Why social sustainability (the ‘S’ in ESG) deserves your full attention

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What is social sustainability?

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Social sustainability goes beyond philanthropy. It’s about proactively managing your business’s impact - both positive and negative - on people. That includes employees, workers across your supply chain, customers, and the communities you operate in. In an age of growing social awareness, stakeholder capitalism, and ESG scrutiny, the quality of these relationships is no longer a “soft” issue - it’s a bottom-line business imperative. In tourism, it’s people who truly shape the experience. Whether it’s the warm hospitality your staff offers guests or the vibrant local communities travelers seek out for authentic encounters, human connection lies at the heart of every memorable journey.

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Social sustainability and Gen Z

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Gen Z’s influence on business practices and expectations

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Gen Z, who are now entering the workforce and gaining economic power (to travel and make purchasing decisions), is actively reshaping what accountability looks like. According to a 2023 IBM Institute for Business Value survey, 62% of Gen Z say they would switch to a brand that demonstrates a strong commitment to social - even if it means paying more. This generation doesn't just scan ESG reports; they seek authentic, systemic commitment to equity, labor rights, and community well-being.

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Unlike previous generations, Gen Z expects social sustainability to be embedded into the core business model, not an adjacent CSR initiative. Deloitte’s 2023 Global Gen Z and Millennial Survey found that nearly half (49%) of Gen Z respondents said they make career decisions based on a company’s values - especially around inclusion, mental health, and ethical supply chains.

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This generational shift is not only social - it’s scientific. The social determinants of health framework, established by the World Health Organization, shows that economic stability, quality education, social cohesion, and community context all directly influence health outcomes and workforce productivity. In other words, businesses that neglect social sustainability may not only face reputational or regulatory risk - they may also be undermining their own talent, innovation, and long-term viability.

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Why focus on the ‘S’ in ESG?

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Business benefits of implementing social sustainability practices

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Too often, the “S” in ESG is overlooked in favor of environmental (E) or governance (G) issues. But social sustainability offers tangible, competitive business advantages.

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Social sustainability directly connects to health, productivity, and business success by fostering equitable, supportive environments that improve well-being and operational performance. In the workplace, prioritizing fair labor practices, mental health support, and safe conditions motivates employees, leading to higher engagement and productivity. Companies embedding social sustainability into their operations also benefit from stronger employee retention and innovation, as well as improved reputations that attract customers and partners. Ultimately, integrating social sustainability is a strategic business imperative that drives healthier workforces and sustainable competitive advantage.

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Stakeholder benefits

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Stakeholders, especially employees, investors, customers, and regulators—are demanding more than just compliance. They expect companies to demonstrate authenticity, action, and measurable impact.

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The financial and reputational benefits of embracing social sustainability are becoming increasingly clear:

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• Employees: Employees want employers who live their values. A 2024 McKinsey survey found that 70% of employees prefer to work for companies that prioritize sustainability, and companies with a strong commitment to social impact report 33% higher employee retention than their counterparts who do not prioritize ESG issues.
• Investors: Investors are increasingly favoring companies with strong ESG ratings. According to a Morningstar report from 2024, ESG funds grew 53% faster than the broader market in 2023, and companies with high ESG scores experience 20% lower cost of capital. Investors recognize that socially responsible businesses are more resilient to risk and can achieve higher long-term returns.
• Customers: Consumers are making purchasing decisions based on alignment with their values. A 2024 Nielsen report found that 73% of global consumers are willing to pay more for brands that are socially responsible. Brands with a clear sustainability focus saw 10-15% growth in customer loyalty and increased market share.
• Regulators: Governments and regulatory bodies are raising the bar on social impact disclosures. In 2024, the EU's Corporate Sustainability Reporting Directive (CSRD) expanded its requirements, impacting over 50,000 companies. Companies that proactively adopt transparent sustainability practices often see lower compliance costs and enhanced investor confidence.

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More than stakeholder demands, adopting social sustainability practices can have business benefits. Some are summarized in the table below:

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Business benefits of social sustainability

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Core areas of social sustainability

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Social sustainability touches a wide range of human rights and development areas. Leading frameworks - including the UN Global Compact and the UN Guiding Principles on Business and Human Rights - highlight:

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Labor rights

• Decent work, fair wages, and freedom of association
  
  • UN Global Compact Principle 3: “Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.”
  • UN Guiding Principle 4: “Ensure that their activities respect workers’ rights in line with international labor standards.”

