Companies are increasingly prioritising social factors in commercial decisions due to rising consumer pressure and legal standards, according to a report.
GlobalData's ESG – Social Factors report found that the social impact of decisions must now be taken into account instead of solely maximising shareholder value, with an expectation from consumers of going above and beyond mere compliance.
The report, which explored why companies need to invest in social responsibility, considered the key elements of social sustainability: diversity and inclusion, health and safety and community impact.
‘Triple bottom line’ replacing the bottom line
The broadening considerations of stakeholders when assessing how a company is being run have seen a focus on the bottom line – profitability – evolve to a concept of the ‘triple bottom line’: people, planet and profit.
This contends that a business should positively impact society and operate in an environmentally sustainable manner while still turning a profit.
To demonstrate their commitment to these three areas, companies are using designations like the B Corp certification, which measures a company's impact on the community, employees and the environment.
Other lists like the Corporate Human Rights Benchmark and the FTSE Diversity and Inclusion Index have emerged.
Reporting on sustainability measures, whether that be environmental or social, is being more widely used. Its proponents claim the reporting helps to assist those hoping to make ethical investment and purchasing decisions, although there remain questions over common definitions and standards.
Consumers expect more progressive social practices
According to the report, issued by Just Food's parent company, the #MeToo and Black Lives Matter movements, which gained traction on social media, highlighted the consequences of unsustainable societal practices for businesses.
More consumers are paying more interest in how companies can protect and uplift vulnerable, marginalised and minority groups, not just through performative statements but through accountable and tangible actions that make a difference to communities.
For example, the report highlights how the Black Lives Matter movement boosted the 15 Percent Pledge, which calls for retailers to commit 15% or more of their shelf space to black-owned businesses. High-profile retailers such as Sephora and Nordstrom took the pledge following the campaign gaining traction.
