Chapter 4 – Social

The “S”/Social aspect of ESG includes all the topics connected to how a company relates to people within and outside its walls.  It examines a company’s relationships with the other businesses and communities, as well as how it treats its employees. The “S” in social includes:

• How companies take care of their employees and their customers.
• How companies help ensure that employees and neighbors are as healthy and comfortable as possible.
• How companies support local businesses, causes, and charities.
• How companies help improve society in general.

The financial world defines the “S/Social” in ESG as “how a company manages its relationships with its workforce, the societies in which it operates, and the political environment.“ Given this, it is not surprising that there is increasing interest from investors in companies’ social programs and they want more information on them.[1]

To start collecting data on your Social material topics of ESG, you can use our Social/ 400 Series Excel file, which is based on GRI.

Treating staff well and engaging with neighbors and communities have become table stakes. Getting ahead of these trends through programs and policy development makes good business sense.

Key topics expected as part of a company’s social engagement programs include Employees, Communities and Environmental Justice, and Human Rights. Refer to the July 2023 workshop for more details (download slide deck):

Employees

A company’s overall corporate health is tied to its employee program and employee relationships.  For example, a strong safety culture, formal diversity, equity and inclusion (DEI) programs, hiring policies, and training programs, are expected. While this will look different among different types and sizes of organization, employee benefits and company culture will determine whether your company is an employer of choice.

• What is the company culture? Do you have programs to build a healthy culture?
• How are your labor practices?
• What is the company safety record, and how is it trending over time?
  • ReMA’s Safety Resources and trainings can support your work in this area.
• What types of training programs does the company provide for employees? Are regular safety, computer, skill development training provided?  Does the company provide support for continuing education?
• How does the company invest in its employees? How are employees compensated, in terms of wages and benefits?
  • Use the Industry Compensation and Benefits Survey to find out how you compare to the rest of the industry.

Companies, especially large firms, are expected to have DEI programs and policies for employees, and supplier diversity initiatives. DEI includes gender, race, religion, geography, age, sexual preference and other identity markers. A good place to start is by collecting data on the diversity of your current workforce, and comparing it to the demographics of the locations where you operate.

Resources: ReMA’s Workforce Management Toolkit provides hiring, retention, and inclusive workforce guidance for the recycled materials industry. Our 2024 Workforce Wednesday series features member examples of second chance hiring, hiring individuals with disabilities, and forming educational partnerships. The consulting firm Korn Ferry has a 4-Step DEI Guide, and Johnson & Johnson, MasterCard, and Progressive‘s DEI policies and reports offer examples of what DEI looks like in practice in large corporations. Michigan’s Small Business Association offers DEI tips for small businesses.

ReMA’s August 2024 ESG Webinar (download slide deck) explored ways current members are integrating employment practices with their ESG work, and engaging employees through ESG programs.

Communities

Company engagement with local communities is more important than ever.  Proactively recognizing, researching and developing programs and policies to get ahead of these trends early can help a company when they need local community support.  Strong community relations can help provide resiliency before it is needed (i.e. zoning/permitting/Environmental Justice concerns) and will pay dividends with your long-term operations.

Environmental Justice[2].  Community relations is connected to Environmental Justice (EJ).  This is how our operations intersect with our communities who have experienced environmental injustice: or the “disproportionate exposure of communities of color and the poor to pollution, and its concomitant effects on health and environment, as well as the unequal environmental protection and environmental quality provided through laws, regulations, governmental programs, enforcement, and policies.”[3] Successful community relationships require community engagement, listening, and communications.

Being a good corporate neighbor is not about what you want to give, but about what your neighbors need.

These are neighbors who are impacted by the business in your area.  This includes “invisible” neighbors that you may not have heard from, and you may need to go door-to-door to identify them.  Maybe your company doesn’t impact them as much as other companies in the area do, but you are still benefiting from doing business in this area and have an important role to play in supporting your local neighbors. Look for opportunities to go beyond regulatory compliance, and for partnerships and activities with the communities you serve by going into the community first, and actively learning about their specific needs.

This also requires taking a close look at your facilities.

• Try to see the impact of your company on the communities you serve from their perspective.
• Create a database with information on your facilities and review notices of violation.

Case Study: WM Sun Valley Recycling Park

WM was surprised by community resistance to proposed recycling facility. The company helped form a citizens’ council for members of the Sun Valley community, providing $500,000 in seed funding for the council to hire consultants and develop suggestions for permitting conditions, and attended hundreds of community meetings. WM had no control over the council’s recommendations. The final project included many items that the company alone would not have known were a community priority without the stakeholder process. Today, the park includes design to avoid emissions and dust, a fleet of clean vehicles at the facility, funding local programs on health care, and environmental improvements.

