Social considerations: digging a little deeper

Businesses' social issues can be hard to spot. The reality is that they are often covert. This is exacerbated by the frequently complicated nature of supply chains. 

The inherent difficulty with such issues poses problems for investors and the wider public when looking at which companies to invest in or give their business. 

With several high profile incidents tied to social topics having occurred since the beginning of the year and the increased scrutiny on social performance, now is the time for investors (and companies) to start looking at these issues in more depth and in a more robust fashion. 

Three particular points spring to mind on this front:

- No longer can there be reliance purely on the usual due diligence queries around policies being in place. There should, in addition, be questions aimed at understanding the wider processes and frameworks companies have in place to assess risks and identify, mitigate and (where appropriate) remedy issues. 

- In a similar vein, caution should be taken when using ESG scores. Those factoring them into their own process of "ESG integration" should ensure they are interrogating any scores to better understand the metrics and methodologies behind them. This will allow for a more informed and robust decision-making process.

- Social issues cannot be assessed, as with all company performance metrics, on a one-off moment in time basis. Whether reviewed annually, on a key events or some other basis, the process for evaluating performance should be on an ongoing basis.

These are issues with which it is difficult to contend. That has long been recognised. Now it's time to roll up the sleeves and do something about it.