Making the S in ESG concrete

Investors and companies will be increasingly asked what their policies and indicators for the S is in their decision making. Most reports or communication today revolves around the Environment – and even when “social” or “societal” is mentioned, the focus is often on environmental factors.

The social (S) is a challenge because it seems less concrete. How do you measure impact on society? On individuals and groups? G (Governance) criteria can be discerned from general corporate governance principles and long experience in promoting sustainability. But for the S, the indicators are often too diverse and fragmented because the way in which the S is conceived by different data providers lacks a common principled basis.

In the conventional investment world, everyone understands fiduciary duty, an obligation of money managers to act in the best interests of their clients—typically centred on financial performance. But without the integration of substantial and substantive professional support from the many areas of “sustainability” which is needed to understand the sustainability dimension of choices made regarding where, when and how much to invest, there will likely only be an ever-increasing amount of money invested in “ESG” product – and the paradoxically, or not so paradoxically, increase in gap between that and the amount needed to reach the SDGs.

This concern increases when considering that human rights, and rights derived from other relevant branches of law, is by no means a professional competence integrated in the senior teams of most asset managers or investees. In order to be able to do due diligence on human rights issues, as well as in order to set strategic objectives and report on them it is crucial to understand what human rights are all about, where they stem from, what effective and meaningful implementation means, including in complex sectors and settings. If this knowledge is not in house – and with a level of seniority which makes it robust, most efforts will at best be futile, at worst damaging.

With this webinar BHR and BST Impact want to offer concrete examples on how to address societal sustainability and governance using human rights standards as a basis for strategy development, internal governance, stakeholder engagement and monitoring and reporting.