Why the "S" in ESG is becoming increasingly more important for companies

When you think about the topics of ESG and sustainability, images of nature and the environment probably come immediately to mind. However, what is often overlooked here: ESG consists not only of "E" for "Environment" but also of "S" for "Social" and "G" for "Governance". Even though the climate crisis is currently a highly urgent problem, the social component of sustainability is becoming increasingly important in times of a shortage of skilled workers (“war for talent”) and the German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz). 

In her research, Erika Bognar investigates the implications of socially sustainable practices for companies. Here, her focus lies on corporate reporting, as under the European Union's Corporate Social Responsibility Directive (CSRD), it will become mandatory for large companies to disclose social sustainability metrics, such as employee turnover and hours of training offered as of next year. The first results show that companies that have a good social sustainability performance are also financially successful in the long term. However, the informativeness of different social sustainability metrics varies widely. Through the cooperation of the Chair of Accounting, especially Management Accounting at Goethe University, where Erika Bognar works as a research assistant, with the Deutsche Rechnungslegungs Standards Committee (DRSC) at the Liaison Hub to the International Sustainability Standards Board (ISSB), the researcher further has the opportunity to be directly involved in the development process of sustainability reporting.

Are you interested in this article? If so, you are welcome to find out more about the cooperation and the research work of Erika Bognar on the DRSC website (here) and the homepage of the Chair of Accounting, especially Management Accounting (here) at Goethe University.