Taking Action regarding Environmental Justice

There are many actions that companies can take to get ahead of issues around EJ:

• Use the US EPA’s EJScreen tool to learn more about community your business operates in, including its exposure to pollution, economic condition, climate risks it’s facing, and health disparities.
  • Develop a training program to increase familiarity with this EPA tool and/or state-level screening tools. It may take some effort to fully understand these tools. Getting training in them and offering it to your staff will help.
• Make sure that your communications address the realities of your business impacts.
• Prepare best practices for facilities to consider in conducting outreach and engagement with environmental justice communities.
• Consider appointing someone to oversee these efforts. All effective programs need to have someone who has responsibility for them. Don’t assume this will get done, or done well, without that person.

ReMA has developed resources to help its members work through EJ issues in its Environmental Justice Toolkit and offers general community relations support in the Community Relations Resource Center. The ISRI2024 convention featured an Environmental Justice Panel (see slide decks). More background on Environmental Justice can be found at the US EPA’s website, including perspectives from affected communities.

Human Rights

Human rights is related to employee relations. From wages to working conditions, human rights issues are an important global topic. It is also important to pay attention to the entire supply chain of a company to understand how a company’s vendors treat its employees.

Human rights also includes the issue of slave labor and child labor.  As easy as it seems to dismiss these issues as relevant in other parts of the world, and not in the U.S., in fact, human rights abuses, slave labor and child labor can happen anywhere. These issues are real and they impact people. Stakeholders are asking companies to be aware of the risks, to provide awareness training, and to have policies about slave labor and child labor.

This is starting to be an area of increased focus for policymakers.  Large companies operating in California are now required to disclose information regarding their efforts to eradicate human trafficking and slavery within their supply chains under the Transparency in Supply Chains Act.

Resources: The UN Global Compact on Human Rights provides resources for business leaders. Sims Ltd. has created a Modern Slavery Statement. Additional human rights policy examples include CMC, Nestle and GM.

Community Giving

A key component of your company’s social impact is how you give back to local communities and charitable causes through both volunteer time and financial donations. Community giving can also become an important part of your company culture and employee engagement. Consider creating a policy to define your giving strategy, and ensure it aligns with your core values, business services, and ESG or sustainability strategy. A corporate charitable giving policy “outlines your company’s approach, guidelines, and processes for corporate giving. It serves as a source of truth for administrators and participants alike, spelling out essential details such as eligibility criteria and deadlines.” ^[4]

For any policy, include which organizations are eligible and what restrictions apply. Here are some common types of giving that may be included in corporate philanthropy programs:

• Matching Gifts: When employees donate a certain amount (minimum match requirement) to a charitable cause, the company will ‘match’ that amount with their own donation.
• Volunteerism: Corporate support for employee volunteering, which can include: allowing volunteering on work time, awarding time off for volunteering, or company-sponsored volunteer events. Companies may also give monetary grants to organizations where companies volunteer (Example: Walmart’s Volunteerism Always Pays)
• Community grants: Directly contributing financially to nonprofits that are based in the communities where the company operates. (Example: International Paper’s Giving Program)
• Sponsorships:  Providing funding to a non-profit in exchange for recognition or marketing (Example: Siemens’ Healthcare Giving).

ReMA members can sponsor a local school with STEM Curriculum through our partnership with JASON Learning.

• In-kind donations: Non-monetary gifts; goods and services that are provided to non-profits like venue space, equipment, or free services like graphic design or legal consulting.

The Process of Social Impact

As companies think about programs related to social issues, about creating social impact goals, and reporting on them, the following list can help facilitate the process:

• Listen first. Reach out and ask questions.
• Create ambitious social goals. Whether it is improving diversity or increasing community engagement – be thoughtful and ambitious.
• Create corporate policies that address social issues (DEI policies, anti-slavery policies, etc.). Look at example from other publicly held companies that post their policies on their investor page.
• Create policies that drive your vendors to engage in responsible sourcing activities that reflect your social goals (DEI, employment, written policies). Make sure that your vendor policies mirror your corporate policies.  Increasingly it is not enough to report on what you are doing – you need to make sure that your vendors are using good practices, as well.
• Research and partner with NGO’s. Look carefully at potential nonprofit organizations in your communities to see if they will be a good community partner for your company.
• Consider the impacts of your business on individuals that may not be located geographically near your operations.  Perhaps your supply chain includes companies in other countries.  What are the impacts of their operations on their neighbors?
• Keep an open mind to thinking differently about the impact of your business on your neighbors, communities and others that you may not be aware of.

Consideration of and action on these social topics will make your company more resilient for the known and unknown challenges and opportunities that your company will invariably face.