An ESG-focused HR Strategy is No Longer Optional

Odette Engelbrecht of Boston Consulting Group shares why integrating ESG values into HR strategies is no longer optional and how it benefits organizations in attracting top talent.

The role and responsibilities of the HR function have evolved considerably over the past three years. The combination of a global pandemic, ‘quiet quitting,’ increased awareness of social issues, and the growing importance of sustainability has culminated in HR leaders necessarily shifting focus to an environment, social, and governance (ESG) centered talent strategy. The opportunity to make a true societal impact by contributing to solving complex challenges such as climate change is more attractive than ever to today’s talent pool. 

This shift was illustrated in a recent reportOpens a new window from Marsh and McLennan Advantage. The report – titled ‘ESG as a Workforce Strategy’ – found that top employers’ ESG scores are 14% higher than the global average, depicting a clear connection between employer ESG and employee satisfaction. The report also uncovered that the companies most attractive to students and young professionals have ESG scores 25% higher than the global average, a critical consideration in today’s volatile labor market. 

The correlation between ESG and employee satisfaction is more apparent than ever. Now is the time for recruiting and HR departments to integrate ESG values into long-term recruitment strategies. 

A Company-wide Imperative  

One of the biggest challenges companies face as they attempt to take action on ESG issues is overcoming a fragmented organizational approach. For example, human resources traditionally managed DEI topics, while sustainability was managed within operations. But for an ESG strategy to be successful, it must be implemented company-wide, across functions, and supported by the C-suite. 

A holistic approach elevates ESG from a compliance matter to a source of competitive advantage. Rather than seeing ESG commitments as an obligation or a societal contribution, leading companies understand that it’s critical to the employee value proposition and, ultimately, to its innovation engine. 

As ESG is embedded across the organization – from strategy to operations and culture – recruitment and HR leaders can articulate compelling, authentic ESG narratives to prospective and current employees.  

See More: Why Continuous Compliance Is a Necessity

Three Strategies for Recruitment and HR Leaders 

How should recruiting and HR departments help organizations advance ESG objectives? First, it requires changing the core culture of an organization. To do so, leaders must inspire employees with the ESG strategy and consistently educate them about it while updating policies and practices.

Advancing ESG goals also requires improving the digital maturity of recruitment functions to conduct business more efficiently and better compete for top talent. Recruitment technology, in particular, frees up human capacity through automation and empowers businesses to deploy that capacity to higher-valued activities related to ESG. The use of AI-driven solutions can also reduce bias in recruitment processes. 

While each component of ESG is important, no area is as urgent as climate action. As sustainability becomes even more critical and sustainability roles evolve and multiply, HR teams must consider how to grow and develop these employees.

Here are three strategies for organizations to integrate ESG values into their long-term recruitment and retention plans:

1. Prioritize the implementation of a sustainability job framework

Job frameworks include job functions, families, and job descriptions, enabling streamlined workforce planning and career development. Having the consistent language to evaluate positions and job levels also ensures the right assignments and opportunities for employees. 

Since sustainability is interdisciplinary and a fairly new profession, it will benefit greatly from standardizing a job framework. Rather than mapping sustainability roles to an adjacent department, businesses can use it to provide a clear career path and fair expectations regarding promotions and compensation. Additionally, companies can boost sustainability efforts and improve employee well-being through policies and practices such as sustainability upskilling programs and sustainable-focused talent acquisition strategies.

See More: Start Small: A Case for Incremental Change in Sustainability

2. Identify growth tracks and development opportunities for sustainable-focused career paths

Once a sustainability job framework is implemented, recruitment technology can help assess incoming talent, define the best onboarding experience, and personalize learning and development offerings. 

An approach for upskilling current employees is key to retention and essential to a strong workforce strategy. As technology advances and workplace strategies evolve, existing employees must be trained in new knowledge and skills. 

The United Nations Industrial Development OrganizationOpens a new window states, “Green skills are the knowledge, abilities, values, and attitudes needed to live in, develop and support a sustainable and resource-efficient society.” The Green General Skill index categorizes four key groups of work tasks that are particularly important for green occupations: engineering and technical skills, science skills, operation management skills, and monitoring skills.  

To attract and retain the right talent, companies must offer the appropriate training in these areas to help employees grow and develop in their sustainability careers. 

See More: The Future of Work: Upskilling and Meeting Talent Needs

3. Invest in employee well-being and engagement

While the above two strategies highlight the importance of the “E” in ESG to long-term organizational sustainability, the “S” is also important for HR leaders to consider, particularly regarding employees’ well-being. 

A recent Gallup surveyOpens a new window determined that fewer than one in four U.S. employees feel strongly that their organization cares about their well-being. This is a striking conclusion, as it is the lowest percentage in nearly a decade. 

Within the “S” are four main areas organizations must focus on DE&I, pay equity, upskilling, and employee psychological safety. Focusing on these areas by changing policy and practice will create a more inclusive environment and a greater sense of fulfillment for employees. This, in turn, helps attract new talent with critical skills while retaining the best talent. 

Employee engagement and satisfaction come down to businesses being authentic and ‘walking the walk’ regarding ESG. Suppose a company makes a public statement about supporting racial justice but continues in-house practices that cause employees of color to experience bias. In that case, employees will notice and become disengaged. These incidents will lead to an exodus of qualified employees, who will likely have more demands and higher expectations towards ethics and ESG. 

Regarding a company’s governing protocol, transparent reporting is crucial for an ESG-centered HR strategy’s success. HR leaders can help shape company culture and boost employee engagement by aligning internal behavior with the company’s overarching commitments and ideals. 

See More: 4 Ways to Enhance Employee Wellbeing at Work

Top Talent Will Shift to ESG Leaders 

Pursuing an ESG HR strategy is in a company’s competitive self-interest, as capital and talent will increasingly flow from ESG laggards to ESG leaders. Recruiting and HR teams can work together to improve sustainability, which will, in turn, help attract and retain talent. 

As people-related priorities become more prominent in the ESG space, the onus is on recruiters and HR leaders to create a sustainable company culture and an organization that consistently takes action to advance ESG values. Over time, this will inspire current and prospective employees to work hard, collaborate and drive the business forward. 

Have you considered incorporating ESG values in your HR strategy to attract and retain top talent, create a sustainable culture, and drive business success? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window . We’d love to hear from you!

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