It is the season for conversations with our friendly financial advisors about purchasing a mutual fund for retirement, and it is a sure-fire guarantee they will mention an ESG fund (ESG — portfolios of equities or bonds where environmental, social and governance factors are integrated into the investment). These funds are a hot trend in investing, designed to provide more knowledge about the business practices of companies where our money is being placed. In fact, according to a PriceWaterhouseCoopers 2021 survey on ESG Consumer Intelligence, 83% of consumers are more likely to buy from a company that ‘stands up for’ ESG principles. The survey also points out that 91% of business leaders believe their company has a responsibility to act on ESG. CNBC recently featured another study on ESG rankings by the non-profit group Just Capital reports that the #1 issue was treatment of workers in their polling results of the public asked about ESG factors.
Business investing activity is also heavily influenced by ESG principles. The media regularly features stories about large pension funds being pressured by their constituents to ‘divest from industry X’ or provide greater support for ‘industry Y’ based on ESG principles. No doubt, it is one of the top defining issues in business for this decade. There are now ESG rating agencies that provide scores on companies that the public can incorporate into their investing decisions. The reality is that a good ESG profile has equal importance to a strong balance sheet in 2022.
Bring up the ESG acronym in conversation and most people are very clear on what 2 of the 3 letters mean. ‘E’ stands for environment and is considered straightforward – is the particular company a careful steward of the natural environment in which they operate. The ‘G’ in the acronym represents Governance, maybe slightly more obtuse but still relatively understandable – do the people running and overseeing this company reflect the community they serve and have principles that balance social good with profit to guide them in their stewardship of the business.
When asked about the ‘S’, the response is normally a bit fuzzy. People might know that it stands for Social, but what does that really mean in the context of a business? According to the website Investopedia, the definition for the Social component is based on business relationships with everyone it touches including suppliers, customers and employees. On the employee side, Investopedia points out “Do the company’s working conditions show high regard for its employees’ health and safety?”
Companies are obligated to create a physically safe workplace for employees and ensure they are fit for duty. This covers a broad spectrum of topics such as substance use, mental health and a respectful workplace. Providing quality and impactful training is the cornerstone of a strategy to create the best possible conditions for an employee to perform their work responsibilities and is definitely one of the top ways to improve the ‘S’ component for your organization’s ESG ratings. Employees respect and appreciate when investments are made in their education, health and safety. Millennial employees especially consider these types of work benefits carefully when making employment decisions, crucial factors when gauging their workplace happiness and decision to stay for a longer engagement.
The Social component of ESG is an equal part of the equation and can be the lowest hanging fruit component to improve. To accomplish this goal it is important to partner with companies that provide services focusing on the ‘S’. Corridor has been an early adopter in the ESG movement, for the past 20 years we’ve been ensuring employees are educated by industry leading Subject Matter Experts. More than 300,000 employees and supervisors have been guided by our premium content from our SMEs to ensure that your corporate policy meets and exceeds industry best practices.
To learn more about how to create the best possible learning solutions, check out our Buyer’s Guide. This guide is for human resources professionals, Health and Safety Experts and Occupational Health Managers with a responsibility for implementing corporate policies that cover the ‘S’ component in ESG — Drug & Alcohol, Safety Sensitive, Privacy in Healthcare and Creating a Safe and Respectful Workplace: Bullying, Harassment and Diversity & Inclusion.