How People leaders drive ESG strategy

Many businesses already committed to being purpose-led, and who have strong sustainability/ESG goals, believe they’re doing business the “right way” and often see it as a virtuous circle where a greater commitment to being purpose-led and sustainable leads to increased profits and growth which in turn funds more initiatives.

Even among those who are not particularly committed to the concept of profit with purpose, there is a growing realisation that it’s going to become a necessity due to:

• Increasing regulations such as CSRD (Corporate Social Responsibility Directive) which will require companies that are in-scope to report on both their own and their suppliers’ activities.
• Changing consumer behaviours and workforce expectations (particularly among Gen Z).
• A capital shift from investors towards those businesses that are more sustainable.
• Supply chain demands.

This is already prevalent across public sector and some of the private sector, but will expand as more companies are required to demonstrate that they are doing business in an environmentally and socially responsible and ethical way.

The role of HR directors in a company’s ESG/sustainability strategy is crucial. They are responsible for ensuring that the company’s policies and practices align with ESG principles.

This includes creating a diverse and inclusive work environment, implementing fair work practices, providing employee training and development opportunities related to ESG issues, promoting ethical conduct across the organization, and facilitating transparent communication about the company’s ESG performance. Furthermore, HR directors play a key role in attracting and retaining talent that values sustainability and corporate social responsibility.

What specific strategies can HR leaders implement to promote ethics within an organization?

HR leaders can implement several strategies to promote ethics within an organization.

• Develop and Implement a Code of Conduct: A comprehensive code of conduct serves as a guide for employees, outlining expected behaviours and practices in the workplace.
• Training Programs: Regular training sessions can help employees understand ethical issues relevant to their roles, and how they should respond in certain situations.
• Ethical Leadership: HR leaders should set an example by demonstrating ethical behaviour themselves. This could include transparent decision-making processes and treating all staff members fairly.
• Encourage Reporting: Creating a safe environment where employees feel comfortable reporting unethical behaviour without fear of retribution is crucial for maintaining ethical standards.
• Regular Assessments and Audits: Regular evaluations of company’s practices can help identify any potential issues early on.

How does diversity and inclusion relate to a company’s ESG commitments?

Diversity and inclusion are integral aspects of a company’s ESG (Environmental, Social, Governance) commitments.

• Firstly, companies with diverse workforces are more likely to drive innovation and better business performance. A diverse range of perspectives leads to varied ideas and solutions which can help in addressing complex environmental and social challenges.
• Secondly, inclusivity is linked to employee satisfaction and retention rates. Inclusive workplaces where every individual feels valued, respected and fairly treated tend to have lower turnover rates which indirectly helps in reducing the environmental impact associated with employee onboarding processes.
• Lastly, diversity is increasingly viewed as an indicator of good governance. Companies that prioritize diversity at all levels – inclusive of board level – show that they value equal opportunity which can enhance their reputation among stakeholders (e.g., investors, customers), contributing positively towards their social commitment.

What role does training play in advancing an organization’s ESG strategy?

Training plays a crucial role in advancing an organization’s ESG (Environmental, Social, Governance) strategy.A well-thought-out ESG-related training program not only equips employees with knowledge but also encourages them to actively participate in achieving the organization’s ESG goals.

• Firstly, training helps in improving the environmental awareness of employees. Through training programs focused on sustainability and environmental stewardship, employees can better understand how their actions impact the environment and what steps they can take to minimize these impacts.
• Secondly, social aspects such as diversity and inclusion can be promoted through training. By educating employees about the value of diversity and fostering an inclusive culture through training programs, organizations demonstrate their commitment to social issues.
• Lastly, with regard to governance, organizations can use training programs to instruct employees about ethical business conduct and regulatory compliance which are important aspects of good corporate governance.

While more ambitious ESG/sustainability goals will present many HRDs/CPOs and their teams with greater challenges it’s also a fantastic opportunity for them to create value and take the lead on a business critical issue. Further more, as the Board place greater emphasis on this area many People leaders may find increased support and additional resources for existing initiatives, particularly those related to DE&I.