We probably all agree that corporates should not operate without awareness of their ESG impact. But it’s noticeable that the Diversity, Equity and Inclusion data points and disclosures required by the GRI, SASB, S&P and others are – ironically – often insensitive to culture and context, and in many ways non-inclusive. Many appear to have been designed by professionals from the global north and the DEI questions they ask – and the data they collect – reflect their biases, assumptions and norms. 

Take, for example, S&P Global’s Corporate Sustainability Assessment (CSA), which since 1999 has annually evaluated the sustainability practices of companies around the world, with around 10,000 companies currently on its list.

The CSA asks companies to disclose whether they  “monitor the breakdown of [their] workforce according to under-represented and structurally disadvantaged ethnic and racial minorities.” While this statement may seem reasonable in America (where S&P was founded and is based), how does it work in a country like South Africa where white people are a minority, but a structurally-advantaged minority, over-represented in the corporate world. In South Africa (unlike America) the black population is the majority, yet a structurally disadvantaged majority, under-represented in the business sector. By correlating minorities with disadvantage, S&P Global draws too closely on the American example, making cultural assumptions that ignore the nuance and complexity of the broader world picture.

S&P’s CSA handbook is intended to provide companies with information “on the rationale and intent” behind questions, as well as “details” and “definitions” relating to those questions. In the handbook, great pains are taken to carefully define and differentiate ‘race’ and ‘ethnicity’. Yet their questions actually conflate the two, with companies simply asked to categorise their employees as Asian, Black/African American, White, or Indigenous /Native. Those who don’t fit into one of these four categories are simply bundled into the final stigmatising category of ‘other’.

S&P’s CSA handbook also takes great pains to carefully define and differentiate between sex and gender identify,  including distinguishing between sex at birth and gender expression. However, in their questionnaire,  gender is presented as a binary, with employees only permitted to self-identity as a male or female, with no subtlety, nuance or acknowledgement of the complexities of the gender spectrum. Therefore although detailed data points are gathered on ‘women’ (i.e. their pay, their proportional representation in the total workforce, on the board, and in junior/ middle / senior management positions), there are no categories to include or even acknowledge those who don’t fit into the traditional gender binary, making transgender people invisible and erasing non-normative gender expressions. 

There is a  persistent and routine lack of data collection on gender identity and sexual characteristics / orientation across industries, sectors and companies, which remain a  challenge for businesses, researchers, and policymakers seeking to improve the health and well-being of LGBTQI+ people.  Although gathering data on sexual orientation and gender identity is undoubtedly complex –  with privacy concerns especially pertinent in the 66 jurisdictions and nations that criminalise private, consensual same-sex activities (Statistica, 2022) – such information would help illustrate the true diversity in an organisation, its cultural openness to non-normative expression of gender and sexuality, and the potential challenges and roadblocks facing the LGBTQI+ community.

Where the link between information and action?

Another flaw of current ESR methodologies is the lack of follow through from gathering information to effectively using it. S&P states that “collecting and disclosing [DEI] data is key to identifying any practices of discrimination or unequal opportunities, and provides an important indicator to shareholders that diversity and inclusion are considered as high on the corporate agenda.” However, can we assume a direct link between a company’s collection of data and its commitment to diversity and inclusion? S&P, for example, asks companies about the percentage of various ‘minorities’ in their workforce and asks if that data is ‘reported’. But companies are not asked whether they have publicly disclosed targets or plans to improve under-representation. So what, we might ask, is the point? 

Is it time to decolonise ESG metrics?

The Social aspects of ESG metrics are meant to demonstrate whether  diversity and inclusion are “high on the corporate agenda”. Yet the DEI questions asked and the data gathered are in many ways pretty un-inclusive, and lack an awareness of diverse country contexts. If companies in the Global South are to be assessed against standards set by the Global North, won’t they be constantly behind in their ESG ratings? Perhaps it’s time to decolonise ESG metrics and make them truly inclusive?