A masterclass on the amorphous ‘S’

OF THE three elements in the environmental, social and governance (ESG) framework, the social aspect is often considered challenging to define and quantify, mainly due to its broad and qualitative nature. While environmental and governance factors have more straightforward quantitative measures, social factors encompass a wide variety of issues that are often context-dependent and less tangible.

The “S” in ESG includes aspects as diverse as labour practices, human rights, community impact, customer satisfaction, data protection, diversity and inclusion. These elements are vital for a company’s sustainability and long-term success, but they are often subjective and complex in nature.

A report by the Global Reporting Initiative and the Global Sustainability Standards Board states that social metrics are more difficult to quantify due to their inherent subjectivity and the lack of universally agreed-upon measurement standards.