Making the S in ESG concrete

Investors and companies will be increasingly asked what their policies and indicators for the S is in their decision making. Most reports or communication today revolves around the Environment – and even when “social” or “societal” is mentioned, the focus is often on environmental factors.

The social (S) is a challenge because it seems less concrete. How do you measure impact on society? On individuals and groups? G (Governance) criteria can be discerned from general corporate governance principles and long experience in promoting sustainability. But for the S, the indicators are often too diverse and fragmented because the way in which the S is conceived by different data providers lacks a common principled basis.

In the conventional investment world, everyone understands fiduciary duty, an obligation of money managers to act in the best interests of their clients—typically centred on financial performance. But without the integration of substantial and substantive professional…