ESG · the neglected Social pillar
ESG ratings have learned to count carbon with precision. They still cannot see — or score — most of the human cost behind an investment. The Social Cost Scope is a measurement standard for the ‘S’ in ESG: a shared way to find that cost, draw its boundary, and put it on the books.
From the carbon ledger → to the human ledger.Carbon became manageable the moment it became measurable. The GHG Protocol gave the world three agreed boundaries and a single unit. Social cost has never had that discipline — so the Social Cost Scope supplies it: the same three-boundary logic, applied to people.
The cost an organisation creates first‑hand — in its own workforce and in the communities that host its operations.
Own workforce & host communitiesThe cost embedded in what it buys — carried by suppliers, contractors and the purchased inputs it depends on.
Suppliers & purchased inputsThe cost carried across the full life of the product — from extraction, through use, to disposal.
Extraction → use → disposalA single social‑cost figure can be true and still mislead — because it says nothing about who pays the cost, or when. Two original factors restore what the average erases.
The same cost is not the same to everyone. The I‑factor records how it falls across income — and in the domains we can already measure, it lands heaviest on those least able to absorb it.
Source: European Commission Joint Research Centre microsimulation (2024). The poorest and richest fifths are reported values; the middle three are interpolated. Measured exposure runs the same way — the poorest fifth of EU regions breathe roughly a third more PM2.5 (EEA, 2025), and lower‑middle‑income countries suffer about 1.8× the air‑pollution death rate of high‑income nations (World Bank).
A cost deferred is not a cost avoided. The T‑factor records when the cost lands — and most of it lands decades after the act that caused it. One tonne of CO₂ emitted in 1990 is the clearest measured case.
Source: Burke et al., Nature (2026) — discounted damages per tonne emitted in 1990. The same shape holds at the macro scale: climate damage runs roughly 1–3% of world GDP by 2030, ~7–15% by 2050 and ~10–30% by 2100 (NGFS Phase V, 2024).
Figures use current peer‑reviewed or official sources; the retracted Kotz et al. (2024) “committed‑loss” estimate is deliberately excluded.
PRI, ISSB, GRI, the rating agencies and the regulators already form the scaffolding of responsible investment. What they share is a gap: no agreed unit or boundary for social cost. The Social Cost Scope is the foundation that gives them one.
The Social Cost Scope maps directly onto the UN Sustainable Development Goals that turn on people — poverty, health, education, equality, decent work and strong institutions. Where those goals ask what progress costs in human terms, the Scope is how you answer.