Where ESG meets DEI: what role for HR?

Improving workplace diversity and corporate social responsibility (CSR) were seen as nice to haves, but ‘too fluffy’ to land on boardroom agendas. As diversity, equity and inclusion (DEI) and environment, social and governance (ESG), they are fundamental. Where do HR and GM fit?

Outstanding chair in row. Yellow chair standing out from the crowd. Human resource management and recruitment business concept

Ruth Holmes

17 August 2022

This article is included in the Autumn issue of Think Global People magazine (5831k) .

Advances in the legislative landscape – particularly around the net-zero agenda and inclusion – alongside social change, the climate crisis and multi-generational workforce are changing how and why we monitor environmental and social impact, and measure business performance.

Corporate social responsibility (CSR) has developed from philanthropic self-regulation into purpose-led environmental, social and governance (ESG) – the often-legal requirement to monitor and report facts that regulators, investors and consumers can use to understand and compare an organisation’s social and internal governance practices.With intangibles like brand value, patents, data and software – including intellectual capital and goodwill – now accounting for over 90% of S&P500 companies’ value, organisations are also increasingly being weighed on these abstract measures. This makes reputation fundamental to risk management – and an important meeting place of DEI (diversity, equity and inclusion) and ESG strategies.

Benefits of diversity, equity and inclusion at work

As well as being the right thing to do, the benefits to attracting, recruiting, retaining and developing people in diverse and inclusive workplaces span every aspect of a business. These include:

maximising individual and team talent and productivity
better team and board decision-making and ESG outcomes
enhanced reputation
improved financial performance
more innovation and resilience to recession.

A Henley Business School study found organisations that implemented practical equity measures, particularly with respect to race, reported up to 58% higher income. Research from global non-profit community Catalyst also found 35% of an employee’s emotional investment to their work and 20% of their desire to stay at their organisation is linked to feelings of inclusion.

A growing area

So, what impact is the DEI agenda and the need for a multi-stakeholder perspective having on organisation development?A report by international recruiter Robert Walters, Environment, Social and Governance: Mindset over must, offers some insight.Published in association with Vacancysoft at the end of last year to coincide with the Glasgow COP26 meeting, the study points to a significant uptick in job roles related to CSR, Diversity & Inclusion and Corporate Governance, particularly since the pandemic, a period which accelerated the Black Lives Matter movement.The findings reflect how ESG practices – advising, consulting, monitoring, reporting and benchmarking – play an increasingly critical role in understanding how businesses interact with and impact wider society and the environment, now and in future.Overall, CSR job vacancies rose 54% on pre-pandemic levels. Within this, the study found:

a 32% increase in D&I roles compared to pre-pandemic levels
62% of professionals would turn down a job offer from a company with poor D&I initiatives.

“As a workforce strategy, ESG has become a competitive advantage in attracting and retaining talent,” comments Daniel O’Leary, Business Director at Robert Walters. “Numerous studies have shown that, when weighing up potential employers, millennials are hugely influenced by how a business responds to and tackles social issues. Businesses which are failing to meet the expected ESG performance standards should expect to see a knock-on impact on their reputation.Such impact is evidenced by the naming and shaming of companies failing to report on gender pay gaps and the financial fallout when whistleblowers call time on bullying workplace cultures. It is therefore perhaps no surprise then that in the UK the consumer goods and services, real estate and construction, and professional services sectors account for most jobs advertised, according to the study.Robert Walters also notes the majority of CSR-related jobs are in senior roles (40%) and are increasingly being advertised across a broad spectrum of departments, suggesting the seriousness – and often the centrality with which – businesses are taking ESG and DEI. These roles can sit in HR (+19%), IT (+18%), Marketing (+18%), Finance (+6%), Research (+6%), Legal (+3%) or standalone roles reporting directly to the Board and are leading to new working practices.

Connecting people to business

The latest Mercer Global Talent Trends (February 2022) survey also quantifies this shift to what it calls “the relatable organisation”. Based on the views of nearly 11,000 people representing three groups – C-suite executives, HR leaders and employees – in 16 geographies and 13 industries, the study reported that four in five C-suite executives believe the people and business agendas have never been more enmeshed.“Organisations now have a moment of profound opportunity to pick up the tools of empathy honed during the pandemic – balanced with economics – and carve a new way of partnering that is more relatable, and ultimately more sustainable,” said Kate Bravery, report author and Global Leader of Advisory Solutions & Insights, Mercer.“A fundamental change in people’s values is underpinning a structural shift in the labour market. There is now increased pressure for organisations to contribute to society in a way that reflects the values of their customers, employees and investors. The challenge is making progress here, whilst grappling with inflationary pressures, pivoting to new crises and tackling differing views on the future of work.”Organisational resilience is central to the challenge; more specifically, the ability of HR and its related functions, including Global Mobility, to apply their extensive knowledge and experience to drive the transformation agenda forward with internal and external stakeholders.Yet while HR and Global Mobility have been at the forefront of the crisis management response to the pandemic, 65% of C-suite executives in the Mercer study believe that as HR processes have automated, they have lost valuable contact between HR and the business – again underlying the importance of people to a business.“While ESG may be on the agenda for many executive boards, identifying appropriate leaders within organisations for specific operational elements can be a challenge,” said David Wreford, a Partner at Mercer, commenting on another Mercer report, HR in ESG. “There can be many internal and external ESG touchpoints across an organisation and recognising where particular elements have a natural ