Social-saurus: the not so extinct dinosaur looming over companies

You may have been forgiven for thinking the dinosaurs became extinct long ago, but the latest headlines surrounding Gunnersaurus (the Arsenal football club mascot, pictured) and the response to the story behind those headlines highlight some very current challenges that companies are grappling with. 

As has been widely discussed, COVID-19 has driven a significant increase in attention on the social limb of ESG. Perhaps previously neglected in favour of climate change, this limb covers more than just traditional employment topics such as labour rights and health and safety. As was demonstrated much earlier in the Summer, this limb also covers unemployment and more generally how companies treat their staff and take decisions against the backdrop of wider events. 

This was shown by the presence of headlines criticising what the public perceived as large, successful companies accepting government relief funds. The backlash was increased in those instances where such companies also announced various cost-cutting measures. In some cases, the response led to some companies taking steps to return funds or reverse decisions, truly demonstrating the power of stakeholders beyond shareholders, the role of corporate values and the concept of a "social licence to operate". In a similar fashion, there were positive headlines for those companies seen as being what this author saw referred to as "responsible unemployers". 

None of this to say companies should not accept assistance when available or should not take decisions simply because the public may disagree. No. The point here is that, unlike Gunnersaurus' ancestors, the social limb of ESG is very much alive. This means companies need to bear in mind the bigger picture against which their actions will be seen and ensure they have a robust and credible narrative to explain decisions that might prove controversial.