Environmental concerns have dominated the ESG agenda for much of the last decade or so. Climate risk, carbon reporting, and net-zero targets have rightly captured boardroom attention. But as the conversation matures and evolves, is there a shift underway?
We believe there a growing recognition that an organisation’s long-term success is inseparable from how it treats people. The next phase of human rights and due diligence laws could mean that the social factor is no longer aspirational.
What does “Social” really mean?
To us, the social aspect of ESG focuses on how businesses affect people throughout their operations and value chains. This includes human rights, fair labour practices, health and safety, diversity and inclusion, living wages, flexible working and overall well-being. It also extends beyond the workplace to communities impacted by sourcing, manufacturing and distribution and product offering.
Historically, voluntary codes of conduct or corporate social responsibility programmes covered the above. Today, it may no longer sufficient. Regulators, investors, consumers, and employees increasingly expect real accountability and measurable action.
New due diligence regulations, particularly in Europe via CSDDD, will require companies to “identify, prevent, mitigate, and remediate negative human rights impacts” across their entire supply chains. Importantly, ignorance will no longer be a defence.
From risk to responsibility
From a corporate standpoint, this is both a challenge and an opportunity.
On the risk side, poor labour practices, unsafe working conditions, or human rights abuses in supply chains can lead to legal penalties, reputational damage, investor withdrawal, and operational disruption.
However, companies that take social impact seriously can turn compliance into competitive advantage. Strong labour practices improve retention, productivity, and morale. Transparent supply chains build trust with customers and investors. Companies that invest in worker well-being are often more productive, profitable and resilient during periods of uncertainty.
Issues around workload, burnout, mental health, pay equity, and inclusivity are no longer “HR issues” they are governance issues. Boards are increasingly expected to oversee human capital management with the same rigour applied to financial or climate risks.
This also requires better data. Companies must move to track indicators such as injury rates, attrition, wage gaps, grievance mechanisms, and supplier audit outcomes. The social pillar will demand systems, processes, and accountability, not just good intentions or lip service.
Employees as stakeholders
“Human Stakeholders” may not be as catchy as “Human Resources” but it doesn’t mean that employees are no less central to the coming shift.
Workers today are more informed and more values-driven than ever before. Many want to know not only what a company does, but how it does it. They expect fair treatment, psychological safety and flexibility as standard not as a nice to have.
Employee well-being is a defining issue of today. Burnout, stress, and disengagement are increasingly being recognised as business risks, not personal failings. Organisations that ignore these realities may not only struggle to attract and retain talent but bear the cost of costly tribunals when it goes wrong.
Shared accountability
Profitability remains essential, but can it remain the sole measure of performance? How value is created and who bears the cost, matters more than ever.
For companies, this may mean embedding respect for people into strategy, operations, and leadership culture sooner rather than later. For individuals, it means recognising and also being accountable in their role as employees, consumers, and public citizens in shaping better outcomes.
Those who view the social pillar as a compliance burden may struggle. Those who see it as an opportunity to build fairer, more resilient organisations will be better positioned for the future.
