ESG – Environmental, Social and Governance – is a drum that everyone is now rightly beating. With COP26, sewage leaks and climate change ever present news headlines, we could be forgiven for thinking right now that it’s all about the ‘E’. Well, it isn’t.
Now don’t get me wrong, the ‘E’ is ‘high priority’, but an organisation’s social impact and approach to governance also needs to be high on the priority list as each element of ESG relies on the other in order to be truly effective. The five points below highlight just how important a role HR can play in an organisation’s ESG credentials.
1. Working practices
Working practices have a huge impact on an organisation’s social footprint. An organisation’s approach to issues such as diversity and inclusion, health and wellbeing, flexible working, family rights, annual leave and speaking up all leave an indelible mark on their employees – which is then taken back into the family, the community and society as a whole. Organisations’ reputations often speak for themselves.
HR plays a key role in ensuring that the right policies are in place to govern all working practices. They are there to provide advice on meeting not just legal obligations, but also on supporting the achievement of an organisation’s goals and ensuring that the organisation does ‘the right thing’. This means being able to challenge business decisions and playing an integral part of all board decisions.
And of course, HR should build environmental matters into all these policies and practices too.
2. Diversity and equality
This is not a topic that should be pigeon holed for HR, as every aspect of an organisation should be focused on the importance of diversity, inclusion and equality. HR will however be a key player in areas essential to ensuring diversity, inclusion and equality such as recruitment, promotion and pay, not only promoting diversity from within but also engaging with the local community in furthering social mobility.
HR will also be able to ensure that the right processes are in place to enable wider engagement through building a clear diversity and inclusion plans, setting targets and creating appropriate internal working groups and forums.
3. Remuneration and incentives
Let’s face it, we all know we should do more. HR however can help with formulating the carrot to really help drive an organisation’s approach to ESG. ESG issues can be built into remuneration and incentive programmes and also appraisal systems to ensure that people are encouraged to do the right thing in the right way.
None of the these points matter of course unless the preaching is practised. Training – and proper training, not tick box exercises – is fundamental to ensuring this all happens. HR again will most likely be responsible for learning and development. It goes wider though – what we learn at work we take into the wider world. Everything from resilience workshops through to technical skills increase an employee’s opportunity to contribute in the workplace and translate into wider societal gains.
HR teams hold a lot of data related to the points raised above. This data can be used constructively to identify risk, areas for improvement and help formulate plans to remediate them. Without this data, and HR to collate and provide it, ESG programmes will miss the mark.
About the author(s)
Simon's approach to employment law issues is hands on and pragmatic. With 12 years' experience at Gowling WLG (returning in 2019), and four years' experience of working in the Employee Relations ("ER") team of a global financial institution he has a deep understanding of a client's viewpoint, including the need for practical guidance at an early stage in order to have control over risk, cost and commercial objectives.