Social sustainability is an organization’s ability to deliver on its responsibilities to its employees and to the community in which it operates.
What is social sustainability?
Social sustainability reflects how well an organization’s management team addresses internal and external social policy challenges. A socially sustainable company can balance its ambition with its responsibility to stakeholders.
Internally, this can mean workplace safety throughout the supply chain, workers’ rights, and paying fair wages. Externally, we look at factors like a company’s contributions and donations, product safety concerns, and whether they produce controversial products (weapons, and so on).
The social risk score in ESG ratings measures the degree to which a company’s economic value is at risk driven by these social factors. Controversies that influence public opinion, labor strikes, and other scandals can detract from investment value.