and managed holistically. How will the pursuit of one affect or support the other?
3. Accelerating action on inequality in the world of work
What is more, we seem to have finally reached a point where calls for social equality – where each and every person is treated fairly and given equal chance without discrimination – can no longer be ignored. Business has a vital role to play in the pursuit of social equality which starts in the workplace. People increasingly want to see tangible evidence of the actions a business is taking and the practical difference this is making in tackling issues of inequality and racism. Even before the pandemic and the rise of the Black Lives Matter movement, global polling earlier this year showed how growing inequality is eroding trust in institutions and highlighted the growing expectations on business to speak out on key current social and environmental issues.
The first step is making a firm commitment to tackling inequalities that exist. Yet businesses must go beyond statements of intent and solidarity – there must be a shift in mindset to go beyond the bare minimum (keeping employees safe, policies around non-discrimination for example) towards much more proactive and practical measures that make a difference. They must take the time to really understand the issues of inequality and the impact (positive and negative) that their business has on these. It requires consideration of every aspect of the way they operate: from policies, processes and behaviours through to who they spend money with, in order to identify where there may be barriers to individual opportunity and plan how to overcome these.
Workforce data is crucial – understanding who is applying for roles, being interviewed, getting hired, progressing in the business, accessing training and development opportunities and diversity and pay at every level of the organisation. Examining how company indicators compare with local and national indicators can be a good place to begin identifying imbalances, exploring the reasons why and setting goals and plans to overcome these.
Companies also now have an ideal opportunity to rethink the kind of workplace they want and need for the future. The future of work has long been a key business concern – with demography, technology, climate change and shifting values all resulting in an increasingly complex landscape for businesses to navigate. With many of these trends having significantly evolved and accelerated due to recent events, companies are resetting and reviewing their workplace plans and projects. Putting social equality goals at the centre of how they respond and adapt will be crucial for society, the economy and for businesses that want to build and maintain the trust of those they rely on.
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