Skip to content Skip to sidebar Skip to footer

Environmental, Social, Governance. Why is the S in ESG so hard?

As businesses increasingly prioritise sustainability and shape their strategy around an ESG framework, its common to see an imbalance between their various commitments and initiatives. Environmental and governance issues are at the fore, but when it comes to the S or the ‘social’ pillar, maturity often lags. But why is the S in ESG so hard?

The S in ESG – Environment vs Social Aspects

Reaching a high level of social performance and human rights standards can be more complex and intangible for an organisation than say, achieving net zero greenhouse gas emissions. Under the ‘E’ or environment pillar greenhouse gas (GHG) emissions can be quantified, baselines set, reduction methods implemented, and the remainder offset. Using science-based targets, we can calculate each country, industry, and organisation’s carbon budget to keep the world from heating beyond recoverable levels.

But for human rights, the acceptable threshold is zero violations. No organisation is allocated an acceptable budget of human rights abuses. No country can systematically enslave a people group and say it is within their science-based threshold. To add to the challenge, there is no “unit of human right” to quantify the issue. And even if there was, human rights abuses by their nature tend to be hidden.

Yet people are denied their most basic rights every day in every country, and many companies are linked to this reality either directly or through their supply chain. For Australian companies, a common link to human rights abuses is the issue of modern slavery. There are an estimated 12,000 people trapped in slavery in Australia, and the country’s supply chains are exposed to imported risk. Nearly 60% of what Australia purchases from abroad comes from Asia, and Asia is where 60% of the world’s estimated 40 million slaves are trapped. Moreover, four of the top 15 countries Australia buys from are also among the 15 countries most exposed to slavery by prevalence (Figure-1). Supply chains reaching China should be of particular concern for Australian business, especially those involving the Xinjiang Uygur Autonomous Region (XUAR) and/or products including cotton, tomatoes, and solar panels.

Given the scale and complexity of the human aspects to sustainability in Australia and abroad, it should not be surprising that many organisations stumble when they get to the S in their ESG strategy and reporting. Beyond counter-modern slavery, many organisations are also unsure how to approach indigenous rights, freedom of association, harassment, grievance and remediation, health and safety, wages and working hours, equality, diversity and inclusion, and other key social issues.

However, we are starting to see this gap close and social sustainability become more sophisticated.

Sustainability Reporting Increasingly Sophisticated on Human Rights

One of the clearest measures for organisational maturity in handling the S in ESG is the sustainability report, which serves as a window into the issues an organisation considers most material. Traditionally, sustainability reports focus on the environment and governance, while only touching on a few social issues such as health, safety, and diversity. These topics are important, but they are only a subset of the broader human rights issues most organisations should consider material.

A key reason for this human rights “blind-spot” in sustainability reporting is that leading frameworks used for sustainability reporting have under-prioritised social issues, including the world’s two most used sustainability reporting frameworks, the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). Both have acknowledged this shortcoming and are overhauling their treatment of human rights to better align with authoritative intergovernmental instruments, namely the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct.

In October 2021, GRI completed a nearly four-year revision to its Universal Standard to bring it up to speed on human rights. Using the new standard for sustainability reporting is optional now, but will become mandatory on 1 January 2023 for organisations reporting in accordance with GRI. Moreover, GRI is also updating and expanding their human rights-related Topic Standards.[1] [2] Similarly, SASB looks set to follow suit after initiating a research project and hosting in-depth stakeholder consultations. Their aim is to design changes which will address human rights issues such as collective bargaining, forced labour, mental wellbeing, workplace culture, and diversity and inclusion.

