An Environmental, Social and Governance HR Strategy

An Environmental, Social and Governance HR Strategy

The key social issues to consider

Key Contact: Claire Knowles

Author: Dan Evans

An Environmental, Social and Governance (‘ESG’) strategy is not only about an organisation doing the right thing, it is an essential framework that generates financial and reputational value. An organisation that incorporates a robust ESG strategy will likely attract the best talent and more easily source investment, as people want to invest their time and resources in an organisation that succeeds, whilst also consciously supporting its community and the environment.

HR need to play a fundamental role in creating and implementing an ESG strategy. The COVID-19 pandemic has resulted in social issues taking centre stage. During the pandemic, the world’s eyes turned to Minnesota and the Black Lives Matter movement raised serious concerns on racial equality. The extended lockdown has also raised growing concerns on mental health and homeworking. It therefore should come as no surprise that social issues are a top priority on board meeting agendas. HR operatives should be prepared to engage with senior stakeholders, to address how the organisation will effectively engage with its people and the community, as it recovers and evolves from the pandemic.

In this article, we look at some of the key social issues that you should be considering when developing your organisation’s ESG strategy.

Equality / Diversity

Promoting equality and diversity in the workplace is all about ensuring you have a workplace that does not discriminate and provides opportunity in recruitment and promotion that is free from conscious or unconscious bias.

It is essential that organisations have policies on (i) equality and diversity; and (ii) anti-harassment and bullying, that takes a zero-tolerance approach to discrimination. To stamp out discrimination in the workplace, the policies should be regularly revisited, revised and embodied into the organisation’s culture.

These policies should only be the starting point. The policies then need to be supported by:

  • meaningful compulsory training on promoting equality and diversity and avoiding bullying and harassment;
  • effective reporting mechanisms to quickly identify unacceptable behavior; and
  • reviewing recruitment practices to avoid conscious or unconscious bias (an organisation should consider (i) the wording of job adverts; (ii) anonymizing CV’s during initial screening; and (iii) making sure questions and tests are suitable and directly relate to the applicable role).

An organisation should also be analyzing employee diversity data. From April 2018, the law has required private organisations with 250 or more relevant employees (“large employers”) and public sector employers, to annually report financial metrics on how men and women are paid within their organisation. As part of the report, organisations are expected to publish a clear narrative and action plan to strive towards equal pay. The CIPD is now demanding that, from April 2023, ethnicity pay reporting becomes mandatory for both large employers and the public sector. There has been no announcement from government at this stage, but signs indicate that transparent reporting on equality and diversity is here to stay. It is therefore recommended that organisations begin to collect and analyze more employee diversity data, to stay ahead of the curve. Analyzing employee diversity data can keep an organisation informed of any pay disparities and demographics that are underrepresented in its organisation, which puts it in a much stronger position to tackle such inequality and evolve its ESG strategy to meet the specific challenges its facing. When not legally obligated to disclose the report, the organisation is also then free to choose whether it wants to publish the report voluntarily.

Mental Health and Wellbeing

  • Work-life balance and homeworking

Promoting a good work life balance was a buzz word before the pandemic, but the lockdown has now catapulted people’s expectations to be entitled to choose how and where they work. The office of national statistics reported that 85% of adults who were required to work from home wanted to continue with a hybrid approach of both home and office working in the long-term future. It is therefore important that organisations clearly communicate their needs and expectations on hybrid homeworking arrangements. There will be no one size fits all on this, therefore it is important to build in a degree of flexibility into your strategy, which entitles the organisation to consider requests on a case by case basis. This can be supported by a hybrid homeworking policy.

It is also recommended that line managers consider what is going to work for their team long term. HR can support on this by communicating with line managers to understand their concerns and how it can support them engage with members of their team, to agree suitable long-term working arrangements. Despite hybrid working providing workers with a better work-life balance, it is also widely recognized that this makes collaborating and supporting more junior or newer members of the team more difficult. It is therefore essential that line managers are encouraged to consider what’s going to work for their team, before allowing everyone to request what they want. One option is to advocate “team days”, where all members of the team commit to attending the workplace on scheduled days, to allow for team members to build working relationships and collaborate. Team days are a useful tool to set a benchmark of what is the minimum expectation for attending the workplace. It also organizes the team, so that they all come together on pre-agreed scheduled days. We recommend that an organisation communicates its expectations with all staff and encourages everyone to discuss their own requests informally with their line manager, to avoid the administrative burden of being inundated with formal flexible working requests.

  • Mental health and wellbeing focused policies

It is recommended for an organisation to implement policies on maternity, paternity, adoption, shared parental, parental and parental bereavement leave. Implementing and applying the policies can go a long way to protect an organisation from making costly mistakes that could result in employees bringing discrimination claims. There is also the option of offering pay at an enhanced rate, to support employees in starting and supporting a family. If an enhanced benefit is offered this should be incorporated into the policy documents.

It is recognized that generally employees are wanting more from their employer in terms of benefits and support. We recently produced an article on Healthcare & Wellbeing Focused HR Policies, which recommends policies on mental wellbeing, menopause, fertility treatment, miscarriages and abortions, alongside training for an organisation’s management team. This article recommends additional social support and benefits that an organisation may want to consider implementing and featuring in its ESG strategy. You can read this article here.

It is becoming increasingly popular for an organisation to have trained Mental Health First Aiders (MHFA) and to provide an Employee Assistance Programme (EAP) to offer mental wellbeing support to its employees. With mental health in the workplace estimated to cost an employer an average of £1,300 for each employee it engages with, offering such additional support has the potential to save an organisation a significant financial sum, whilst also making the organisation a more attractive place to work.

There is no doubt that there is a lot to consider when supporting mental health and wellbeing in the workplace. To create an ESG strategy that is effective on supporting mental health and wellbeing, it is essential that HR are engaging with management and all workers, to understand their needs and concerns. By actively engaging with all people in the organisation, you will be in a strong position to offer insightful value to your organisation’s ESG Strategy.

Concluding comments

It is essential that organisations engage with its people in a way that promotes equality and diversity and supports their mental health and wellbeing. It is recognized that promoting such social values in an ESG strategy goes a long way in attracting the most talented people into an organisation and ensuring that they remain happy working for the organisation. As the saying goes, ‘a happy workforce is a productive workforce’, and a productive workforce is fundamentally important to all organisations as they navigate through the post pandemic economy.

The new generation of workers are also demanding far more from their employer than their predecessors and are much more likely to leave an organisation that they feel does not place high importance on social issues. It is therefore essential that an organisation creates a working environment that its people are proud to work for.

If you want support creating an ESG HR strategy for your organisation or you are interested in implementing policies or benefits which promote social values, contact our Employment Team today.

We will soon be releasing articles that relate to the environmental and governance aspects of an ESG HR strategy, so watch this space for the next article in the series.

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