Let's talk about S...

Demystifying the S of ESG

When we look at the S, we talk about the importance of issues such as a safe work environment, product safety for customers, non-discrimination, continuing education, diversity and inclusion, human rights, supplier relations and the impact on local communities.

And when we try to demystify the S into key values, we often think of sensitivity, sensitivity, sympathy, systemic, service, sincerity and maybe even spirituality. But above all: stakeholders. Who do you depend on in the ecosystem in which you operate as an organisation and who depends on you for income, welfare and care? 

Systemic analyses of your ecosystem, your role, interdependencies and interconnectedness can help assess where you stand in delivering the S. Research shows that companies that truly put the needs of their stakeholders at the centre of their business model tend to perform better on the S. If you treat your stakeholders with respect and trust and create mutual benefit, you can perform better on the S. 

There are also examples of value destruction if the S is not managed well, such as the declining valuation of a well-known meal delivery company based on the way it treats employees.

Research shows: investing in the S of ESG leads to financial returns

For those who still doubt the importance of the S for a company's long-term survival, checking out this study - and the empirical evidence it provides - could be interesting. By investing in the employee experience, organisations can realise savings of up to 12.6 per cent of their turnover.

A positive employee experience increases organisations' productivity and reduces absenteeism and turnover. The latter are major cost items for employers. The report examines the financial returns (expressed as a percentage of turnover) from investing in those aspects that have a major impact on how people experience their work.

So stop using the excuse that S cannot be specified, quantified and measured. Because it can. And in the end, the real human connection is the ultimate driver of value creation. So, what are we waiting for?