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Equity and inclusion

• Women, children, indigenous communities, and people with disabilities
  
  • UN Global Compact Principle 6: “Businesses should contribute to the elimination of discrimination in respect of employment and occupation.”
  • UN Guiding Principle 2: “Businesses should not infringe on the human rights of others and should address adverse human rights impacts with due diligence.”

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Community engagement

• Participation, consultation, and investment in local development
  
  • UN Global Compact Principle 1: “Businesses should support and respect the protection of internationally proclaimed human rights.”
  • UN Guiding Principle 19: “Provide effective grievance mechanisms for communities impacted by their operations.”

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Health and education

• Workforce well-being and societal uplift
  
  • UN Global Compact Principle 7: “Businesses should support a precautionary approach to environmental challenges.”
  • UN Guiding Principle 15: “Businesses should take appropriate measures to prevent harm to the environment, community health, and education systems.”

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Human rights due diligence

• Preventing Harm and Ensuring Access to Remedy
  
  • UN Global Compact Principle 2: “Businesses should ensure that they are not complicit in human rights abuses.”
  • UN Guiding Principle 17: “Businesses should carry out human rights due diligence to identify, prevent, mitigate, and account for how they address their impacts on human rights.”

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Social Sustainability and the UN SDGs

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These elements also align with several UN Sustainable Development Goals (SDGs), such as:

The UN recently added a new tourism specific indicator to measure the number of people employed in tourism, to underline the importance of the sector for the social dimension.

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How to embed social sustainability: A roadmap

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Phase 1: Initial Steps to Embedding Social Sustainability

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• Conduct a Social Impact Assessment
  
  • Understand the impact your business has on employees, communities, and the environment.
• Map stakeholders and rights holders
  
  • Identify all affected groups (e.g., employees, local communities, customers).
• Integrate social KPIs into performance reviews
  
  • Set measurable goals for social sustainability and track progress.
• Report transparently on social issues
  
  • Disclose social impact openly in annual reports and other communication.
• Partner with credible NGOs and advocacy networks
  
  • Work with trusted organizations to ensure your efforts align with best practices and the actual needs of the stakeholder.

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Phase 2: Complementary Actions for Greater Impact

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• Create decent jobs with fair compensation
  
  • Focus on offering fair wages and safe, inclusive working conditions.
• Develop inclusive products and services
  
  • Design products that meet basic needs and cater to diverse groups.
• Invest in inclusive value chains
  
  • Support underrepresented businesses and regions in your supply chain.
• Support public policies that elevate equity and rights
  
  • Advocate for policies that support social justice, human rights, and equity.
• Form cross-sector alliances
  
  • Collaborate with other businesses, governments, and organizations to drive systemic change.

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Frequently Asked Questions (and Answers)

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What is social sustainability in business?

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Social sustainability in business is managing your company’s impact on people—employees, communities, and supply chains—to ensure fairness, equity, and long-term well-being.

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Why is the S in ESG important?

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The “S” in ESG matters because it focuses on people. Focusing on social sustainability leads to healthier, more productive workplaces, stronger employee retention, better customer loyalty, and increased investor confidence.

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How can companies measure social impact?

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Companies can measure social impact by:

• Conducting social impact assessments to understand their effects on people and communities.
• Setting and tracking Key Performance Indicators (KPIs) for diversity, equity, fair wages, and community investment.
• Using employee engagement surveys, retention rates, and supplier audits.
• Reporting transparently on social outcomes in annual and ESG reports.
• Partnering with NGOs for third-party verification and benchmarking against global standards like the UN SDGs.

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What are examples of social sustainability initiatives?

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Examples of social sustainability initiatives include:

• Implementing fair labor practices and safe working conditions.
• Promoting diversity, equity, and inclusion programs.
• Investing in local community development and education.
• Supporting mental health and well-being in the workplace.
• Ensuring human rights due diligence in supply chains.
• Designing inclusive products and services for underserved groups.
• Partnering with NGOs and supporting public policies that advance social justice.