GRI and SASB’s added prioritisation on human rights will have significant impact on how organisations conceptualise and report upon the S in ESG. KPMG’s Survey of Sustainability Reporting 2020 found that 80% of the world’s largest 5,200 companies are now reporting on their sustainability performance (up from 18% in 2002), and 83% of those use GRI’s Universal Standard to do so, meaning that many of the world’s biggest companies will soon need to be more sophisticated with their human rights disclosures.[3]

And to be clear, GRI’s 2021 re-focusing on human rights has been significant. The three updated GRI standard documents reference “human rights” 102 times more than the older 2016 versions, a 536% increase (see Figure-2 below). The most changed is the General Disclosures standard that defines what information should be reported on: “human rights” is referenced 63 times throughout the updated version, up from four in 2016. In reference to these changes, GRI said that “human rights [is now] a broad subject area, like the environment” and will “require all organisations to report basic information on how they meet their responsibility to respect human rights.”

Next Steps for ESG Reporting

Regulations and stakeholder expectations around human rights are intensifying, and leading sustainability reporting frameworks are catching up to global best practice around these issues. As a result, many organisations are moving to better balance their ESG strategies to include robust treatment of human rights equal to environment and governance. Because social indicators can be harder to quantify, this can be a challenging initiative for many organisations, but those who work to get this right early will reduce risk and attain more opportunities.

This is the first in a two-part publication on this topic. In the second instalment, we will go into detail about how organisations can begin strengthening their ESG strategy’s ‘S’ elements. We will advise on properly conducting materiality assessments that factor in social sustainability, setting better social indicators and targets, and linking these issues in with corporate strategy and regulatory obligations.

For more information and or guidance around formulating your ESG strategy, reach out to our experts. Contact Brian Kraft on or call us on +613 7035 1740

[1] Current GRI human rights related topic standards include those on child labor (408), forced or compulsory labor (409), non-discrimination (406), freedom of association and collective bargaining (407), the rights of indigenous peoples (411), and security practices (410).

[2] GRI is an independent entity of the Global Sustainability Standards Board (GSSB) which develops the GRI standards using a formally defined due process.

[3] (67% of N100 = 3484) / (80% of N100 = 4160)

Business Hours

Mon - Fri : 9am - 5.30pm

Melbourne - HQ

Level 2, 27 – 31 King street, Melbourne, VIC 3000 P: +61 3 7035 1740


Commons Central, 20-40 Meagher St, Chippendale, Sydney, NSW 2000 P: +61 3 7035 1740


Level 6, 200 Adelaide Street, Brisbane, Qld, 4000 P: +61 3 7035 1740


Level 25, South 32 Building, 108 St Georges Terrace, Perth, WA 6000 P: +61 8 6557 8571

Ndevr Environmental Pty Ltd© 2021. All Rights Reserved. Founded 2010. Privacy Policy.


Please complete the form below and we’ll be in contact with you shortly.



    ​AWESOME STREETFOOD, ZERO CARBON – that’s Atiyah. With its launch in 2020, Atiyah became Australia’s first 100% renewable-run street food zero-carbon kitchen certified under Climate Active. Atiyah sets operational carbon efficiency benchmarks and raises awareness about the global warming impact of food choices. They even disclosed the footprint of every item on their menu to empower their customers’ low-carbon lifestyle. We assist ATIYAH with their carbon neutrality certification.



    Responsible business is at the heart of what Intrepid does. Intrepid has been a pioneer in measuring and reporting carbon emissions since 2010. When it joined the Climate Active family in 2018, it became the largest global provider of carbon neutral certified travel adventures and the first company to voluntarily include all global operations in its certification.


    CARBON NEUTRAL ORGANISATION & PRODUCT NEXTDC are one of Australia‘s most trusted providers of data centre solutions. Since 2018 we’ve been assisting them with their Greenhouse Gas (GHG) accounting and in March 2021, the company broke ground with the launch of NEXTneutral, an innovative Climate Active-compliant colocation opt-in program for their customers. Learn more.


    Goodman Group is an ASX20 global property expert in logistics and business space. It owns, develops and manages industrial property in 17 countries. We provide strategic advisory on Goodman’s operational GHG inventory and trajectory, the GHG intensity of its investment portfolio, net zero pathway and carbon neutral certification, as well as the renewable energy delivery strategy.


