ESG/BHR data as ‘humanity hygiene’

Sustainability at its heart is about delivering better standards of liveability. Human rights in the business context are fundamentally about operationalizing dignity within our communities of effect. ESG gives sustainability its legs: the indicators, the frameworks, the risk roster expressed through publicly facing ratings which drive trust and transparency.

But are we measuring impact through ESG within the corporate human rights indicators? We are trying to establish a ‘humanity hygiene’ baseline, the complaints, incident statistics, resolution numbers, access infrastructure etc. It gives a reliable performance snapshot to the investor class regarding social risk, the subliminal cues of reading between the data lines, the grid of numbers flashing in front of our screens. ESG data is an early warning detector of an impending crisis.

The global progressive values paradigm often colloquially labelled as woke, which is often carried over to the ESG meta framework, reflective of the culture wars in US Politics ahead of the presidential polls.

From risk to resilience

ESG is the flavour of the corporate zeitgeist for all kinds of drivers and is often treated as an acronym which might be a temperature check for ethics. Environment as a domain when double clicked on, leads to a drop down menu of a number of sub-domains, starting from climate change to biodiversity to waste management. Governance is a vast sea of knowledge of their own from anti-graft to board diversity to compensation matters. However, the 'social' in ESG has several buckets, from health & safety to DEI to BHR to community stakeholder engagement to inclusive governance. There are major modern slavery legislations from Australia to the US that are reinforcing the transition of the soft laws or voluntary standards to the hard language of climate and modern slavery linked litigation. 

The intertwined nature of the various elements and their effect brings about the real nature of the weak signals that ESG as a riskification paradigm is trying to achieve. All these elements need to be mapped along a spectrum and drawn from the ESIA playbook; their cumulative impact is a vital measure. The interpretive nature of the assessment requires an appreciation of the organizational context.

Ratings and rankings are bundled value judgements; thus, the methodology matters in the way that assessments are done, rather than looking at the rankings at face value. Important questions to ask as a ready reckoner are:

1. Who is assessing?

2. To what end is assessment driven data utilized in decision making calculus?

The ‘S’ tent

Environmental impact assessments is the epistemic cornerstone for ESG due diligence, as the ability to gauge risk and suggest mitigation measures is a key skill.

There are two ways in which ESG/sustainability works in the current situation: 

1. As a transparency and trust play for organizations demonstrating compliance to the emergent risk of sustainability disclosures

2. Thinking new markets and products for the net zero era

The unquantifiable 'S' in ESG is the operational glue which is the circulatory system at various scales. The numerous studies within the large tent ambit of the social are:

• Stakeholder Engagement Plan 

• Social and Labour Audits

• Human Rights Risk Assessments including Due Diligence

• Worker Well Being Studies

• Social Impact Assessments for Infrastructure Permitting and ESG Compliance for sustainable finance 

• DEI Strategy Mapping 

• Resettlement Action Plans

• Community Investment Plans

• M&E Studies

• Human Resources Training 

Human rights from a corporate perspective from the lens of the global south is a matter of vendor compliance in adherence to EU CSRD and a plethora of emergent legislations. The compliance is normally enterprise level and tier 2 vendors at the maximum, yet the rot lies hidden from the audit gaze. In the era of activist transparency, human rights need to be deeper with greater vendor accountability through long term interventions, in a cross-stakeholder fashion to bring out tangible change which ultimately can be reported. Unlike carbon, human rights compliance is an everyday operational affair. Good health and safety are human rights as well, and eurocentric moorings of human rights can be incorporated into local registers of understanding, as good work makes for motivated employees and charged millennial end users. There is a business case for going beyond compliance for human rights. If the civil society can find loopholes being bottom up, the corporations can do the same in a collaborative approach. Imagination and intention solve problems.

Human rights obligations for business has been mainstream for the readymade garments sector for a while, and for the palm oil and electronics value chains globally as migrant labour has been a source of manpower for decades across internal and external migration corridors. Mining and O&G have had stakeholder engagement before their projects and HRIAs have been commissioned specifically. With the advent of ESG as a metanarrative, human rights as dignity and care are operationalized in a quotidian level. Human Rights risks for the technology sector would be different to a resource extractive sector, and that context matters. Global human rights risk obligations stitch local risks in a networked fashion and elevate it to international registers. Mapping human rights risks amongst the ESG landscape is an opportunity to operationalize dignity in the value chains, where salaries are paid in time, proper facilities are provided and any at risk employees are provided adequate tools to be offered a safety net as a normal worker. Context is again imperative in such complex journeys. 

There is an enormous need for cultural understanding through history and ethnography for an effective social impact assessment for infrastructure. There is a tendency to be apolitical and technocratic, which is quite meaningless for effective participation.

Moving ahead: ESG as an early warning system 

The crisis which ESG in the current avatar is of underperformance or at least the optics of it. ESG is not a monolith and has to be gauged on a sliding scale. The non-financial risk metrics are weak signals of material risks to be, which is a temperature check equivalent of something which might go wary. ESG itself needs to be assessed on its own terms rather than a proxy for the weight of our collective aspirations regarding climate change. ESG is a proxy for an aspect for which it is, it is a way of doing business the right way. 

In the era of acute geopolitical crisis with the Gaza humanitarian debacle, the Ukraine war which has been moved to the backburner despite the European winter coming up, human rights and its applicable iterations will gain salience, as a human tragedy is pinging on our news alerts and saturating our Instagram feeds every few hours.

'Being human' is good for business and society as we live in a hyper 'risk society' in an Ulrich Beck vain.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.