The second of the ESG pillars we are considering as part of our series ‘An Introduction to ESG for HR Professionals’ is S for Social.

The ‘S’ Pillar relates to the considerations that a company must be aware of when navigating its social environment– this includes its interactions with employees, local communities and the wider public. Social aspects like H&S, DEI and human rights fall under the bracket of social considerations and accordingly there is a natural overlap with the responsibilities of HR.

Promoting health and safety

Ensuring a safe and healthy work environment is a social factor that is fundamental to an employee’s well-being and human rights. Companies need to proactively identify and mitigate health and safety risks in their operations and products. Developing a culture that encourages employees to report potential hazards without retaliation can help mitigate the significant costs associated with workplace injuries including medical expenses, tribunal claims and reputational damage. An understanding of H&S risks in the supply chain is also becoming more relevant, particularly in the context of the Corporate Sustainability Reporting Directive which is discussed further in our Governance article.

Some of the key rights that an employee is entitled to in relation to health and safety include:

• to be equipped with the necessary safety equipment free of charge;
• having the freedom to disclose H&S concerns without fear of reprisal;
• being provided with sufficient breaks and paid holiday time; and
• the implementation of effective H&S assessments and controls.

Diversity, equity and inclusion

Family friendly rights, the gender pay gap and workplace inclusion measures are all also considered important social issues under the umbrella of Diversity, Equity and Inclusion (DEI).

A greater focus on DEI in the workplace can improve talent retention and recruitment but what is sometimes less apparent is the impact that diversity can have on decision-making generally. The impact of ‘groupthink’ can seriously undermine a successful corporate strategy and studies have shown that a diverse management team can help to reduce this risk.

HR professionals play an important role in embedding a diverse and inclusive working culture through the introduction of effective policies, training and people networks. Companies looking to become employers of choice may even want to consider a more progressive approach – for example in recent years we have seen a greater uptake of focused policies related to a wide range of life events including menopause, neurodiversity, domestic violence, transgender considerations in the workplace and career breaks.

Human rights

Human rights are rights inherent to all human beings, regardless of race, sex, nationality, ethnicity, language, religion, or any other status. Everyone is entitled to these rights, without discrimination[1]. Unfortunately, there remains a real risk of human rights violations in the workplaces both in the UK and abroad. Companies must also ensure legislative compliance – for example, a company’s obligations under the Modern Slavery Act 2015 are wider than merely publishing a compliant statement.

Forced labour, human trafficking and bonded labour remain live issues with cross-sector significance and should not be overlooked. This is especially relevant when carrying out due diligence into potential acquisition targets or prospective suppliers.

For companies with a global supplier network the risks will already be apparent however even the UK is now classified as ‘high risk’ in relation to the prevalence of forced labour violations in the supply chain according to the Supply Chain ESG Risk Ratings report[2].

Forced labour is the practice of requiring individuals to carry out work without their consent, through the use of threats, coercion or other forms of duress. Bonded labour is slightly different in that a person is exploited through debt bondage, which occurs when a person is forced or tricked into working to pay off a debt or loan. Often, an individual ends up working harder, and for longer hours than necessary. Typically, the debt may be re-paid long before an individual is released from their obligations. It is common for passports and ID documents to be seized and held hostage by culpable employers as a threat to compel obedience.

Human trafficking sits closely alongside forced and bonded labour and is a key contributory factor to these practices. This has been defined as the unlawful act of transporting people in order to benefit from their work or service, but also typically includes the recruitment of individuals through fraudulent employment agencies prior to transportation. In May 2023 alone, Interpol made 212 arrests in connection with human trafficking.

Given the nature of their role, HR professionals have a key part to play in recognising the warning signs of forced labour in the supply chain. Factors such as excessive overtime, withholding of wages, and inadequate training or management awareness of these issues are all hallmarks of forced labour. Supply chain mapping and audit exercises can be useful methods of establishing the prevalence of these issues, but do not come without risks. Company’s exploring these types of measures should be conscious of emerging caselaw suggesting that the exertion of significant control over a Supplier’s actions or awareness of a “state of danger” could result in an extension of a company’s duty of care to include harm caused by third parties. Navigating the complicated morale, reputational and legislative landscape of business and human rights can be difficult. However, an awareness of the key issues is an important first step towards developing an effective, industry-tailored approach to human rights.

In recent years, the historic boundary between the personal and professional has dramatically reduced with social issues now permeating every aspect of the modern workplace. Employers would be well-advised to start engaging with these issues now, in order to realise the benefits of robust social framework and positive workplace culture.

Click here to read our next article which will look at the governance pillar and how HR professionals can add value in this space.

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[1] Human Rights | United Nations

[2] Supply Chain ESG Risk Ratings Report: 2023 – ELEVATE (elevatelimited.com)