ESG (Environmental, Social, and Governance) has already made a positive impact in board meetings, with conversations buzzing about its critical role in business strategy. Few managers, however, fully grasp what it means for their corporate culture. It’s time to discuss how a heightened focus on Corporate Social Responsibility (CSR) will shape the future of HR professionals. Let’s dive into immediate actionable steps.
What is ESG? Originating from a 2006 UN report discussing sustainable practices, ESG encapsulates areas companies need to prioritize to be truly sustainable:
- E – environmental: dealing with environmental issues, carbon emissions, and our carbon footprint.
- S – social: emphasizing the people strategy, focusing on employee engagement, well-being, and impact on wider community.
- G – governance: highlighting corporate governance, ensuring transparent governance practices and evaluating relations at various administrative levels.
Origin of ESG
ESG provides a framework, enabling stakeholders to compare companies based on their responsible business practices. With roots going back to the UN’s initiatives in 2004 and the industrial revolution’s social issues, ESG reporting paints a clear picture of a company’s ethical business practices and social responsibility. And in a climate-conscious world, no business, irrespective of its size, can overlook its environmental and sustainability goals.
ESG’s relevance to HR professionals? Soon, HR strategies will need to encompass more than basic care, encompassing employee satisfaction, work-life balance, diversity metrics, and more.
While it might seem evident, a recent 2023 survey unveiled that only 36% of HR experts believe in their company’s clear strategy. A well-defined strategy is essential for business outcomes and performance metrics. Without it, HR activities often lack breadth, and progress remains unmeasurable – something indispensable for ESG audits.
If you’re still formulating your strategy, begin by defining key areas, setting objectives, employee experience measures, and validating them periodically.
Where does ESG intersect with HR?
Emphasizing workforce diversity, considering aspects like gender, age, ethnicity, board diversity, and more.
Addressing employee well-being through tools and strategies that cater to life’s varied challenges.
☘️Crisis steps and prevention
From handling reputational damage to whistleblowing, it’s about safeguarding employee rights and fostering an inclusive workforce.
Analyzing the Gender Pay Gap, salary discrepancies, and promoting ethical business practices.
☘️Recruitment and retention of employees
Embracing strategies from attracting Generation Z to harnessing artificial intelligence in recruitment processes.
☘️Mental health and well-being
Prioritizing employee wellbeing and mental health, ensuring they remain at the core of people strategy.
HRIS and data
In today’s data-driven age, companies need data-driven insights. Capturing comprehensive employee retention, satisfaction, and performance data are paramount for ESG audits. Most companies are adopting digitized data systems. Still, the integration of this data with HR strategies for actionable insights remains a challenge. Handling such comprehensive data requires robust governance, ensuring employee privacy and data security.
ESG requires thorough data collection, from feedback to diversity data. If you’re not tracking it, it’s time to start, or risk being caught off guard when senior leaders and business leaders inquire about business performance from an ESG standpoint.
HR ESG team
Contrary to popular belief, ESG isn’t just for auditors; it demands a collective effort. For a competitive advantage, it’s recommended to form an inclusive ESG team, allowing for a diverse range of inputs. A conscious workforce can provide valuable insights that might be overlooked by a specialized team. As the team evolves, it can better support audits, ensuring the company meets and exceeds ESG expectations.
ESG might seem cumbersome, but when approached from the right perspective – highlighting and amplifying the positive actions and sustainable attributes of your company – it becomes a powerful tool for business sustainability. Through the ESG lens, businesses can project their sustainable practices and ethical values, making them more attractive to current and prospective employees, and setting them up for long-term success.