ESG & Human Resource

Investors and employees alike are concerned about the effects of global warming, high-profile business scandals, and concerns of inequality. It is imperative that organizations take a firm stance on environmental, social, and governance (ESG) issues in order to compete in the future workplace.

Human resource managers can make a significant contribution to the development and implementation of an organization's ESG strategy, as well as aiding the company in closing its skills gap.

International efforts to slow global temperature rise have been prompted by an increase in the frequency and severity of climate change occurrences. Policy, the law, and regulation, as well as the conduct of lenders or investors, are increasingly influenced by those obligations made by governments. Companies are being forced to reexamine environmental and sustainability issues due to a number of causes, including an increasing usage of hybrid working methods and the potential for brand damage from a green agenda.

It is possible for HR and Reward teams to play an important role in supporting and encouraging a shift in organizational behavior and culture. In order to reduce a company's carbon footprint, HR experts can take the lead in implementing effective environmental policies for employees. It's HR's job to connect these policies to a company's mission and values.

The travel policy, for instance, is an example. Sales teams may need to travel frequently to meet with clients in other locations; operations employees may need to travel to the office or manufacturing plants; back-office teams and product developers may be able to work from home. When it comes to business travel, a one-size-fits-all strategy may not be appropriate, but HR professionals are well-equipped to recognize the diverse demands and effectively communicate the policies so that employees understand them.

To support policies, suitable training on sustainability concerns can also be implemented by HR. Environmental factors can also be incorporated into appropriate incentive, development and recruitment initiatives. Incentives for employees to reduce their carbon footprint or meet other "green" goals are becoming increasingly common.

HR and legal departments will need to work together more frequently in the future to deal with challenges like employee activism and environmental whistleblowing.

Managing connections with customers, suppliers, employees, and the communities in which a company operates is at the heart of ESG's 'S' component. Modern slavery, as well as health and safety management, are crucial aspects of ensuring equality, diversity, and inclusion.

An HR professional's support in the collection and analysis of diversity data can be used to help set suitable, challenging goals for gender and ethnic minority representation in the workplace.

Onboarding papers, contracts, and HR policies can benefit from the assistance of legal teams to ensure that the wording used is inclusive and complies with regulatory criteria while also addressing the data privacy challenges inherent in the collection of diverse data. Pay equality and transparency activities, such as equal pay audits and pay gap reporting, can be supported with their help.

It's possible that HR and legal will have to work together to ensure that discriminatory actions in the workplace are dealt with harshly; it's critical that employees feel free to be who they truly are. Most of the time, happier people do better work and are more willing to share their insights. By bringing together people from various backgrounds, it is possible to increase the diversity of viewpoints and so challenge long-held beliefs and practices.

With the correct purpose and governance, D&I networks and employee resource groups can have a significant impact on an organization. Additionally, HR can build and deliver development programs, reciprocal mentorship schemes, executive coaching, leadership, and sponsorship programs that provide opportunities for workers and minority ethnic individuals to upskill at the same time.

The board of directors and the executive team are often at the helm of an organization's governance, which is comprised of a variety of management and decision-making procedures. Organizations must have in place a system of processes that give meaningful information for decision-makers, allowing them to take into account all important stakeholders—employers, suppliers, consumers, and the communities in which they operate—and take advantage of opportunities and manage risk.

When it comes to driving accountability and transparency, HR plays a vital role in making sure the company stays on track with its stated mission and core values. Improved investor-employee relations, less risk, and regulatory pressure, and increased government backing can all be a result of effective organizational structure and leadership.

In many businesses that are leading the way in responding to the ESG agenda, HR has a direct impact on strategy and culture since the department has a seat at the executive table. Working with legal advisers, HR can support the board in pay reporting and audits, and with modeling to inform recruitment and succession planning around company, industry, and regulatory targets. As a result, they may assist organizations to develop ESG measures that can be tied to performance conditions, bonuses, and long-term incentive plans, and they can advise on expectations and voting standards in areas of corporate governance.

When it comes to new technologies in the workplace, human resources (HR) can advise organizations on the ethical use of new technologies, such as when artificial intelligence (AI) systems are used in recruiting choices, such as when AI is used in processing CVs from applicants. Prior to implementation, involving HR in the stress testing of the technology can help detect and mitigate bias or discrimination issues that may be entrenched in how the system runs, as well as obtain an understanding of what motivates such decisions.

Helping companies select pension providers and investment portfolios that align with their ESG strategy and managing risks from mismatches between the sustainability aims of the company and pension provision for employees are two more areas where HR may be of assistance to businesses. Many reports highlighted that governments are losing money, due to a lack of digital skills in the workforce.

Businesses will want workers that are proficient in the use of cutting-edge technology, such as artificial intelligence (AI), as well as data analysis and interpretation skills in the future. Companies must do all they can to attract and retain top personnel in a competitive labor market, which is why the government's recently published digital strategy provides an overview of the most recent initiatives taken by the government.

When it comes to the ESG agenda, how an organization approaches it can make a big difference. Increasing numbers of employees are scrutinizing prospective employers' environmental measures and hybrid working approaches, their working practices, and ethical issues in their supply chain, their aspirations around pay equality, and their approach to diversity and inclusion, before making a decision on which organization to join if the salary and benefits packages are comparable.

Many successful organizations have already made it part of their culture and daily operations to practice environmental and social responsibility as well as sound corporate governance. Having HR and legal teams on board may help these companies stay on top of the ESG agenda and be in the best possible position to attract and retain the employees they need to drive development and innovation.

Is a long-term business model crucial to us? Whom are we attempting to please, what is our time horizon, and how do we define success?

Our ESG and sustainability strategy must be overseen, enabled, and supported by our board of directors. How can this be done?

How do we implement our ESG and sustainability plan in terms of structure, work, and platforms?

What are the best practices for fostering a positive work environment, motivating our employees, and reinforcing the proper behaviors?