People First, Not Carbon.

For a family struggling to make ends meet in Batam, Indonesia, sustainability is not an abstract debate about carbon neutrality, investment classifications or the environmental performance of multinational corporations.

It is whether there is enough money to put food on the table. Whether the cost of cooking gas has increased again. Whether a parent can afford the journey to work. Whether the children can continue their education. Whether tomorrow offers the prospect of a better life than today.

These are not secondary considerations. They are the foundations of human dignity.

Yet across the international financial system, an extraordinary contradiction has taken hold.

We have developed sophisticated methods to calculate carbon emissions, assess environmental exposures, classify investments and judge the sustainability performance of corporations. Vast financial resources are devoted to collecting environmental data, modelling climate risk and developing the standards against which businesses and even national economies are increasingly evaluated.

Yet the human consequences of these decisions—higher living costs, lost livelihoods and diminished economic opportunity—rarely receive the same level of attention, measurement or accountability.

Where is the equally rigorous accounting of the family whose purchasing power has fallen, the worker whose livelihood has disappeared, or the community that bears the costs of decisions made thousands of kilometres away?

How did the world become so accomplished at counting carbon, yet remain so inadequate at accounting for human hardship?

That is the question at the heart of the neglected Social pillar of ESG.

The Letter That Should Matter Most

Environmental, Social and Governance—ESG—was intended to broaden the understanding of corporate responsibility beyond conventional financial performance.

Its three components were supposed to recognize that economic activity does not occur in isolation from the environment, society or the institutions governing it.

But somewhere along the way, the balance became distorted.

Environmental performance acquired a sophisticated language of emissions inventories, carbon intensity, transition pathways and measurable targets. Governance remained anchored in familiar corporate structures, compliance systems and financial accountability.

The Social pillar, however, has struggled to command comparable attention. And that is a profound contradiction.

The S stands for Social. It represents the circumstances in which people live and work: employment, wages, affordability, healthcare, education, economic opportunity, community wellbeing and the protection of human dignity.

These are not peripheral consequences of economic activity. They are among the principal reasons economic development matters in the first place.

A corporation can improve its carbon profile while the communities around its operations become poorer. An investment can satisfy environmental criteria while imposing unacceptable costs on low-income households. A transition strategy can look persuasive in an institutional presentation while proving devastating for the workers required to bear its consequences.

A sustainability assessment that fails to distinguish between these outcomes is incomplete, no matter how technically impressive its methodology.

A company cannot reasonably claim to be sustainable simply because its emissions have improved while the people sustaining its operations have been left behind.

Who Decides What Sustainability Means?

Consider the influence of the international ESG ratings industry.

Organizations such as MSCI and Morningstar Sustainalytics provide assessments used throughout global financial markets. Their methodologies help inform investment decisions by asset managers, pension funds and other institutional investors.

There is nothing inherently objectionable about assessing corporate exposure to environmental, social or governance risks. Financial markets need reliable information.

But there is an important distinction that too often disappears from the public conversation.

MSCI describes its ESG ratings as measuring a company’s resilience to financially relevant sustainability risks and opportunities.

That is a legitimate investment objective. It is not, however, the same as measuring whether a company’s activities make society better or worse.

The difference is fundamental.

A company may manage its financial exposure to a social problem without eliminating the underlying hardship experienced by the people affected. It may protect its own resilience while costs continue to fall on workers, consumers or surrounding communities.

A rating designed principally to assess risks to the company does not necessarily reveal the full consequences of the company.

Neither does the existence of social indicators within a methodology establish that the true human costs of economic decisions are being adequately captured.

This is not an accusation that every ESG rating is misleading, or that every rating provider neglects social issues. Different methodologies serve different purposes, and some incorporate extensive social assessments.

It is a challenge to a system in which commercially useful risk measurements can acquire the appearance of comprehensive ethical judgments.

When a financial risk score is mistaken for a measure of social responsibility, the people who bear the real costs can disappear behind the numbers.

And when investment models influence access to capital, the consequences extend well beyond the financial markets.

