People are at the heart of social sustainability assessments (SSAs). In other words, SSAs measure the impacts that an organization’s activities have on people and on society at large. This could begin by looking within the company itself—in particular how well it supports its own staff, such as ensuring safe and secure working conditions, or by promoting diversity, equity and inclusion. An SSA can also go further by placing a spotlight on how organizations treat workers in their supply chain or value chain, people in local communities and even their customers.
But what is social sustainability, exactly? The United Nations defines social sustainability simply as “identifying and managing business impacts, both positive and negative, on people.” In short, social sustainability assessments address the social pillar of environmental, social and governance (ESG) principles.
Why Social Sustainability Assessments Are Important
Through social sustainability assessments, including social life cycle assessment (S-LCA) of their products, organizations can gain transparency on how their business activities trickle down and affect humanity. Such data will be increasingly significant for meeting regional, national and international supply chain laws. Even without this regulatory pressure, NGOs, public interest groups and individuals around the world are already demanding due diligence on societal issues from companies.
Having established the importance of social sustainability assessments, where should an organization start? Reporting on social topics is still quite novel, even for businesses that may already be familiar with ESG disclosures.
As a holistic ESG service provider, Sphera has the tools and consulting know-how to guide you along your social disclosure journey. Here are five steps to get you started:
1. Identify the material topics.
The first and most crucial step is to shortlist the social topics that are important for your organization. Bear in mind what is prescribed by relevant regulations. Next, consider what is pertinent to your stakeholders, for example, workers, members of the local community or smallholder farmers.
During this initial step, a company may have some blind spots concerning the less tangible aspects of the business that are not based on manufacturing processes. These include trading among smallholders, education and training, and end-user experience. Organizations will do well to consider these “shadow processes” as well to avoid pitfalls.
An essential resource for a business beginning this journey is the U.N. Environmental Programme’s 2020 Guidelines for Social Life Cycle Assessment of Products and Organisations and its accompanying methodological sheets. The following image from the 2020 UNEP guidelines provides examples of stakeholders and their relevant social topics:
Source: UNEP Guidelines for Social Life Cycle Assessment of Products and Organisations 2020
At Sphera, we draw on our expertise conducting materiality and double materiality assessments, as well as our proprietary software, social data from global indices and the body of work available in your organization. We also engage with your stakeholders to define their desired areas of focus.
2. Identify your KPIs.
What are the indicators of social performance and what tools exist to report on them? Social indicators may not always provide a clear-cut judgement of positive or negative impacts. Some are influenced by individual or even cultural preferences, as expectations hinge on contextual nuances. In some cases, multiple possible indicators may be used, for example, the social topic of “safe living conditions” for the stakeholder. “Local community” could be measured according to the number of sponsored community initiatives, the number of complaints lodged against an organization by community interest groups or a combination of both. While some guidance does exist, such as in the UNEP publication, no standard set of indicators has yet been defined.
For each study, organizers therefore have the task of selecting or even developing an appropriate set of indicators. This should be followed by creating a reference scale against which performance will be measured. So, with the example of safe living conditions in local communities, the best possible achievement for the company could be zero complaints per year. The worst outcome could be defined as 10 complaints annually.
This is why many organizations value working with consulting-service providers like Sphera, which has experienced consultants in sectors including agriculture, building and construction, chemicals, manufacturing, electronics and mining. Sphera consultants work with companies to define the indicators and develop a fitting reference scale, also in accordance with company targets.
3. Measure and set a baseline.
Once the indicators and reference scale have been established, the assessment provides a snapshot of how your organization is performing. This serves as a baseline for reporting, potentially for benchmarking against peers, as well as for strategy development to set future targets. One way to complement this measurement is to adopt a participatory approach. Involve the identified stakeholders via questionnaires and/or surveys where necessary.
Again here, Sphera can provide guidance with formulating questionnaires, conducting interviews and interpreting findings.
4. Set targets and develop a strategy.
The findings from the social sustainability assessment should reveal clear opportunities and risks. You also gain insights into potential hotspots that deserve more attention. Sphera can help your organization develop a decision-driving ESG roadmap tailored to your company’s specific needs. We’ll walk you through each step of the strategy development process. By defining new social performance targets and developing an implementation plan, we help you set up an action plan that aligns with your overall business strategy.
5. Report using Sphera’s integrated software.
Sphera’s integrated ESG cloud software provides a holistic sustainability management platform. Businesses can consolidate ESG data and gain integrated visibility of sustainability impacts and performance across the entire organization. Companies can seamlessly create reports that comply with leading frameworks such as the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB).
The benefits of conducting a social sustainability assessment go beyond a regulatory focus. Credibility on social issues will be crucial to remaining competitive on the market. Environmental, social and governance topics are no longer a long-term, or even medium-term concern for businesses.
All types of companies, including small- and medium-size enterprises, need to begin developing a strategy to assess social topics. This enables them to stay ahead of regulation AND maintain a social license to operate. Whether at the product, operational or organizational level, Sphera’s sustainability and ESG experts can guide you in evaluating the social impacts of your business.