Introduction to Social Impact

Social impact within the framework of Environmental, Social, and Governance (ESG) criteria has become increasingly vital for organisations in today's global landscape. One reason for its importance is the growing recognition that businesses are not just economic entities but also social actors with considerable influence on societal well-being. For instance, the United Nations Global Compact reports that over 13,000 companies across 170 countries are actively aligning their operations with principles that promote human rights, labour standards, environmental protection, and anti-corruption efforts. This shift reflects an understanding that addressing social issues such as poverty, inequality, and social justice is crucial for sustainable development and long-term business success.

According to the Global Reporting Initiative (GRI), over 80% of the world's largest companies now issue ESG reports, reflecting a growing recognition of the importance of social responsibility. This surge is driven by stakeholders' increasing demand for transparency and ethical business practices. For instance, companies that prioritise social impact often experience enhanced brand loyalty and customer trust. In the wake of the COVID-19 pandemic, there has been a significant shift towards evaluating companies not just on their financial performance but also on their contributions to societal well-being.

Global statistics highlight the need for an intensified focus on social impact. According to the World Economic Forum, nearly 71 million people were pushed into extreme poverty in 2020 due to the COVID-19 pandemic, exacerbating social inequalities. Additionally, the International Labour Organization estimates that 160 million children are engaged in child labour, a stark indicator of ongoing social challenges. Companies that prioritise social impact can play a pivotal role in addressing these issues. For example, Unilever's Sustainable Living Plan has successfully improved health and well-being for over 1 billion people, demonstrating the significant positive outcomes that can arise from corporate social responsibility initiatives. In Bangladesh, the Grameen Bank's microfinance model has empowered millions of women, significantly reducing poverty and improving living standards. Similarly, in the United States, companies like Salesforce have committed to equality by focusing on workforce diversity and inclusion, resulting in higher employee satisfaction and innovation. These examples underscore the importance of integrating social impact into business strategies, demonstrating that such efforts can lead to tangible improvements in communities and contribute to sustainable development.