Social and community impact – the ‘S’ in ESG

I have been part of many discussions recently about EDI – equality, diversity, and inclusion – and many organisations have started to pick up on these important issues as part of their risk register. EDI is now surfacing as a regular board-level or trustee level agenda topic at many public and social sector organisations.

Social and economic inequalities

A lot of this interest in EDI, and the broader ESG agenda, has been driven by public pressure in response to social and economic inequalities that have been exacerbated by the pandemic. Public service organisations now find themselves at the forefront of addressing issues such as climate change, social justice, and community regeneration and cohesion. As these issues grow in public awareness, leaders are actively thinking about the risks and opportunities they present.

A failure to act on these issues can have significant financial and reputational implications. In the charity sector, for example, funders are more closely scrutinising the ESG outcomes of the organisations they choose to donate to. Funding may decrease for those organisations that cannot prove they have a credible strategy for achieving their ESG goals.

As well as presenting challenges, the pandemic also provides a window of opportunity for leaders to reflect and reset their ESG approach. Embracing flexible or hybrid working models over the long term, for example, may lead to greater workplace diversity and inclusion.

Recruitment & Reporting

Employers are also increasingly reflecting on their recruitment approaches to remove any unconscious bias or ensure they recruit from a wider talent pool.

At this moment of profound change, re-evaluating the meaning and importance of the local community can also help organisations to refresh their social purpose and attract more diverse talent.

At Mazars, we know that regulation is moving in the direction of greater reporting and transparency on issues such as ESG, which includes EDI. We are seeing forward-thinking organisations that are starting to get ahead of any future regulatory requirements by embracing regular sustainability or EDI reporting. In doing so, they are proactively demonstrating their commitment to ESG, and are better able to define their positive social or community impact.

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