How can HR best help with ESG strategy?

Are HR professionals sufficiently involved in their business’s ESG strategy? What is HR’s role exactly? Which elements of E, S and G can HR realistically help with? We’ll consider that.

It was back in September 2021 when we featured an article in Personnel Today which carried the headline: ‘HR shut out of climate change projects’. This was research conducted ahead of the UN Climate Conference, COP26 in Glasgow showing that only half of the 120 organisations surveyed said that HR was involved in developing their company’s climate change agenda and, of those that hadn’t involved HR, only 9% planned to do so in future. 

The report describes the involvement of HR leaders as ‘the missing link’ and highlight the risks of not involving them. They say, first, impatient investors and talented employees will look to make their contribution to organisations which are committed to climate change actions. Secondly, new talent will be put off. Thirdly, current skills, knowledge and capabilities are likely to be a poor fit for the future.

15 months on from that that report has anything changed? Sarah Munro has been working with a number of clients on their ESG strategies since then and earlier she joined me by phone from Edinburgh. 

Sarah Munro: “Yes, it's an interesting point, Joe, because I think a year on from when we first started talking about this, we thought that we'd be more advanced in having an employment ESG strategy within lots of our businesses. Now, that's not to say that it's not happening. ESG is very, very much on the top of everybody's agenda, and HR professionals are feeding into that, but I think we are not seeing as much input as we may have expected.”

Joe Glavina: “The headline of the article we featured a year ago was that HR is being left out in the cold. Only around half of organisations surveyed said that HR was involved in developing their company’s climate change agenda. Is that still true today do you think?”

Sarah Munro: “I think it might be true and I think the reason for that is there has been so much focus on the E, the environmental of ESG and, naturally, that doesn't sit particularly easily within an HR professionals remit because it isn't something that they would have focused on historically. Now, there are some elements of environmental issues that would fall within an HR person's remit. So training, making sure that policies and contracts are sustainable, there have been moves to link pay rewards to ESG and environmental type targets, but where I think that the gap has been is there hasn't been a realisation that a lot of what HR professionals are doing already, just in their day-to-day roles sit quite nicely within the S and the G of ESG, which is obviously social and governance.”

Joe Glavina: “Tell more about that, Sarah. HR’s involvement in the S and the G.”

Sarah Munro: “I think where HR can really help on the S and the G elements of ESG is looking at what they're doing already and building upon that and making sure that their boards know what they're doing. For example, looking at workforce governance, looking at workforce stability, looking at transparency of pay, looking at diversity and inclusion which people have, obviously, been doing for a number of years, but really focusing on that from board level right down, revaluating what their policies and contracts say and making sure that they are fit for purpose and are aligned with their company's sustainability issues and programmes. It's really about a bit of a cultural change, which HR professionals have been dealing with for years on the diversity and inclusion front, and it's just putting a different slant on it, but it's not as easy as just repackaging and relabelling what they've been doing. It's building on the good work that's already being done in these areas, which naturally fall under S and G of ESG.”

Joe Glavina: “In December you ran a webinar on ESG looking at HR’s involvement in business’s strategy. What did you find from that? What was the level of involvement?”

Sarah Munro: “I think the impression that we received from the seminar - and we ran various polls throughout the seminar to see how involved HR people have been in their organisations’ ESG strategies – and, interestingly, some had, but not all, so there was certainly not a clear indication from the attendees that all HR professionals were being pooled into their company's ESG strategy and that really links back to what we were saying at the beginning of our call, that we are a little surprised that companies are not embracing the excellent talent that they have within their HR professionals to really help bolster their ESG strategies and, hopefully, some of the pointers that we were able to give during our session will help HR go to their boards and say, ‘look, we're doing a lot of this, we can really add to the overall strategy.”

Joe Glavina: “Is there a job here for HR to raise this with the HR Director who may be able to take the message to the board to raise the profile and get HR more involved?” 

Sarah Munro: “Yes, I think you're right, and I don't for a minute think HR professionals haven't been trying to do this, but it is very difficult, it’s such a huge topic, and there's so many elements to it. It's just about making it clear that you're there to help and that you do have that expertise and things that you have historically thought, well, that's not an ESG because it's nothing to do with the environment, actually, if you drill down into the detail of ESG, there's a lot that doesn't have to have the environmental badge on it. So it's just about making that clearer, and I don't think that it's anybody's fault. I think it's just we've been carried away with the climate change and ESG being almost wrapped up into one.”

Relevant to the issue of ESG, especially the reporting angle, is the EU Corporate Sustainability Directive which requires businesses to monitor their supply chains for the risk of violations of human and environmental rights. Sarah deals with that in her interview with me and we will be featuring that in a programme at the end of this week so do watch this space. Meanwhile, there are two useful Outlaw articles on the Directive at if you’re interested. They are: “New corporate responsibility rules for EU companies’ and ‘Non-EU businesses should prepare for new EU rules on sustainability reporting’. We have put links to both of them in the transcript of this programme.

LINKS
- Link to Out-Law article: ‘New corporate responsibility rules for EU companies’
- Link to Out-Law article: ‘Non-EU businesses should prepare for new EU rules on sustainability reporting’