The role of HR in developing Environmental, Social, and Governance (ESG) goals

May 20th 2024 | Posted by [email protected]

Environmental, Social, and Governance (ESG) criteria serve as a framework to evaluate a company’s ethical and sustainable practices across its operations.

As previously expressed by the current monarch, when he was Prince Charles, “The sustainability revolution will, hopefully, be the third major social and economic turning point in human history, following the Neolithic Revolution – moving from hunter-gathering to farming – and the Industrial Revolution.”

Originating from the 2006 United Nations Principles for Responsible Investment (PRI) report, ESG has evolved into a focal factor for investors, establishing itself as a critical element in corporate assessments.

The Role of ESG in an Organisation

ESG enables investors to scrutinise a company’s commitment to:

  • Environmental stewardship, including energy usage, waste management, emissions, climate impact, and conservation.
  • Social responsibility, focusing on employee welfare, diversity and inclusion, human rights, customer satisfaction, and community engagement.
  • Governance practices, such as board structure, executive remuneration, accountability, ethics, and anti-fraud measures.

The overarching goal of ESG is to generate a positive impact on both society and the environment while adhering to accurate governance standards, thus making companies with robust ESG practices more attractive to investors.

HR Managers: Catalysts for ESG Integration

HR managers are paramount in bridging ESG strategies with employee engagement, covering several critical areas:

  • Integrating ESG principles into the organisation’s mission and values, and spearheading ESG training and awareness initiatives.
  • Recruiting professionals dedicated to ESG objectives.
  • Fostering employee involvement through the creation of committees and incentive programs centered around ESG commitment.
  • Formulating policies that align with ESG standards.
  • Ensuring a diverse and inclusive workplace.
  • Leading corporate social responsibility (CSR) efforts, including employee engagement and promoting sustainability programs.
  • Providing employees with access to work-life balance and well-being programs to enhance physical and mental health.

As gatekeepers of corporate culture and values, HR managers play a multifaceted role in embedding ESG into business operations and enhancing employee comprehension and participation in these initiatives. Their efforts are crucial in positioning companies as leaders in sustainability and ethics, attracting conscientious investors and nurturing a dedicated workforce aligned with the company’s ESG goals.