There's now increased awareness and advocacy of ESG-related social issues from consumers, employees and other stakeholders. Companies are expected to take a more active role in addressing these issues and having a positive social impact. Reporting on ESG's social factors helps create a sort of "social credit score" that's meant to function like personal credit scores for consumers.

A June 2021 report titled "Accelerating the S in ESG -- a roadmap for global progress on social standards," which was published by the U.K.-based International Regulatory Strategy Group and consulting firm KPMG, pointed out that the pandemic fueled more interest in ESG overall and, in particular, focused greater attention on its social factors. "COVID-19 forced working and living practices to change and has highlighted -- and exacerbated -- longstanding social issues," the report said.

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5 tangible ways to address the 'S' in ESG

Here are five specific areas for addressing social issues that companies can focus on as part of their ESG strategy:

1. DEI initiatives. Programs and policies that promote diversity and inclusion in the workplace -- as part of hiring practices, training, mentorship programs and more -- can help increase the representation and participation of different groups of people. In addition, equity measures are designed to ensure that all employees are treated equally and have the same kinds of opportunities. DEI principles include recognizing that people face different challenges and not taking for granted the prevailing ways of doing things and thinking. Effective DEI efforts can result in more diverse views and a workforce that better reflects a company's customer base.
2. Employee engagement and well-being. As part of the human capital management process, companies can prioritize the health and well-being of their employees through initiatives such as mental health support, flexible work arrangements and fair compensation. These efforts are key to combatting widespread employee disengagement and increasing retention rates. They can also help attract new employees. Ensuring that working conditions are safe and healthy is another important part of ESG programs.
3. Community involvement. Engaging with the local communities where companies have operations can be done through business partnerships, volunteerism, mentoring and philanthropic initiatives. This can benefit both the communities and companies. For example, IT departments can offer internships with local high schools and community colleges to provide a pathway for advancement while filling open IT positions. Having a positive impact on communities can also improve the standing of a company, reducing potential business risks.