By Dr Ana Nacvalovaite, ESG advisor and Research Fellow at Kellogg College, Oxford University
Over the last 5 years as an ESG advisor, I have seen first-hand the benefits of guiding investors and businesses on aligning their portfolios with their environmental and social objectives, as well as helping them meet – and exceed – Sustainable Development Goals (SDGs).
Indeed, there are 17 Sustainable Development Goals set by the United Nations as part of the 2030 Agenda for Sustainable Development. Each goal addresses a specific aspect of sustainable development, encompassing social, economic, and environmental dimensions.
Although all of the sustainability goals hold prevalence in relation to business, in the context of sustainable investment, it is SG7 and SG8 that should be mentioned specifically, as both of these addresses the core components of sustainable finance, combining environmental stewardship with social responsibility. SG7 is ‘Affordable and Clean Energy’, which states we should ensure access to affordable, reliable, sustainable, and modern energy for all. SG8 is ‘Decent Work and Economic Growth’, which promotes sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.
So, how can businesses ensure that they are instigating positive social change? In my experience, I have led workshops, influenced stakeholders, and guided teams to resolve complex issues and move forward. I have seen how through regular dialogue, investors can advocate for greater transparency, enhanced social initiatives, and the adoption of sustainable business practices.
But we must also highlight that key focus within the ESG framework is the social aspect, which encompasses a company’s impact on its employees, communities, and society at large. If we focus on social objectives and embed them into core business strategies, companies will attract and retain talent, and cultivate long-term value.
Therefore, to effectively meet and exceed sustainability goals, society and businesses need to foster a culture of social responsibility and purpose. This can be achieved in a number of ways. Firstly, companies should encourage integration of social objectives throughout the organization, from top-level management to front-line employees.
Business leaders should also involve everyone in the decision-making process, setting clear targets and benchmarks. By creating a climate and an atmosphere where all the members of the organisation feel that they can bring ideas to management, and suggest initiatives that will be considered, this will help businesses measure and track their progress toward social goals, ensuring accountability and transparency amongst all.
Businesses should also incite collaboration with external stakeholders, such as non-profit organizations and community groups, to leverage their expertise and create meaningful social initiatives, which should be encouraged and rewarded. By forging strong partnerships, businesses can become an important part of the community they operate in, and have access to diverse perspectives, as well as maximize their positive impact on society.
Of course, focusing on the S in ESG can also accelerate the transition towards a sustainable future, where financial success and social progress go hand in hand. Social sustainability involves identifying and managing a firm’s positive and negative impacts on a community. This includes ensuring that workers are treated fairly, providing equal opportunities to all and working to address social disparities. From a business perspective, social considerations such as diversity and inclusion, worker rights, and human rights, can play a crucial role in determining the long-term success and sustainability of a company.
As such, in order to exceed sustainability goals, the social component cannot be ignored. Businesses must recognize the critical role that social factors play in driving long-term value creation. Investing in human capital and communities is the right thing to do from a moral and ethical perspective. As we invest in employees, customers, and communities, we build stronger, more resilient, and more sustainable communities.
One can clearly see how empowering it is to work with businesses to integrate ESG best practice into their corporate processes. However, on a broader scale, it has also been encouraging to see that globally, nationally, and locally enterprises are increasingly recognizing the significance of going beyond their sustainability goals, as well as actively striving to exceed them. Indeed, by driving positive social change throughout their operations, businesses can, and will, go beyond their sustainability objectives, ensuring a better future for all.
Bio:
Dr. Ana Nacvalovaite is a highly accomplished researcher specializing in international human rights law and sovereign wealth funds. Currently, Ana is involved in a three-year research project in collaboration with Professor Jonathan Michie at Kellogg’s Centre for Mutual & Co-owned Business.
As an advocate for ethical business and investment practices, and serves as an expert advisor to the British Standards Institution on the Committee of Experts on Sustainable Finance, where she contributes to the development of the ‘Sustainable Finance Framework’.
Ana is dedicated to raising awareness about the concept of a ‘just transition’ and the critical role of sustainable finance in supporting the social aspects (the ‘S’) within Environmental, Social, and Governance (ESG) frameworks.
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