February 19, 2025 4 min to read

(ENG) ESG Survival Business WEEK 4

Written by ESG Team

Chapter4: No Company Without People

Understanding the Social Dimension in Business

The social dimension is often undervalued in corporate priorities because it is not immediately reflected in tangible financial figures, unlike other factors such as strategy and products.

However, at its core, a company is built on relationships among various stakeholders—partners, customers, and the local environment. Ignoring social issues can have serious long-term consequences for business growth.

Rising Interest in Human Rights and Social Responsibility

Human rights concerns extend beyond protests and activism outside the company. They also involve how employees and workers in the supply chain are treated.

• In the past, companies emphasized a controlled organizational culture for performance improvement.
• Today, work environments significantly impact talent mobility and internal conflicts, affecting corporate survival.

Historically, Fordism treated people like machinery, but over time, human rights violations have been recognized as major obstacles to corporate growth.

As global organizations, investors, and stakeholders increasingly prioritize human rights, businesses must recognize that how they treat people is now a key evaluation metric, beyond just operational efficiency.

The Pitfall of Work-Washing

Work-Washing:

A practice where companies outwardly promote worker welfare, human rights, and social responsibility without genuinely implementing them.

• Similar to greenwashing in environmental responsibility.
• Employees and partners suffer despite the company’s positive image.
• Ultimately leads to a loss of trust among customers and investors, jeopardizing corporate survival.

Meeting Social Responsibility in Employment

Key Considerations in Employment

Since employment is people-centered and involves multiple stakeholders, standardized guidelines are essential.

Primary Criteria: The number of regular (average) employees in a workplace.

Checklist:

1. Working Conditions – Secure basic elements such as working hours, leave policies, safety, hygiene, and fair wages.
2. Equality and Fairness – Ensure non-discriminatory hiring, promotion, and compensation processes, with immediate corrective measures for issues.
3. Legal and Regulatory Compliance – Adhere to International Labour Organization (ILO) standards and regional labor laws. Multinational companies must be aware of international regulations.

Talent Acquisition Strategy

Beyond salary competitiveness, companies must emphasize their values, organizational culture, and social responsibility as attractive factors.

• Maintain fair recruitment processes and compliance with employment laws.
• Many firms outsource HR functions due to the complexity of compliance.

Promoting Diversity and Equal Opportunities

Diversity Metrics in the Workforce

Gender Diversity and Working Conditions

Despite ongoing efforts, the glass ceiling for women persists.
Since women represent a significant portion of consumers, companies must ensure equitable treatment.

Employment Rate of People with Disabilities

Ensuring inclusivity for people with disabilities strengthens corporate responsibility and social harmony.
Different levels and types of disabilities allow for diverse roles in business and society (e.g., Stephen Hawking).

Employees as Business Partners and Internal Clients

Companies must view employees not merely as workers but as crucial stakeholders.

Applying Global Standards

Representative Global Standard: ILO Conventions

These conventions emphasize protecting vulnerable workers, banning forced labor, and ensuring fair working conditions.

Key Labor Rights:

1. Freedom of Association – The right of individuals to form organizations for shared objectives.
2. Right to Organize – Employees can collectively improve working conditions, economic standing, and social status.
3. Collective Bargaining Rights – The ability to negotiate with employers collectively.
4. Right to Collective Action – The right to conduct group activities for better conditions.

Ensuring Freedom of Association

The right to unionize is a fundamental labor right recognized by the ILO.

• Companies that suppress unions or treat them as adversaries face rising conflict costs and international criticism.
• In contrast, firms that establish transparent communication channels with labor representatives improve productivity and stability.

Conflict Is Inevitable, But Resolution Matters

Every organization faces internal conflicts. The ability to manage and resolve them effectively is key.

• Internal grievance resolution systems
• Victim protection programs
• Regular employee satisfaction surveys

Addressing Social Responsibility Through Supplier Relations

Collaboration for Sustainable Growth

A key aspect of social responsibility is fostering fair partnerships with suppliers.

• Human rights, labor rights, and environmental concerns extend across the supply chain.
• Even if a company does not directly employ affected workers, their treatment impacts corporate reputation.

Best Practices in Supplier Management

1. Fair Contracts
2. Technical Support
3. Financial Assistance
4. Regular Audits & Communication Channels

Ethical Business Practices Begin with People

Child Labor Exploitation – A Global Crisis

Industries such as mining and agriculture often involve severe child labor abuses.

• Some global companies knowingly overlook or allow child labor.
• This leads to consumer boycotts, NGO lawsuits, and investor withdrawals, causing direct financial harm.

Engaging External Stakeholders

Companies must engage beyond employees and suppliers to include local communities, NGOs, governments, academia, and the media.

• Ignoring issues like factory pollution or rent hikes can escalate social backlash and financial losses.
• Companies that proactively engage in community projects (e.g., job creation, education, environmental initiatives) enhance their corporate image and business stability.

Ultimately, It’s About People

While Environmental and Governance aspects of ESG are crucial, people drive every process.

Even with well-defined business visions and strategies, sustainable growth is impossible without employee, supplier, customer, and community satisfaction.