Driving Sustainability: Exploring the Complex Relationship between Gig Work and ESG

The increasing number of gig workers as a direct outcome of the pandemic and their lack of job security and benefits has no doubt opened the door for concerns about the impact of gig work on the environment, society, and governance. The gig economy is expected to continue growing over the coming years, and this is by no means limited to blue-collar jobs. The management consulting services market, too, is expected to grow at a 4.8% CAGR between 2023 and 2033, according to Fact.MR. By 2033, the global market for these services will reach US$ 477.3 Billion. According to Fact MR, a provider of market research and competitive intelligence, the global management consulting services market is rapidly growing. It will continue its growth trajectory in the coming years.

The above has a consequence in terms of the relationship between the gig economy and ESG, which can no longer be ignored and will become more pronounced, demanding more attention from future of work influencers, policymakers, governments, investors, and boards of directors.

Just how intricately close is the relationship between the gig economy and ESG? What are the impacts and the dependencies at play between both? Companies realize that the relationship between gig work and the E, S, and G is neither simple nor straightforward but rather complex and multifaceted. However, by identifying and understanding the impact and deploying foresight, organizations can develop proactive solutions to overcome these complexities in a world that is becoming more borderless.

Environmental Impact

The environmental impact is significant, as gig workers often use their vehicles to travel to different locations, leading to increased carbon emissions. Gig work can also contribute to the overconsumption of resources and waste generation, particularly in the case of food delivery and ride-hailing services. Companies that engage gig workers can address these environmental concerns by working remotely where possible, promoting the use of sustainable modes of transportation, such as public transit or electric bikes, and providing incentives for sustainable practices. The opportunities to create a positive impact are enormous. Gig economy giants have the power to decrease their carbon footprint significantly. Whether incentivizing contract workers to be more eco-friendly or finding greener ways to operate, corporation-led initiatives can combat climate change much more effectively than individual efforts. For example, Uber has addressed its environmental impact by offering cash bonuses to electric vehicle drivers. The company may even have an interest in self-driving EVs from Tesla. If other gig economy brands also invest in greener technology, this could lead to significant milestones in reducing carbon emissions.

Social Impact

As gig workers are not entitled to the same benefits as traditional employees, they experience financial instability and insecurity. This can result in negative consequences for their well-being and that of their families. Companies can address these concerns by offering gig workers benefits such as healthcare, paid time off, and retirement savings plans. These benefits can help promote the social well-being of this category of ‘employees’ and contribute to a more sustainable and equitable gig economy. That’s not the only way how corporations can create a positive impact in terms of society. There is a massive opportunity for effective partnerships to start forming between organizations from various sectors to create ecosystems that support the development of the gig economy and encourage people to participate in this type of job market. Digital upskilling initiatives that ensure people are equipped with future-ready skills to thrive in the growing digital economy are an example. Microsoft Malaysia partnered with Biji-biji Initiative to launch the ‘Digital Skills and Gig Economy Employability Programme,’ aimed at equipping Malaysian youths with future-ready skills and increasing their employability in the gig economy.

Impact on Governance

Companies must ensure that their engagement of gig workers as stakeholders aligns with their sustainability objectives and meets their legal and ethical responsibilities. From a governance perspective, gig work presents unique challenges that companies must address to ensure that gig workers are being treated fairly and ethically. One of the primary challenges is that this worker category is often classified as independent contractors, meaning they are not entitled to the same legal protections as traditional employees. This can raise concerns about worker exploitation, wage theft, and job insecurity. As a result, companies that engage gig workers must ensure that their contracts are clear and transparent and that gig workers are aware of their rights and responsibilities. Additionally, companies must provide them fair compensation and ensure that they are not subject to discrimination or harassment. Organizations must also have effective grievance procedures in place, allowing gig workers to raise any concerns or complaints and receive a fair and prompt resolution.

To summarize,

Companies must be agile and adaptable to remain competitive in today's rapidly changing business environment. Adopting the gig economy as part of a sustainable human capital strategy can benefit companies significantly. It can create long-term value for shareholders and improve overall organizational performance. The gig economy provides a flexible and scalable workforce, allowing companies to adapt to changing market demands and optimize their workforce quickly. Organizations can access a diverse talent pool, bringing in new ideas, skills, and perspectives that can lead to increased innovation and productivity. Adopting the gig economy can help companies unlock competitive advantage by improving their operational efficiency and reducing labor costs. Additionally, by treating gig workers fairly and ethically and promoting environmentally sustainable practices, companies can demonstrate to their shareholders and stakeholders their commitment to sustainability as a business strategy and, very significantly, contribute to a more sustainable and equitable society as part of their purpose.

Sources

Global Management Consulting Services Market Share Is Projected To Reach USD 477.3 Billion by 2033, At a CAGR Of 4.8%: Fact.MR Analysis https://yhoo.it/3lYnidc

The modern demand for convenience is driving the success of the gig economy. https://www.hydrogenfuelnews.com/gig-economy-and-sustainability/8544579/

Empowering A Sustainable Future for the Gig Economy. https://news.microsoft.com/en-my/2022/03/14/empowering-a-sustainable-future-for-the-gig-economy/