The fundamental role of HR professionals in ESG policy

ESG – Environmental, Social and Governance – considerations are oft-repeated refrains in discussions today. For many businesses, ESG policies have increasingly become a top priority. But what is ESG, and what role can HR professionals play within this ecosystem? 

What is ESG?

ESG is short for “Environmental, Social and Governance”- interest areas that today’s investors consider priorities when deciding whether to invest or not. Not long ago, investors focused solely on profit levels or risk factors to invest in a particular business – which is no longer the case. ESG considerations go beyond investors. Prospective employees and customers may decide to engage with a company based on ESG credentials. 

Undoubtedly, a significant shift in perspective has occurred across all stakeholder levels. How and when did the change take place? The focus on EGS originates from a movement to push businesses to be socially responsible and sustainable. The shift did not happen overnight but has steadily gained momentum over the years.

ESG and HR professionals

Until recently, organisations have focused on the “E” or environmental impact of a business on communities. Since the pandemic, however, the emphasis has shifted to a company’s social impact – particularly on supply chains and workplace policies. 

No one size fits all; ESG policies can vary widely across sectors. But there is no denying it is a tremendous opportunity for HR professionals – given the overlap of most social issues and human resource functions. Some people might say that human resources are at the fore of creating workplaces with ESG at its heart. 

Below we take a look at key focus areas that HR professionals could consider to boost their company’s ESG credentials:

1. Workplace practices and policies

Few things reflect an organisation’s social impact better than work culture. A company’s approaches to inclusion, mental health, well-being, and diversity are telling indicators. In addition, workplace practices determine annual leave, flexible working, insurance, and work-life balance overall. What organisations practice can hugely impact employees – attitudes and mindsets that tend to spill over into the family and larger community outside work. 

Here is where HR comes in, and the clue is in the name. As “human” resource professionals, HR must be a bastion of ethical behaviour. HR professionals are imperative in ensuring that the right policies govern workplace practices. HR must challenge unethical business decisions to ensure the company achieves its ESG goals.  

2. Diversity and equality

Diversity, equality, and inclusion must inform all aspects of organisational culture. Contrary to myth, these topics are not the purview of HR alone. The entire company needs to take ownership too. HR must ensure policies encourage equal opportunities during recruitment or discussions on wages and promotions. The responsibilities do not end with promoting diversity within the company. HR must engage with the larger community to facilitate social mobility. 


 3. Remuneration and incentives

HR must build clear ESG policies into incentive, remuneration, or appraisal systems. Doing so encourages employees at all levels to do things the right way. Besides ensuring everyone gets paid minimum wage, businesses must commit to paying living wages that meet employees’ daily needs. Similarly, employers must ensure pay equality based on gender, ability, and race. Pay and incentives demonstrate a company’s ethics. HR teams must ensure there is no pay disparity. 


4. Training

Every workplace tends to check the boxes for some things – particularly for “trendy” topics that they must somehow adopt. This often results in shoddy implementation or actions that are merely performative.  

ESG has no value unless policies come alive through training and consistent practice. 

As always, HR will need to lead learning and development around ESG. And the training must go even deeper. From technical skills to soft skills, training must focus on a person’s ability to contribute to the workplace and society.

5. Data

HR teams are privy to crucial ESG data such as remuneration, pay, and hiring. Teams can use the data to inform policies, identify risks, outline areas of improvement, and implement plans. Data gives direction to ESG goals, ensuring that programmes contain targeted and specific objectives.  

Several ESG aspects are familiar to HR professionals already. Present-day ESG frameworks may offer a rejuvenated direction for HR to create equitable and inclusive workspaces.