A World That Cannot Afford to Be Forgotten

The scale of the challenge is immense.

The United Nations Development Programme’s 2026 Global Multidimensional Poverty Index identifies approximately 1.2 billion people living in acute multidimensional poverty across the 108 countries assessed.

The United Nations’ World Social Report 2026 records that 58 per cent of workers worldwide were informally employed in 2025.

These are people whose economic security is frequently fragile, whose access to social protection may be limited, and whose ability to absorb sudden increases in living costs can be extremely small.

For them, a higher energy bill is not an inconvenience. It can mean less money for food.

A more expensive journey to work can make employment itself less viable.

The disappearance of a local industry may mean that the next opportunity is not available without relocation, retraining or resources that the household does not possess.

These realities are especially important in developing economies, where millions of households are working toward living standards that wealthier societies have long taken for granted.

It is easy to advocate costly transitions when the fundamental necessities of life are already secure. It is quite another matter to ask those still struggling for economic security to shoulder the immediate burdens of policies whose benefits may be realized years or decades later.

This is not an argument against environmental protection. Indeed, poorer communities are often among the most vulnerable to environmental degradation, polluted air, flooding, extreme heat and climate-related disruption.

Their wellbeing requires both a healthy environment and a viable livelihood.

The issue is not whether environmental action is necessary. The issue is why so many of its costs are allowed to fall on those least able to bear them.

The Price of Progress—and Who Pays It

The distribution of these costs is not merely a matter of opinion.

Research by the European Commission’s Joint Research Centre has demonstrated that a hypothetical uniform carbon tax of €80 per tonne on household consumption across the European Union could disproportionately burden lower-income households.

The reason is straightforward: food, energy and other essential goods account for a larger proportion of poorer households’ incomes.

The same research demonstrates that better policy design and compensating transfers can reduce or offset these regressive effects.

That is precisely the point. The social outcome depends not simply on the environmental objective, but on how the transition is structured and who is protected.

The employment consequences are equally significant.

Research published in the OECD Employment Outlook 2024 found that workers displaced from high-emission industries experienced larger and more persistent earnings losses than workers displaced from lower-emission industries.

The creation of new green employment is welcome. But a new job created elsewhere, requiring different skills and becoming available at a different time, does not automatically replace the livelihood lost by an existing worker.

A family cannot pay this month’s expenses with the promise of a possible job several years from now. A community cannot survive indefinitely on assurances that economic transformation will eventually produce benefits.

A credible transition must therefore be financed twice: once for the technology and infrastructure being introduced, and again for the people whose economic lives are being transformed.

Anything less risks turning environmental ambition into social injustice.

Indonesia Is Not a Footnote in Someone Else’s Framework

This question has particular importance for Indonesia.

Indonesia is a large, diverse and developing nation with responsibilities that cannot be reduced to a collection of international environmental indicators.

It must protect its natural resources and respond to climate risk. Equally, it must expand opportunity, improve infrastructure, create employment, strengthen household purchasing power and enable its citizens to achieve greater economic security.

These objectives should reinforce one another. They should not be presented as though progress toward one necessarily requires sacrificing the others.

International standards can provide valuable scrutiny, including of governments. No country should be exempt from reasonable expectations of transparency, responsible governance or environmental stewardship.

But the organizations developing those standards must also be prepared to answer difficult questions about their own assumptions.

Have they adequately considered local living standards? Have they assessed the distribution of costs across income groups? Have they distinguished between the economic circumstances of developed and developing countries? Have they consulted the people most directly affected? And when an internationally preferred policy creates hardship, who accepts responsibility for mitigating it?

In Batam, as elsewhere across Indonesia, the legitimacy of an economic policy is ultimately tested not in an international conference room, but in the daily circumstances of ordinary people.

Global institutions have a right to offer analysis. They do not have an exclusive right to define what constitutes a good society.

Development cannot be judged solely by how closely a country conforms to an external model. It must also be judged by whether people have better opportunities, more secure livelihoods and greater dignity.

