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Social performance assesses a company’s engagement with its workers, customers, suppliers, and the local community. It covers human rights, diversity and inclusion, health and safety, and community impact. Inattention to these factors can damage corporate brands and reputations and bring legal and regulatory penalties.

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Human rights
Forced labor
Implement clear policies against forced labor
Child labor
Implement clear policies against child labor
Marginalization of indigenous people
Work with indigenous people to uphold their rights
Personal data breaches
Implement clear policies on data privacy and data security
Low wages
Implement HR policies that ensure all workers are fairly paid
Job insecurity
Implement HR policies that ensure all workers have their rights protected
Diversity and inclusion
Gender discrimination
Disability discrimination
Implement strong and up-to-date diversity and inclusion policies
Religious or racial discrimination
Introduce policies and training to eliminate unconscious bias
Ethnic minority discrimination
Implement formal process to report incidences of discrimination
Age discrimination
Implement mentorship programs
Sexual orientation discrimination
Health and safety
Inadequate employee health & safety
Invest in employee health & safety training and management
Inadequate customer health & safety
Invest in protocols and management systems that improve customer health & safety
Inadequate supplier health & safety
Police health & safety standards at suppliers
Inadequate product health & safety
Ensure product complies with health & safety standards
Community impact
Community neglect
Boost local economy by consulting local stakeholders
Lack of charitable donations
Donate to local community projects
Displacement of communities
Construct homes for displaced communities

Human rights

Every individual is entitled to basic rights and freedoms during their lifetime.

Human rights violations can come in many forms, including forced labor, child labor, displacement of indigenous people, data breaches, low wages, lack of citizenship rights, and job insecurity. For example, despite the existence of laws protecting human rights, the UN states that 40 million people are involved in modern slavery through forced labor and forced marriages.

The table below summarizes how basic human rights factors impact society, and the actions companies can take to mitigate their impact.

Contributing factor Description Impact on the environment Mitigating actions
Forced labor Coercion of individuals to work against their will, whether through intimidation, violence, or human trafficking. Forced labor can lead to permanent mental and physical illness and, in some circumstances, death. Enact clear policies against forced labor and pay equal attention to eliminating forced labor from supply chains.
Child labor Employment of children under the legal minimum age. Child labor deprives children of the right to an education and a childhood and limits opportunities in later life. It can cause malnutrition, depression, and premature aging, Enact clear policies against child labor, including creating transparency across supply chains. Companies should consider working with third-party advisory firms to ensure their supply chains are free from child and forced labor.
Marginalization of indigenous people Exclusion and disregard of native people that differ in traditions and culture from the wider population. Indigenous people face displacement, marginalization, and human rights abuses. Severing the bond between native people and their land often leads to the erosion of identity, culture, and livelihood. Encroachment on indigenous land can lead to the destruction of sacred or culturally significant sites. Consult with and invest in indigenous communities and recognize them as key stakeholders.Work with them to uphold their rights.
Personal data breaches Breach of security leading to the unauthorized access, use, destruction, loss, alteration, or disclosure of personal data. People have a right to privacy. Personal data beaches are a direct breach of human rights. Enact clear policies on data privacy and security, including training employees for both office-based and remote work. The EU implemented the General Data Protection Regulation (GDPR) in 2018, protecting European citizens’ data privacy rights and punishing non-compliance with fines of up to EUR20million ($22.7 million) or 4% of annual global turnover, whichever is greater. The California Consumer Privacy Act came into force on January 1, 2020.
Low wages Wages that are insufficient to support a satisfactory standard of living. Employees on low wages can suffer from increased stress, poverty, and poor health. Implement clear HR policies that ensure all workers are paid fairly.
Job insecurity Concerns regarding the continuity of employment or the removal of workers’ rights. Job insecurity can cause behavioral and emotional changes that impede workers' performance and welfare. Implement clear HR policies that ensure all workers have their rights protected and are offered adequate training opportunities.

Diversity and inclusion

Discrimination based on gender, disability, religion, race, age, ethnicity, or sexual orientation continues to be a global problem.

According to the European Institute for Gender Equality, improving gender equality would increase EU GDP per capita by between 6.1% and 9.6% by 2050, equivalent to between EUR2 trillion ($2.2 trillion) and EUR3.2 trillion ($3.6 trillion).

The table below summarizes how these diversity and inclusion factors impact society, and the actions companies can take to mitigate their impact.

