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Sustainable Investing Glossary

Social

The ‘S’ in ESG: one of the three key factors to watch in Sustainable Investing, together with environmental and governance considerations.

Social issues relate to the rights, well-being and interests of people and communities. These issues include human rights, labor standards in the supply chain, child and forced labor, workplace health and safety, and relations with local communities. 

A company that manages social issues well and takes the interests of its various local stakeholders into account, will obtain a ‘social license to operate’. This refers to the level of acceptance or approval by local communities and stakeholders. This will facilitate the obtaining of government permits and ‘social permission’ to conduct their business. Increasingly, having a social license to operate is an essential part of operating within democratic jurisdictions, as without sufficient popular support government agencies are unlikely to grant operational permits or licenses. 

A company that does not address social issues risks reputational damage, increased costs and lawsuits.

Creating returns that benefit the world we live in
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