Managing the “S” in ESG: The case of indigenous peoples and extractive industries

• Autores: Nick Pelosi, Rebecca Adamson
• Localización: Journal of Applied Corporate Finance, ISSN-e 1745-6622, Vol. 28, Nº. 2, 2016, págs. 87-95
• Idioma: inglés
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• Resumen

  • Although a company's “social license to operate” is critical to its long-run viability and success, the “social” component of corporate environmental, social, and governance (ESG) problems appears to be taking the longest to be integrated into the corporate business model. The authors make the case that corporate boards must assume a more direct and proactive role in identifying, measuring, and mitigating social risk.

    Board involvement in the management of social issues, although not a silver bullet by itself, is an important step that can help catalyze the changes needed within upper, middle, and lower management. The absence of board oversight of social performance means that the reporting chain is not reaching the highest level of management. And this in turn creates a lack of attention and accountability to social performance that is likely to permeate the rest of the company.

    Along with board oversight, companies need more and better information to understand the value that good social performance creates for business, and to equip them for building and maintaining positive relationships with communities. At the individual company level, this means more comprehensive and granular analysis of social risk, the full range of costs of conflicts with local communities, the benefits of having a social license, and quality baseline data for community engagement. At the macro level, these data points must be aggregated to understand their implications across industries.