Contributing factor Description Impact on the environment Mitigating actions
Gender discrimination, disability discrimination, religious or racial discrimination, ethnic minority discrimination, sexual orientation discrimination The unjust or prejudicial treatment of different categories of people on the grounds of gender, disability, religion, race, ethnicity, age, or sexual orientation. Failure to include a diverse range of talent in a company’s workforce can result in a corporate sector that is detached from the communities it sells to, recruits from, and operates in. From a business’s perspective, diversity and inclusion can increase creativity, innovation, and employee engagement by harnessing a wider talent pool. It can also lead to better decision-making by taking account of a wider set of stakeholders and viewpoints. Hire and empower diversity officers to ensure they have strong diversity and inclusion policies with consistent, formal processes to resolve incidences of discrimination.Companies can also provide mentorship programs and regular anti-discrimination training to eliminate unconscious bias.

Health and safety

Organizations must safeguard employees, customers, and suppliers from physical and mental harm. Every year, more than 374 million people suffer from work-related injuries and accidents, causing a 4% hit to global GDP, according to a 2019 report from the International Labor Organization (ILO), Safety and Health at the Heart of the Future of Work: Building on 100 Years of Experience.

The table below summarizes how health and safety factors impact society, and the actions companies can take to mitigate their impact.

Contributing factor Description Impact on the environment Mitigating actions
Inadequate employee health and safety The inability to provide safe working conditions that ensure the physical, mental, and social wellbeing of employees Poor employee safety standards could lead to increased injuries and reduced productivity. According to the National Safety Council in the US, compensation payments relating to fatal and non-fatal workplace injuries across the US surpassed $171 billion in 2019. Mental illness alone costs the global economy approximately $1 trillion each year, according to a 2019 study by WHO. Companies can also face reputational damage and legal ramifications if they do not ensure adequate health and safety for employees. Hire health and safety officers to promote policies that create a safe workplace environment. Invest in adequate health and safety training and management for employees and hire health and safety officers to promote these policies.
Inadequate customer health and safety The inability to ensure customers have a safe experience while purchasing a product or using a service. Poor customer safety standards could lead to death or serious injury. In some cases, this could lead to regulatory fines, criminal negligence lawsuits, or civil lawsuits. Companies with a reactive customer complaints process can mitigate customer health and safety issues before they get out of hand by having a system to record, acknowledge, escalate, and resolve them. Invest in protocols and management systems that ensure customer health and safety.
Inadequate supplier health and safety The inability to monitor and control health and safety hazards across the supply chain. Engaging with companies with poor health and safetyplaces employees at risk of injury or death. Set health and safety requirements for suppliers and ensure that these are being upheld.
Inadequate product health and safety The inability to ensure that all products are designed and manufactured in a way that puts customer safety at the fore. Consumers have the right to expect that the products they purchase are safe and fit for purpose. Faulty or poorly designed products can risk financial loss, injury, or even death for the consumer. Monitor and follow product safety standards and regulations. For example, the UK General Product Safety Regulations (2005) requires all products to be safe in their normal usage. If this is not met, legal action can be taken. Pursuing certification will also demonstrate conformity to health, safety, and environmental protection. For example, the CE mark is used within the European Economic Area. Companies must communicate and engage with consumers to ensure they are aware of safety issues.

Community impact

Companies have a social obligation to act responsibly towards the communities in which they operate. The table below summarizes the impact companies can have on their local communities, together with the mitigating actions they can take.

Contributing factor Description Impact on the environment Mitigating actions
Community neglect The failure to support or hire individuals from local communities. Companies that fail to hire from local communities can exacerbate the decline of those communities. This can set in motion a vicious circle of decline, creating deprived areas and causing local resentment. Boost the local economy by consulting local stakeholders, hiring from within the community, and forging partnerships with local businesses or charities.
Lack of charitable donations The failure to donate money or time towards community welfare. A lack of charitable donations may render some communities underdeveloped, leading to food insecurity, unhygienic conditions, and a lack of proper education and healthcare. Companies are increasinglyconscious of the need to bolster their reputation as responsible stakeholders in society and are increasing their philanthropic activity. Common corporate philanthropic programs include matching gifts and volunteer grants. According to Chief Executives for Corporate Purpose(CECP), 68% of companies increased their community investment by at least 2% between 2018 and 2020.
Displacement of communities The eviction of local communities for commercial gain. The global economy lost $20.5 billion in 2020 due to the displacement of communities, according to figures from the Internal Displacement Monitoring Centre. Avoid or minimize displacement where possible and aim to minimize all adverse impacts, for example, by rehousing displaced communities to restore livelihoods.

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