ESG, one radar in a complex tangle
Environment, Social and Governance, these 3 concepts make up the core of ESG reporting. This reference work captures all the non-financial impact areas, risks and opportunities inherent in a company's day-to-day operations. Provided some free interpretation, ESG is in line with older acronyms such as PPP (People, Planet, Profit) and GRI (Global Reporting Initiative), but the abbreviations don't stop there. “My ears are still ringing,” admits one participant after our last partner meeting of the Competence Center Next Generation Work.
Not surprisingly, ESG is after all part of the ESRS (The European Sustainability Reporting Standards), which in turn form the technical criteria under the CSRD (Corporate Sustainability Reporting Directive). Both systems fit into the EU Taxonomy of Sustainable Activities, a taxonomy that defines what is sustainable and what is not, under the broader umbrella of the European Green Deal, which aims to make the EU climate neutral by 2050 in a socially just way.
All add up to a complex tangle, agree many people managers who are overwhelmed by the technicality of sustainability reporting, and who do not see this task as their responsibility. “The Legal, Marketing or Finance department should just get this job done” they say, or “Let's focus primarily on the E of ESG. It seems a lot easier than the S, and that way HR stays out of the picture.”
Material themes
Yet this S in ESG offers many opportunities to reinvigorate typically 'people-oriented themes' that have been on a sustainable HR agenda for years, such as social dialogue, work-life balance, diversity and inclusion, health and safety, training and development. Within sustainability reporting, they are seen as 'material themes': relevant topics that deserve attention.
The 4 main components of this pillar
- S1: Own employees
- S2: Employees in the value chain
- S3: Impact on communities
- S4: Consumers and end users
Sample themes
- Working conditions
- Diversity and inclusion
- Health, well-being and safety
- Social dialogue
In this way, classic themes are given a new sense of urgency (because no one escapes sustainability reporting) and new oxygen, both in terms of formulating ambitious, measurable objectives and in connecting and aligning them with the broader sustainability mindset within the organization.
S-reporting as a lever for (more) sustainable HRM?
Formulating, quantifying and reporting ambitions seem commonplace within the E of ESG. So why is this challenge so much greater for the S? This question caused quite a stir at our last partner meeting. Among other things, participants referred to cold feet about numbers and the high workload of HR. Yet, they were just as quick to push HR into a leadership role.
There is an opportunity to set ambitions for our workforce about how we want to implement health & safety, and how we want to collaborate with Communities. Let's start this dialogue about a sustainable and future-oriented HR strategy with the business now, and not wait until an auditor to tell us to do this.
In other words, the ESG framework, and especially S-reporting, creates opportunities for sustainable HR initiatives and a push to place them strategically on the sustainability agenda.
Data-driven collaboration
A widely supported sustainability approach does not end with the delineation of material themes, but requires a sustainable implementation strategy, in which cooperation as well as involvement are central. HR, the sustainability manager, the auditor and the marketing and communications department need to step out of their silos more often to promote cohesion, clarity and support for the sustainability story.
Data collection is crucial for this, because these insights allow companies to visualize impact, identify risks and discover new opportunities. HR can play a key role by turning data insights into targeted decisions regarding diversity, training, well-being and job satisfaction. However, the temptation to outsource data collection and reporting to colleagues in other domains appears to be great, but in doing so HR would also relinquish the core of its mission: to steer good employment practices from an integrated approach.
HR professionals should take the lead and leverage the CSRD to advance sustainable, strategic HRM by embracing people analytics.
A broad and innovative scope
Beyond the typical, people-oriented themes, there are several other fields of action that give ESG its broad, innovative scope, such as green HRM and green mobility. And beyond thematic broadening, the ESG framework can also help broaden HR's concrete field of action. For example, Patagonia developed a code of conduct for all the factories the brand works with, based on International Labor Organization (ILO) standards. Such an S2 perspective broadens the HR scope: the sustainable HR approach applies not only to personnel on its own payroll, but also to temporary workers, freelancers and even the wider value chain (such as subcontractors and suppliers).
Competence Center Next Generation Work & ESG, a pretty picture
Since 2012, the Competence Center Next Generation Work has played a pioneering role in sustainable HRM, sustainable careers and labor relations, with an ongoing focus on topical issues such as well-being, reintegration after burnout, diversity and inclusion, climate adaptation, lifelong learning, total talent management and employee voice versus silence. Our goal is both knowledge creation and valorization, always in a sustainable collaborative relationship with our knowledge partners SDWorx, Aquafin, bpost, B-tonic, elia, Baloise and Argenta. Also interested in a partnership? Feel free to contact ans.devos@ams.ac.be.