    ISPT is one of Australia’s largest unlisted property fund managers, with over $11.9 billion of funds under management. We assist ISPT with its net zero pathway, land-based offset strategy as well as maintaining its carbon neutral certification. When ISPT joined the Climate Active network, it pioneered many concepts. It became the first participant under Climate Active to voluntarily include base building operations on all its owned and operated properties into its organisational certification and, as an industry first, procured 100% Australian Carbon Credit Offset Units (ACCUs).


    BHP is an ASX listed, world-leading resources company and are among the world’s top producers of major commodities, including iron ore, metallurgical coal and copper. They also have substantial interests in oil, gas and energy coal. We assist BHP comply with energy and greenhouse gas legislation and advise facilities on matters related to energy use and production emissions.


    Intrepid Travel is the largest small group adventure travel company in the world. Responsible business is at the heart of what Intrepid does. We assist Intrepid with their Human Rights reporting obligations as well as many aspects of its GHG accounting and reporting. This includes its Science-based target (SBT), making them the first tour operator with approved SBT. When Intrepid joined the Climate Active family in 2018, it became the largest global provider of carbon neutral certified travel adventures and the first company to voluntarily include all global operations in its certification.


    Lion is a global beverage company with a portfolio of brands in beer, cider, wine, spirits, seltzers, and non-alcoholic drinks. Lion has four large and four small Australian breweries, and its brands include XXXX, GOLD, Tooheys New, and Little Creatures. We assisted Lion to become Australia’s first large-scale brewer to be certified as carbon neutral under Climate Active in 2020.

    QANTAS Airline

    Founded in the Queensland outback in 1920, Qantas has grown to be Australia’s largest domestic and international airline. We have worked with Qantas since 2016 on a variety of emissions reduction projects.


    Orica is the world’s largest provider of commercial explosives and innovative blasting systems to the mining, quarrying, oil and gas and construction markets, a leading supplier of sodium cyanide for gold extraction, and a specialist provider of ground support services in mining and tunnelling. We assist Orica with their regulatory reporting such as NGERs and also carbon abatement projects.

    Fulton Hogan

    Fulton Hogan has more than 80 years experience in the transport, water, energy, mining, civil construction and land development infrastructure in New Zealand, Australia and the South Pacific.
    We assist Fulton Hogan comply with NGER and NPI legislation for their extensive national operations. We work Fulton’s team to streamline reporting procedures to avoid duplicating data handling and transparently demonstrate data flows and aggregations.


    Toyota Australia was founded in 1963 and is one of Australia’s leading automotive companies. We have worked with Toyota since 2018 on many aspects of its GHG accounting, target setting, reduction initiatives, and reporting. We continue to inform strategic decisions around the contribution of the Australian business to the realisation of Toyota’s global Environmental Challenge 2050.

    H&H Group / Swisse Wellness

    H&H Group is a global health and nutrition company listed on the Hong Kong Stock Exchange. Consumer brands include Biostime, Solid Gold Pet, Dodie, Good Goût, Aurelia Probiotic Skincare, CBII, and Swisse Wellness, a vitamin, supplement, and skincare brand, born in Australia in 1969. We have been working with Swisse and the group on many aspects of its GHG accounting and reporting, including the ongoing management of its Climate Active certification.


    AGL is one of Australia’s leading energy companies offering electricity, gas, solar and renewable energy services, plus internet and mobile plans. We have assisted AGL for over five years on a variety of activities including audit and assurance projects.


    Viva Energy is a leading energy company which supplies about a quarter of Australia’s fuel requirements. Viva Energy make, import, blend and deliver fuels, lubricants, solvents and bitumen through extensive national and international supply chains. We assist Viva Energy with a range of energy and greenhouse gas related projects. These include annual NGER reporting, Safeguard baseline setting, advice on Emission Reduction Fund opportunities and emission trajectories.