Improving Social Impact

People are at the heart of any business, so it makes sense that firms will want to develop their Environmental, Social and Governance (ESG) strategies around those that it will impact the most.

ESG was mentioned in the FCA’s speech at this year’s BIBA conference and appears in its Business Plan for 2022/23. The regulator aims to embed the consideration of ESG issues into how it authorises firms and individuals, considering factors such as diversity and inclusion (D&I), the nature of the firm and the products/services it wants to offer. In July 2021, a Discussion Paper ‘Diversity and inclusion in the financial sector – working together to drive change’ was published jointly with the Bank of England and PRA and more detailed proposals are due to follow.

Social impact metrics have been around in varying forms for some time, making it a concept that many businesses should be familiar with. However, recent economic and societal changes have meant that more robust measures are needed for firms to recognise how their business practices affect both the wider society and the inner workplace culture so that it can mitigate the risk of harm.

Key considerations for a social impact strategy include:

  • Diversity, Equality, Inclusion
  • Employee welfare
  • Labour standards and working conditions
  • Supply chain relationships
  • Data protection for clients and employees
  • Community involvement and community relations
  • Safety measures
  • Customer satisfaction

It’s an extensive list but the points it covers are important. One of the main problems a business might face stems from the lack of a standardised method for measuring ESG strategies. How does a firm know they are heading in the right direction with their social impact practices if they have nothing to compare it with?

Firms also have to tackle the other pillars of ESG; monitoring their company’s environmental sustainability as well as governance in relation to its decision-making and reporting practices within the business.

What happens internally is ultimately going to be reflected on the outside. Employees who feel valued and supported in the workplace will be more productive and their work will be positively affected as a result. A fair and equal workforce shows commitment to upholding the company’s core values, which in turn hold more appeal to future investors, clients, and new employees. 

One method of improving social and ethical business practices is to provide appropriate training for staff to help carry out their roles as well as to support their wellbeing and work/life balance. These approaches should not be seen as a ‘tick-box’ exercise which might have worked in the past, but a more in-depth shift towards establishing the foundations of a better workplace.   

About the author

Jessica joined RWA in 2018, having graduated with a First Class Honours degree in Film Studies. Her role as a content designer involves developing new and engaging e-learning modules as well as assisting in the creation of articles for Insight. 

Get UKGI Insight In Your Inbox

Regular business news and commentary delivered direct to your inbox each week. Sign up here