Exploring the Intersections of ESG and HR

When stakeholders discuss the growing efforts by companies to integrate environmental, social and governance (ESG) commitments into their purpose and strategy, images of the planet typically come first to mind.?While that’s well deserved—and climate change deserves much of the credit for driving ESG-related trends—just as central to ESG is ensuring that impacts to people are assessed and improved as a company does business.?

ESG topics and HR strategies often intersect around employee engagement. According to the 2022 Edelman Trust Barometer, 60% of the 36,000+ global respondents said they choose a place to work based on their beliefs and values. Topics like culture, climate change, business ethics, and diversity, equity, and inclusion (DE&I) matter to employees and prospective candidates alike.

In this way, the CHRO and the HR function have an increasingly important role to play. HR has always been at the core of the employee experience, corporate social responsibility (CSR), and governance, owning practices and process across a broad range of topics within the “S” of ESG and the broader ESG ecosystem. GE’s recently released 2021 Sustainability Report— “Building a World that Works for Tomorrow”—highlights the important role HR plays in the company’s ESG efforts through its coverage of a range of topics.?Thinking ahead, as the interest in ESG topics gain momentum among stakeholders, HR is positioned to help organizations take stronger steps to not only meet, but to strategically advance ESG goals.

More specifically, HR leaders have an opportunity to accelerate constructive impact across aspects of the ESG topic spectrum.?While certainly not an exhaustive list, a few examples include:

• Enhancing the candidate and employee value proposition:?As we’re navigating a highly dynamic talent market, a company’s clearly articulated commitment to sustainable practices – particularly within the “E” category of topics, can be a unique part of the employee value proposition for both retention and recruitment. ?Employees have become critical voices – and stakeholders – of topics related to a company’s impact on the planet, like climate change, greenhouse gas (GHG) emissions, and resource conservation. ?In the same way, providing educational opportunities for employees to better understand a company’s progress in these areas is also an opportunity to engage employees in a positive and productive way.?GE’s purpose—to lift up the quality of life for people everywhere through energy, healthcare, and transportation—outlined in Part I of the report is a unifying mission for our employees and candidates.

• Strengthening talent strategies: The COVID-19 pandemic and prominent social movements have also turned stakeholder attention to companies’ social initiatives in a meaningful way. ?Relatedly, many ESG issues often listed in the “S” category are directly connected to HR, uniquely positioning HR leaders to strengthen programs and practices in the context of business strategy.?Across companies and industries, topics including DE&I, human rights, flexibility and employee health and safety are receiving greater awareness and attention from all stakeholders in the past few years.? In 2021, GE launched an enhanced wellbeing offering to all global employees with a focus on holistic health introducing four pillars: physical, social, emotional – and added financial wellbeing as a new pillar. ?As the company continued to accelerate our strategy through talent, we launched new curriculum into our Lean leadership development programs to build more sustainable capability among our teams.?

• Supporting ESG education at all levels: Consider the “G” category--HR leaders support governance priorities in many ways—for example, by ensuring diverse leadership of the company’s board of directors, promoting responsible business ethics, and supporting topics concerning pay equity.?Of course, HR has always played a leadership role in holding an organization accountable for culture and performance in partnership with business leaders.?As ESG plays a more prominent role in organizations, boards of directors are likely to place greater focus on supporting progress of companies’ ESG priorities. ?Examples of this range from creating dedicated board committees to designing structured educational efforts for boards with external experts to ensure ESG fluency.

The strategic and operational intersections between HR and ESG-related topics are strengthening and gaining more attention – from DE&I to pay policies to capability development, and more.?As people-related priorities become more prominent in the ESG space, HR leaders will continue to play a key role not just managing the activities to drive change, but in building sustainable cultures and teams to achieve stronger performance.??