Mapping of ESG frameworks and standards and their connection with the Human Security approach

The aim of this paper by LSE IDEAS is to inform policymaking and practice on ESG (Environmental, Social, and Governance) impact by investigating the usefulness and relevance of the Human Security (HS) approach to ESG standards. The Human Security approach is operationalised in terms of business use through the Human Security Business Partnership (HSBP) Framework which proposes a mechanism of partnering based on a set of Human Security principles, processes and tools.

The study sought broadly to assess to what extent the major ESG risk and SDG impact frameworks and standards already converge with the Human Security approach, and to highlight what more could be done in policy terms to tackle gaps in how these frameworks can improve corporate accountability and responsibility standards. To achieve the research objective, the authors conducted a mapping study whereby Human Security informed local engagement mechanisms were mapped onto international ESG risk and SDG impact frameworks, standards and their guidance notes.

Nine major ESG frameworks and standards have been assessed on the basis of four value creation areas: Learning, Relational, Instrumental and Financial, elaborating their weaknesses and strengths, and how these standards align with the Human Security approach, and its core characteristics of people-centred, comprehensive, context-specific, and prevention-oriented responses that strengthen the protection and empowerment of all people and all communities. The four standards offering the highest congruence with the Human Security approach in combination with the highest influence on the private sector are the GRI (Global Reporting Initiative) standards, the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises and the Equator Principles.

The research points to the relevance of the HS approach in light of the current policy context, in that it responds to developments such as the new European regulations on corporate accountability and responsibility and the pushback against ESG in some parts of the world, in particular the US. Secondly, it draws attention to the significance of a people-centred perspective in terms of addressing the S in ESG and in particular the need to articulate engagement with communities. In policy terms, there is a clear need for ESG standards to clarify how concepts of inclusion, participation, stakeholder engagement and ownership are defined and should be implemented, as part of the improvement and clarification of standards.