By Isaac FRIMPONG (Ph.D.)
Environmental, Social, and Governance (ESG) criteria are guidelines used to evaluate a firm’s operations and their impact on society, the environment, and governance practices.
As ESG concerns increasingly dominate boardroom discussions, the social aspect often receives less attention compared to environmental and governance issues. Yet, every firm exists within an ecosystem where the social side is key to its function and sustainability.
The social dimension seeks to understand how well leadership manages its relationships with stakeholders, including fair labour practices, customer and community engagement, local economy contributions, promoting human rights (diversity and inclusion), health and safety practices, and accountability for the actions and inactions of its supply chain.
The COVID-19 pandemic has underscored the profound intersections of health, economy, technology, social factors, and geopolitics. As Vivian Hunt, a senior partner at McKinsey, emphasises, these intersections are more significant than ever.
In Ghana, where a substantial portion of the workforce is engaged in non-standard forms of employment—including street vendors, artisans, cart pushers, vehicle mechanics, watch repairers, and informal service providers—the social aspect of ESG is particularly relevant.
By addressing fair labour practices and social responsibility, we can greatly enhance the livelihoods of these workers, who often lack work-related protections. This article examines how the social aspect of ESG can improve the experiences of the millions of Ghanaians who engage in non-standard employment.
Non-Standard Employment in Ghana
Non-standard forms of employment in Ghana make up a significant portion of the workforce, accounting for approximately 70 per cent. These types of employment have grown due to economic diversification, technological advancements, and flexibility in terms of entry requirements, work hours, and scheduling.
Ride-hailing app platforms like Uber, Yango, Tap n Go, inDrive, and Bolt have created opportunities in transportation, while temporary, part-time, and self-employment work is common in retail, services, and agriculture. These activities are vital to Ghana’s economy, providing income for millions outside the formal job market and offering avenues for many to display their entrepreneurial skills.
However, these jobs often lack work-related benefits such as job security, health insurance, and pension coverage, making the social aspect of ESG crucial for improving working conditions and overall well-being. In contrast, those in standard employment generally receive work-related benefits, but the impact of their employment on their social lives can still be a concern. For instance, how many employers know the number of their employees who live hand-to-mouth, even after receiving a realistic salary?
Key Components of the Social Aspect of ESG
Basic health and safety standards are essential for reducing workplace accidents and health issues. For instance, market traders and street vendors could benefit from safer market spaces equipped with security and sanitation facilities to prevent health hazards and accidents such as fire outbreaks and flooding. Fair compensation in terms of wages or salary is paramount for enhancing the quality of life for workers due to its consistency and stability.
However, the majority of individuals in non-standard employment are self-employed, relying on trading their labour or selling services without the protection of minimum wage guarantees that those in standard employment typically enjoy. Given the erosion of the purchasing power of the Ghanaian currency due to inflation, their working capital can easily be eroded.
Therefore, the state should consolidate its various social interventions, currently scattered across different government agencies, under one umbrella for more effective implementation and greater impact.
This is important because, during personal crises, where do these people turn? The traditional support system, once led by the family as the primary line of protection, has been weakened by migration and urbanisation.
For those in standard employment, firms ought to consider establishing emergency funds to aid employees during times of personal crisis and ensure that wages provide sufficient disposable income beyond basic needs, such as rent and food.
Job Security
Non-standard employment often lacks job security. ESG initiatives can address this by promoting businesses to offer more formalised contracts, providing greater job stability, and providing legal protections, especially during economic uncertainties.
The state can also adopt initiatives to guarantee job stability for individuals in non-standard employment. This is crucial because the nature of these employment types makes individuals particularly vulnerable to exploitation.
The social aspect should therefore include measures aimed at protecting workers from exploitation and abuse. This involves enforcing anti-discrimination policies to safeguard workers, whether in self-employment or not, from unfair treatment based on religion, party politics, gender, age, or ethnicity.
Ensuring that the rights of all workers are respected. For example, those in non-standard employment should have access to social protections such as health insurance and pension coverage, which can provide a safety net and reduce their vulnerability.
Skill Development and Training
Investing in training programmes is often likened to people in standard employment because firms can invest in training programmes to equip workers with new skills, enhancing their employability and potential for career advancement.
Those in non-standard employment also need skill development opportunities to help them diversify their income streams and improve their economic stability.
Supporting them with resources for entrepreneurship can foster economic independence. Programmes such as business training and financial literacy can enable workers to start and manage their businesses, contributing to broader economic growth.
Community Engagement and Development
Community engagement and development initiatives undertaken by firms can contribute to the community by investing in local infrastructure, education, and healthcare.
Supporting community projects that enhance the living conditions of people can have a significant impact. Furthermore, engaging with and supporting local economic activities by extension can strengthen the community and provide more stable employment opportunities.
For instance, prioritising sourcing from local suppliers, who are often in non-standard employment, can boost their income and integrate them into the broader economy.
Making a Positive Impact
To make a positive impact, the state and firms must evaluate their social footprint and identify vulnerabilities and strengths in their ESG practices.
As Bruce Simpson, CEO of the Stephen A. Schwarzman Foundation, highlights, many firms have purpose statements that lack substance and fail to anchor specific ESG initiatives. Government policies can play a critical role in promoting the social side of ESG.
For example, policies encouraging businesses to adopt ESG practices—such as tax incentives and subsidies for training programmes—can help integrate social ESG criteria into the public and private sectors of the economy. Public-private partnerships are also essential for combining resources and expertise to improve working conditions and provide support for those in non-standard forms of employment.
Conclusion
Enhancing the well-being of Ghanaian workers necessitates that businesses incorporate the social aspects of ESG into their operations. Adopting fair labour standards, upholding human rights, and engaging with local communities are methods by which businesses and the government can collaborate to build a more sustainable and inclusive economy. Recognising the development of knowledge and dedication by both the public and private sectors to the social component of ESG will yield long-term benefits. This includes promoting economic growth by providing more equitable employment opportunities and cultivating a resilient workforce in which every worker actively contributes to Ghana’s progress.
Isaac is a Researcher and Consultant
