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The growing importance of Social Sustainability

Only 20 years ago, businesses’ sole focus was the bottom line – profit. But, with the growing awareness of the need for a sustainable approach to the environment and society in which businesses find themselves, this has been replaced by a focus on what is known as the triple bottom line: People, Planet and Profit.


In line with this, we are seeing greater attention being paid to the management of social issues. Are we properly engaging with our stakeholders? Are complaints and grievances adequately responded to? How can we efficiently uplift the communities we directly and indirectly impact, and what is the most effective manner of having them participate in our supply chain? Are we investing in the education of the young people in our immediate surrounds? Identified by various names – Social Management, Corporate Social Responsibility, Social Investment, and Local Content – the change in focus has been driven by the recognition that failure to partner with neighbouring communities causes conflict and, in the medium to long term, is simply less profitable.


This is particularly the case in the extractive industries where, commonly, communities are displaced by mines or oil and gas plants, and need to be resettled, compensated, and to have their livelihoods restored. This is a delicate and complex undertaking and failure to manage the process properly can lead to the revocation of the company’s licence to operate.


When implementing systems for managing sustainability, the trend is towards including Social Sustainability Management alongside Environmental Management. The two necessarily go hand in hand: impacts on people have a domino effect on the environment, and vice versa. This is further acknowledged by the ISO 14001 standards, which now incorporate language from ISO 26000, the guideline on social management.


Commercially, the change is being felt as well. Companies now offer services to measure Social Return on Investment, assurance that social spend is made in ways that go beyond mere philanthropy but that provides a return to the business as well as improving people’s lives. One of the world’s largest environmental consultancies, ERM, recently purchased RePlan, a social management consultancy. The acquisition was made because it “strengthens [ERM’s] ability to help clients deliver sustainable value from their long-term investments.”


Investment patterns are changing too. Portfolios are selected based on long term profitability and a solid reputation of managing negative impact together with enhancing society and the natural environment. There is growing pressure on board members to effectively track company performance against the strategic Key Performance Indicators which ensure that the business remains an attractive investment destination, in the short, medium and long term. This approach moves business leadership beyond the compliance paradigm, where it is okay simply not to be breaking any laws. Businesses are beginning to accept their role as stewards of the environment and custodians of the societies in which they operate.


Only what is measured can be improved. In the past, measurement stopped at the profit and loss statement. Now, as social sustainability systems mature, companies are able to see, in real-time, how they are performing against the strategic objectives they have set for environmental and social management. More advanced companies can now get a monthly statement of their triple bottom line. People, Planet and Profit.  Or, as I prefer to see it, People, Planet and Prosperity.