1. Ethical behavior and social responsibility. This relates to practices that "support human well-being and orient companies to the ways they impact and are impacted by society," as Ann Skeet, senior director of leadership ethics at Santa Clara University's Markkula Center for Applied Ethics, wrote in February 2022. Ethical behavior and social responsibility can be promoted through codes of conduct, transparency and accountability. For example, being proactive about communicating how organizations adhere to their internal codes of conduct can go a long way toward avoiding investor votes against directors and challenges to executive pay.
2. Corporate purpose and culture. Identify a corporate purpose that incorporates ESG goals, including social ones, and then build your company culture around it. A purpose-driven culture is critical to getting internal support for ESG efforts, Harvard Business School professor George Serafeim wrote in a 2020 Harvard Business Review article. Purpose isn't a slogan on the wall at corporate headquarters, an online mission statement or a town hall meeting speech by the CEO, he said, but "how employees perceive the meaning and impact of their work."

IT's role in managing ESG's social aspect

Data is at the heart of ESG reporting. As managers and custodians of corporate data, IT leaders need to ensure the quality and availability of their organization's ESG data. This becomes more difficult in the context of the social aspect of ESG, because there aren't standard ways to measure social impacts -- and because many of these metrics are qualitative in nature. Some evidence of that: In a global survey of investors conducted in 2021 by financial services firm BNP Paribas, 51% of the respondents said they found social issues to be the most difficult component of ESG to analyze.

IT can aid in developing metrics and measuring progress on social initiatives. Data analytics tools are needed to track and analyze a company's social impact, while the IT team manages data privacy, security and protection. CIOs can also help ensure that the full range of social effects comes into play in ESG reporting -- including the positive side of how a company operates as part of society, as opposed to just the risk of operating in a more antisocial way.

Another crucial task for the IT department is making sure that technology is used in an ethical and responsible way. This will only become more pressing in the AI era, which demands clear usage policies. In addition, IT can promote digital inclusion by ensuring that required technology is accessible to all employees and by aiding in community access to some technologies, such as high-speed Wi-Fi connections.

ESG investing has lately come under fire from some politicians in the U.S., primarily Republicans. More than a dozen states, including Texas, Florida and West Virginia, have enacted legislation to limit or bar ESG considerations such as decarbonization from influencing investment decisions by state pension funds. In March 2023, Congress approved a Republican-driven resolution to block a federal rule that allows retirement fund managers to consider ESG criteria, but President Biden vetoed the measure. Despite the politicization of the issue, it's clear that ESG initiatives in companies are here to stay.

All types of ESG considerations must be embedded in both business strategies and operations, Serafeim said in his Harvard Business Review article. Promoting ESG factors, including social ones, is aligned with financial performance and business strength, he noted, writing that organizations "are likely to be more resilient in the face of unexpected shocks and hardships if they are managed for the long term and in line with societal megatrends, such as inclusion and climate change."