The people of Indonesia should never become an inconvenient variable in a sustainability equation designed elsewhere.

From the Carbon Ledger to the Human Ledger

The solution is not to abandon ESG. It is to insist that ESG fulfill its stated purpose.

A useful intellectual foundation for that correction has been developed by Paul Gardner Brook in his research The Neglected ‘S’ in ESG and his proposed Social Cost Scope measurement framework.

The central principle is compelling: if the financial system can establish systematic boundaries for identifying carbon emissions, it should also develop more rigorous methods for recognizing the human costs associated with economic activity.

The proposed framework distinguishes between social costs arising directly from an organization’s operations, costs carried through suppliers and contracted activities, and costs extending across the broader lifecycle of products and services.

It also asks two questions that conventional headline indicators can obscure. Who actually bears the cost? And when does that cost fall?

These distinctions matter because a financial burden that is manageable for a wealthy household can be devastating for a poorer one. Equally, costs arising years after a decision may fall on people who had no part in making it.

The Social Cost Scope is a proposed measurement approach, not an established international standard. But it points toward a vital principle of accountability: social consequences must be identified, measured and considered with the seriousness already devoted to environmental metrics.

For corporations, that means looking beyond published policies to the actual living standards of workers and the conditions experienced by surrounding communities.

For investors, it means examining the consequences of capital allocation rather than relying exclusively on high-level classifications or aggregate ESG scores.

For rating agencies, it means clearly distinguishing assessments of corporate financial resilience from assessments of wider human impact—and improving transparency about what their methodologies do and do not capture.

For governments, it means ensuring that environmental and economic transitions include credible protections for those most exposed to their costs.

And for everyone involved, it means listening to affected communities before decisions are made, rather than treating their hardships as problems to be explained afterward.

People Must Be the Measure of Progress

I do not believe that protecting the environment and protecting people are competing moral obligations. They are inseparable.

But that does not mean every policy advanced in the name of the environment is automatically fair, or that every investment labelled sustainable necessarily improves society.

Environmental ambition cannot become a justification for indifference to poverty. Corporate sustainability cannot become a substitute for social responsibility. And international governance standards must not be treated as beyond criticism simply because they have been developed by influential institutions.

We should expect more from the global financial system than increasingly sophisticated measurements of environmental performance accompanied by inadequate recognition of human consequences.

We should expect major corporations to demonstrate that their operations provide genuine economic opportunity. We should expect investment institutions to understand how their decisions affect the lives of workers and communities. We should expect international rating agencies to be transparent about the limitations of their judgments. And we should expect policymakers to place the welfare of ordinary people at the centre of every significant economic transition.

Above all, we should reject the suggestion that the immediate needs of vulnerable families are somehow less important because they are more difficult to incorporate into a financial model.

The people who struggle to afford food, education, transport and energy are not obstacles to sustainable development. They are among the principal people sustainable development is supposed to serve.

The purpose of economic progress is not to produce a more impressive set of indicators while human hardship persists outside the accounting system. It is to improve lives.

The purpose of environmental protection is not to create a world that looks better on paper while people become poorer in practice. It is to secure a livable future for humanity.

And the purpose of ESG cannot simply be to help capital assess its own risks while overlooking the costs that capital imposes on others.

A society cannot call itself sustainable if the people who sustain it are being sacrificed to achieve the appearance of sustainability.

We must continue to count carbon. But we must finally learn to count the human cost with equal seriousness.

Because carbon is a measure. People are the purpose.

And until the world’s institutions understand that distinction, the most important letter in ESG will remain the one they have failed to honor.

People first. Always.

Where the figures in this article come from.

• UNDP — 2026 Global Multidimensional Poverty Index
• UN DESA — World Social Report 2026
• MSCI — ESG Ratings methodology
• OECD — Employment Outlook 2024
• European Commission JRC — Distributional implications of carbon pricing
• Paul Gardner Brook — The Neglected ‘S’ in ESG
• Paul Gardner Brook — The Social Cost Scope