In Europe, we hear a lot about ESG (Environment Social Governance) these days. With good reason. The new EU Corporate Sustainablity Reporting Directive (CSRD) which includes reporting on ESG is comprehensive and ambitious. When reading through what companies need to respond to, it is clear that the EU has carefully crafted what a Sustainable company should look like. Not only will companies have to report on Environmental sustainability, such as climate change mitigation, emissions, material impacts on pollution and water management, etc., they will also have to report on Social sustainability and Governance.
We hear a lot about ESG, but we mostly hear about E- about climate change and environmental sustainability. Yet S – Social sustainability – is hardly mentioned in the multitude of online discussions, workshops, job adverts related to ESG reporting. As an anthropologist and emotional intelligence coach, I am very interested in the S part of ESG. How do companies plan to gather the data they will use to report on their social impact?
Social sustainability reporting entails significant quantitative data regarding their workforce- such as how many employees are female, disabled, covered by collective bargaining agreements, residents of foreign country, what is the gender pay gap, number of work-related ill-health incidents, discrimination incidents, and turnover rates, etc. Yet it also includes qualitative data- with narrative and semi-narrative responses regarding working conditions, workforce involvement in decision-making, mitigating negative impacts on workers, addressing human rights and labour rights, etc.
In addition to social sustainability measure for employees, S also entails impact on the local society. Companies need to disclose negative material impacts on affected communities, and how the affected community has been engaged with, has had a channel to express grievances, and what the company is doing to remedy their negative impact on the society. How will the company gain insight into how they might be negatively impacting the local society?
I live near Kalundborg where there has been enormous growth in the past couple of years, mostly due to the industrial growth of companies such as Novo Nordisk. Just a cursory glance at Facebook groups in the area will show that the community has definitely been affected- mostly positively with economic growth; but also negatively with unaffordable housing, labour drain and smaller businesses not able to compete with higher wages, influx of non-Danish speaking residents, etc. What are companies doing to gain insight into how the local community in Kalundborg is affected?
ESG reporting now demands that companies are held accountable- they have to submit an in-depth report on how their company affects the Environment, the Society, and their Governance measures for ensuring a sustainable corporation. ESG reporting criteria are not meant to be a test a company should pass, but rather a measurement of where the company currently is in their sustainability practices and how they plan to improve their ESG sustainability in the future.
I find the ESG reporting criteria inspiring. It demands that companies reflect and report on their impact. This information will be publicly available, which hopefully will introduce a level of accountability as well as inspire companies to invest in improving their ESG sustainability, which in the long run will help to create a more sustainable environment, as well as a social, mental and emotionally sustainable future.
Elizabeth Williams Ørberg 