Welcome to the third edition of the Brunswick Social Value Review, born of our belief that to be a leading company in today’s world you need to deliver financial value alongside social value.
This proposition is also central to the growth of ESG, which has risen rapidly up the agenda for many of our clients in recent years. It’s increasingly clear that ESG isn’t a fad or a niche: global ESG assets are on track to exceed $53 trillion by 2025, representing more than a third of the $140.5 trillion in projected total assets under management, according to analysis by Bloomberg.
But while there are increasingly mature frameworks and metrics for the “E” and “G” elements of ESG, the “S” dimensions have suffered from what commentators have called “middle child syndrome”—somewhat overlooked and neglected. This is partly because it can be much more difficult to define and quantify the social factors than certain environmental or governance factors. As United Nations Principles for Responsible Investment have put it: “The social element of ESG issues can be the most difficult for investors to assess. Unlike environmental and governance issues, which are more easily defined, have an established track record of market data, and are often accompanied by robust regulation, social issues are less tangible, with less mature data to show how they can impact a company’s performance.”
Societal factors are not only harder to measure, but more various and more local in how they show up around the world. Thus the “S” in ESG has not had the same level of attention—until now. The COVID-19 pandemic has thrown a spotlight on so many social factors: stark levels of inequality, treatment of employees, access to healthcare and digital services, among others. Movements such as Black Lives Matter and #MeToo have focused attention on corporate diversity, equity and inclusion. Customers, investors and civil society groups are demanding greater transparency from companies in these areas.