Recently, I had a conversation with a young woman who had just accepted a new job. She excitedly explained she’d joined this particular local company because she felt their culture and corporate responsibility stance aligned better with her values than the organization she was leaving. She told me these factors were as important to her decision as the pay and advancement opportunities.

Employees, customers, communities and other corporate stakeholders are increasingly valuing and demanding different practices and policies around the social aspects of work. These elements make up the S in ESG, which stands for environmental, social and governance, and refers to key factors used to measure the sustainability and ethical impact of a business or company. 

“The ‘S’ in environmental, social and governance (ESG) investing moved into the spotlight during the COVID-19 pandemic as companies faced concerns about employee wellbeing and bold calls for action on social inequality,” says a recent Reuters article. However, social aspects of work are even broader than health and social support and DEI (diversity, equity and inclusion) policies; they also encompass hiring and advancement, learning and skills development, work/life balance, workforce or board composition, corporate charitable giving, community involvement, volunteerism, employee satisfaction, labor practices, parental policies, and pay equity, just to name a few.

That’s a big list. Because many of these factors are complex and varied, quantifying social impact can be difficult for leaders and organizations. A 2021 Global ESG Survey by BNP Paribas shows that 51% of investors surveyed found the S to be the most challenging of the letters in ESG to analyze and include in investment strategies. 

Regardless of how challenging it is to report on social issues, stakeholders – including employees, customers, investors, and community members – are increasingly paying attention. Younger generations in particular are prioritizing the social aspects of work and corporate responsibility; the 10th annual Deloitte Global Millennial and Gen Z Survey reveals millenials and Gen Z are making specific employment and purchasing decisions based on companies’ practices. Like my young friend who just changed jobs, many individuals are examining all the social aspects of a company when considering where to work, what companies to patronize and where to invest.

As a result of attention on the S in ESG, forward-thinking companies are now reevaluating how they address the well-being and representation of a wide range of constituents. The good news is that focusing on the S in ESG can improve business continuity, improve a company’s brand, and increase retention and engagement – which ultimately are positive for the bottom line.

I asked local leaders why the S in ESG is so important to companies:

Sarah E. Madsen, vice president and chief legal officer, UFG Insurance: The social pillar, or S in ESG, evaluates a company’s level of engagement with its workforce and society. Socially conscious investors purposefully invest in companies that actively cultivate relationships with employees, customers and communities, and are attendant to social issues including human rights, labor, diversity, health and safety, community engagement, product quality and brand. Given the importance that socially conscious investors and employees place on a company’s societal engagement, enhanced focus on S in ESG can play a significant role in a company’s ability to recruit the brightest talent and engender loyalty in customers, which ultimately promotes greater profitability.   

 

Darren Rebelez, president and CEO, Casey’s: The social element of ESG is often reflective of the heart of a company’s purpose. For Casey’s, our purpose is to make life better for our communities and guests every day. As the third-largest convenience retailer and fifth-largest pizza chain, our continued investment in our team members and communities is imperative to sustain our transformative growth. Companies are recognizing that their first and most important stakeholder is their employees. The guest experience will never exceed the employee experience. Taking care of your people isn’t just the right thing to do, it’s good business as well. Externally, being a responsible contributor to society means finding the intersection of your business goals and community needs to make a greater impact. 

 

Beth Wood, executive vice president, chief marketing officer and chair of ESG task force, Principal Financial Group: For companies, the S in ESG is about people – including your employees and customers. Principal Financial Group is driven by its purpose to create greater access to financial security across the globe. When people have access to decent work and their basic needs are satisfied, they survive. When they are also supported with access to opportunities to build wealth, plan for a bright future and leave a legacy, communities and countries are elevated and thrive long into the future. 

Advice for leaders and businesses seeking to address the S in ESG:

Connect your strategy with your policies. “Leaders can begin shaping a strategy to address societal issues by assessing the topics most material to their key stakeholders and connected to their business purpose, or the reason their organization exists,” says Wood. Madsen observes that shaping a strategy to address social issues requires company leaders to reflect on how the company is currently perceived by employees, stakeholders and the community. Once that strategy is in place, she says, “Companies should memorialize their social consciousness with robust policies on human rights, diversity, health and safety, equitable compensation, and training and development.” 

Prioritize your most important assets – your people. Rebelez says that at Casey’s, their purpose and values guide them in how they strengthen their operations, their communities and their commitment to deliver compelling experiences to their guests. “It starts by fostering a culture that rewards and drives performance,” he observes, adding that because this is the heart of everything they do, Casey’s is able to celebrate a more diverse, gender-balanced organization today – nearly 60% of Casey’s Senior Leadership Team and over 50% of Casey’s Extended Leadership Team reflect diversity by race, ethnicity or gender.

Develop an informed perspective. Companies seeking to better support key stakeholders and connect to their business purpose can benefit from education and data. “One way to provide an informed perspective is through relevant research,” says Wood. To support a deeper understanding of financial inclusion, Principal launched the Global Financial Inclusion Index in 2022 – a research initiative to help them and other financial services companies, governments, employers and organizations better understand the factors contributing to a financially inclusive society. 

Gather feedback from all stakeholders. Intentionally asking for feedback from customers, employees, board members and other stakeholders can give companies better information about how their company is currently perceived by employees, stakeholders and the community. “Employee engagement or pulse surveys can provide an objective measure,” says Madsen, who stresses that employers should consider routine one-on-one meetings with members of their team to focus on both professional and personal development. “Holistic management of employees allows employees to know they are cared for as people,” she notes. 

Support employees. Taking good care of employees – including offering them opportunities and resources to succeed, providing competitive and equitable pay, and creating an inclusive workplace – is paramount to recruitment and retention efforts, says Madsen, who notes that as remote jobs out of state are increasingly offering greater salaries, employees are seeking out culture and a sense of belonging as their reasons to stay. Rebelez echoes that support matters: Across their 2,400-plus stores, female leaders at Casey’s continue to be recognized as Top Women in Convenience. “We are proud of these leaders and know their contributions play an integral role in Casey’s transformative growth,” says Rebelez.

Engage in the community. Madsen notes that giving back to the community bolsters a company’s reputation and also helps companies combat anti-corporate sentiment that drives social inflation. Rebelez concurs, saying that community involvement such as supporting schools, food banks, veterans and first responders is core to Casey’s mission in both urban areas and small towns. “With over half of our stores being located in rural communities, we have found our business is only as strong as the communities that we call home,” he says. “Giving back to fundamental areas like schools and food banks and fire stations helps these towns stay prosperous.”