The 'S' in ESG: What, Why, and How
When it comes to environmental, social, and governance (ESG) factors, the 'S' has been somewhat overlooked. But as investors, boards, employees, job seekers, and consumers increasingly demand this information, the 'S' is finally being brought into focus.
What is the 'S'?
There are many ways to define the 'S,' but it's ultimately about a company's impact on people.
Relationships with people and institutions1
Employee, customer, and community interactions and impact2
Outcomes for all stakeholders (not just shareholders)3
"What is an organization doing to improve lives?"4
51% of investors found the 'S' to be the most challenging ESG element to assess and use in investment strategies.
How to quantify the 'S' with workplace equity metrics
92% of ratings for social metrics focused on measuring company efforts and activities — not outcomes or impact.
Workplace equity metrics demonstrate actual progress towards equitable employment outcomes, such as equity in:
Compensation
Access to higher-paying roles
Starting pay (including equity/stock, as well as sign-on bonuses)
Bonuses
Recruiting
Employee engagement
Performance scores
Promotion rates at every level
Retention rates at every level
Reporting on the 'S' can become a business advantage
Hover over each card to learn more.
Click on each card to learn more.
Improved
financial performance
See how >
Companies that disclose they've conducted a pay equity analysis report nearly 8% higher mean five-year Return-on-Equity.
Companies that disclose representation by job group tend to see higher returns.
Boosted
brand
reputation
See how >
78% of respondents put "brand name and reputation" at the top of the list for reasons to engage in ESG efforts.
92% of leaders in a 2022 survey thought that ESG issues would affect corporate reputations in the next 12 months.
Increased
employee loyalty and productivity
See how >
Employees are three times more likely to stay and 1.4 more times more engaged if they work at a purpose-driven company.
58% of U.S. employees would consider switching jobs for more pay transparency.
Your stakeholders are demanding ESG progress and reporting
Investors
85% of investment professionals included ESG factors in their 2020 investing decisions.
99% of millennial investors consider social responsibility in their investment decisions.
Investors poured $649 billion into ESG-focused funds in the first 11 months of 2021.
Employees and job seekers
More than half of employees consider a potential employer's ESG commitments.
95% of employees believe businesses should benefit employees, customers, suppliers, and the communities they operate within — not just shareholders.
The top 3 things young millennials and Gen Z workers look for in employers are employee wellbeing, ethical leadership, and diversity and inclusion.
Regulatory bodies
The SEC is considering recommendations on board diversity and human capital management disclosures.
Europe and other countries have mandated ESG reporting requirements.
Consumers
77% of consumers are motivated to purchase from companies that publicly commit to making the world a better place.
65% of Americans say when a company takes a stand on an issue, they will do research to see if it's being authentic.
Financial stakeholders
91% of banks, 24 global credit rating agencies, and more than 90% of insurers monitor ESG factors.
67% of banks screen their loan portfolios for ESG risks and ESG considerations have caused insurers to limit coverage.
Want to dive deeper into the 'S'?
Check out our blog post series to learn how your company can connect the dots between social impact goals, metrics, progress, and transparency.
Webinar
The ‘S’ in ESG: Why Investors Want You to Start Measuring How You Treat Your People
Learn why leading investment groups consider ESG measures when investing, and why tracking the ‘S’ in ESG makes more sense now than ever. Speakers include:
Tolu Lawrence, JUST Capital
Wayne A. Seaton, EY
Craig A. Woolridge, Syndio
Maria Colacurcio, Syndio
Ready to make an impact with workplace equity?
1 McKinsey & Company, 5 ways that ESG creates value, November 2019
2 Antea Group,What Does the 'S' in ESG Mean? Explaining Social Criteria for Today's Businesses, November 2021
3 Harvard Law School Forum on Corporate Governance, Time to Rethink the S in ESG, June 2020
4 Wolters Kluwer, The ABCs of ESG reporting: What are ESG and sustainability reports, why are they important, and what do CFOs need to know, March 2022