Introduction

Rethinking the importance of the Social factor

‘S’ for Social is probably the least researched and standardised aspect of Environmental, Social and Governance (ESG) investment. It relates to how a firm manages its relations to different stakeholders and has been somewhat neglected by investors – until the recent past.

The Covid-19 pandemic has led to a pronounced increase in public interest in how companies ensure their employees’ health and safety, and their supply chain management standards. Firms have suffered large reputational losses for reacting inadequately to the crisis, whereas firms with perceived higher ‘moral’ capital may benefit.[1] The scandal at a large German meat processing company, which suffered a major outbreak of Covid-19, has not only put the company’s future at risk, but also triggered public outrage and new legislation with a major impact on the business model of the entire discount meat industry.

Cick here to read the full article

1. A positive link between company reputation and corporate financial performance has, for instance, been established by Busch et al. (2018).

font

CIO View