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5 ways leaders can prioritize positive social impact

The benefits of going the extra mile to be socially responsible are felt by customers, employees, and shareholders alike. Here’s a plan to secure them.
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Key Takeaways
  • Leaders are increasingly expected to redefine success beyond financial metrics.
  • Effective management systems can be used in the move towards practical social impact.
  • Transparency with stakeholders and clear auditing are both crucial for initiatives to succeed.

In the rapidly evolving business landscape, leaders are expected to redefine success beyond financial metrics. Recent years have shown us that customers, employees and shareholders pay more and more attention to the non-financial success of companies and support those that go the extra mile to be socially responsible. 

A socially responsible company has policies, plans and systems to identify and manage any social risks related to company operations. Here are five strategies that leaders can implement to prioritize social impact in 2024. 

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1. Pay attention to human rights

Human rights are finally getting mainstream recognition as an operational business risk. In my day-to-day work as a social performance practitioner, I set up and implement management systems with all my clients, as we step away from corporate level commitments and focus more on practical processes to undertake risk assessment, risk screening, auditing and due diligence. 

Proactive companies have already started the recruitment of supply chain or value chain experts that focus largely on child labour and forced labour. In certain industries, there are other human rights risks related to operations. For mining, the impacts of extractives (oil and gas) on traditional land rights and cultural heritage are also risks to be aware of. 

I would emphasize that identifying human rights risks in operations is not an automatic red flag — but if you have the management systems, you can find ways to avoid, mitigate or manage the scope and scale of the risk. 

2. Get engaged

For companies embarking on employee engagement, employee wellbeing and an assessment of their human resources practices, I would suggest looking at ESG (environmental, social and governance) frameworks as an inspiration. Easy ideas to implement include an engagement survey to get anonymous feedback from your employees on how you can do better. Would they want a more flexible working week? Initiatives to increase diversity, inclusion, and equity? The simplest way to find out is to ask them.

For companies that have already done the work of assessing labour issues in the direct workforce, I would recommend looking at potential issues around third-party or agency workers, and contractor management. I have seen clients with impeccable labour and workforce management systems that decided to outsource high-risk activities to agency workers. In these instances, business leaders have very little visibility to the working conditions and terms of employment of the agency workers. There is a need for more detailed due diligence, and for applicable legislation. 

3. Put “community” in context

“Community” is a buzzword when it comes to social impact and ESG in general. My pet peeve is seeing communities appear in various reporting without adequate context. In my work, communities are defined as groups of people who are directly or indirectly affected by the project or operations. For others, communities include consumers. There are no right or wrong answers here: What I would advise is to provide scope and context when you talk about community investment and community engagement. 

“Engaging with” your communities is merely initiating a dialogue to understand concerns, questions and feedback. “Investing in” the community or giving back to the community implies that there is some sort of financial or in-kind support that you as a company provide. My practical advice for leaders who want to invest in their communities is this: define your eligibility criteria for communities and community initiatives; decide on your budget and the length of your support; and make sure you and your community agree on what success looks like at the end of the day. 

4. Be transparent with stakeholders

Being transparent with stakeholders can bring additional benefits to maximizing social impact. Start by identifying who are the “affected” and “interested” stakeholders. Affected stakeholders for any business will include shareholders, employees, customers and potentially communities (around manufacturing facilities for instance). Interested stakeholders might be other local business partners, or civil society organizations (CSOs). 

You need to define what information you share with the different stakeholder groups, what methods you use for engagement, and how often you need to communicate with them. In addition, establish a feedback mechanism: It will be an invaluable resource for understanding your stakeholders and their concerns. 

In terms of information disclosure, the annual ESG report or corporate sustainability reporting you (likely) already publish is a great starting point — but are there ways to make it more informative? For example, by defining your communities, or adding some information on your management systems for human rights risk.

5. Make good on promises

As customers, employees and the general public are getting more and more informed about social impact, they will ask leaders more — and more challenging —questions. It is in every leader’s best interest to become educated on social impacts related to their companies’ operations and step away from generic definitions. 

If you make a public commitment, you need to follow through with action. For example, saying you will review human rights risks in your supply chain is no longer sufficient without disclosing some of the conclusions of the audits and due diligence you conducted. When I see business leaders talk about social impact, what I listen for are the next steps: conducting on-site audits; committing to disclosing a summary of findings; sharing how you’re addressing issues. Increase your credibility by being transparent about your initiatives — and make good on promises.

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