HR has ‘pivotal role’ in shaping firms’ ESG strategy

Businesses that fail to convince workers they are serious about environmental, social and governance issues, are likely to suffer skills shortages and even fail completely. That was the warning from CIPD president Baroness Ruby McGregor-Smith- speaking on the second day of the HR body’s annual Festival of Work conference. She said HR professionals need to be the driver of ESG targets in business, the president of the CIPD has said. We’ll consider practical steps HR can take. 

Personnel Today covers this and quotes McGregor-Smith. She says  ESG should sit at the heart of the leadership agenda, particularly as many leaders were questioning why they couldn’t hire or why some staff had not returned after furlough. She said: “People are changing the way they work, and the talent and skills shortage means we’ve got to think very differently about how we hire people but also how we keep them.” She said ESG initiatives should be driven by the people profession as they were “the only people who really care about these issues”.

We agree and that is central message in Helen Corden’s Out-Law article ‘How HR can shape and deliver the ESG agenda’. She says HR professionals can play a critical role in shaping and delivering their organisations’ ESG strategy – and help those companies address their skills gap in the process.

So, let’s hear more about that. Helen joined me by video-link from Birmingham to discuss this. I started by asking Helen about HR’s role in terms of ESG strategy: 

Helen Corden: “So HR does have a pivotal role to play in terms of the environmental policies set by an organisation. So, for example, if we just take the travel policy, it's clear in today's new world of work, and different ways of working, that a one size fits all travel policy isn't going to work for a particular organisation because organisations, for example, might have  sales people who are on the road on the road all the time, they may have people who work in offices, they may have people who work from home, people who work at manufacturing facilities. So, whereas previously organisations may have had just one a travel policy for everybody, nowadays, especially taking into account environmental considerations, HR have a really pivotal role to play in looking at that policy and looking to see how it should operate for the different parts of their workforce. So, if you take the sales workforce, for example, they might be on the road a lot more and HR could be looking at, well, can they be encouraging those salespeople to do some of their trips using the train which is more environmentally friendly than using the car, they could be looking at whether trips to customers and client sites, for example, could be combined, whether everybody has to travel separately or can people travel together? So I think with HR, they really understand the employees and the business in which they operate so they have to have that instrumental part to play in terms of how that travel policy is shaped.”

Joe Glavina: “So on a practical level what is it that HR needs to do to help make headway with ESG?”

Helen Corden: “So I think the ‘S’ relates to how the organisation interacts with people, whether that's with its employees, whether it's with its customers, whether it's with the investors, and it's really looking at all of those policies that impact upon people who touch the business and the role that HR can play in shaping those policies. So just by way of one example in terms of diversity and inclusion and the collection of diversity data, obviously HR have a crucial role to play in looking at what data was collected, how that data was collected, and then how that data is used and then also how that translates into targets that are put in place. At the moment, especially with the skills gap and the race for talent, an organisation's ESG policy in relation to the S has to be really integrated into the organization's brand because a lot of employees, or prospective employees, at the moment will be looking at what organisations are doing in relation to their ESG agenda and if, all things being equal and they have two job offers on the table, the organisation's ESG policy might tip the balance in favour of one organisation rather than the other because, for example, if they can see that that particular organisation is really focusing on its environmental impact, is really focusing on diversity and inclusion initiatives, that might persuade them that that is the organisation that they want to work for, rather than the other one.”

Joe Glavina: “In your article you talk about the important role that HR Directors have to play. Tell me about that, Helen?”

Helen Corden: “So, I think it's really important that HR directors have a place at that board table and especially in relation to the ‘G’ of the ESG in terms of the governance agenda because the HR Director will be able to feed into some crucial and important decisions that might be taken at board level. So, for example, if you take decisions in relation to what pension plan is going to be put in place, it may well be that the HR Director can influence, or bring in to account considerations to do with the investment decisions that that pension scheme, or the pension scheme that they're looking at, might be making. Are their investment vehicles that are more focused on environmentally-friendly decisions, for example, and other things such as the use of artificial intelligence in terms of recruitment decisions. The whole governance piece around that is absolutely crucial to make sure that there are no discriminatory elements that are brought in by the use of artificial intelligence.”

Helen’s article Out-Law article looks in some detail at the role of HR in shaping and delivering their organisations’ ESG strategy, and helping address the skills gap in the process. It’s called: ‘How HR can shape and deliver the ESG agenda’ and is available from the Out-Law website.

LINKS
- Link to Out-Law article ‘How HR can shape and deliver the ESG agenda’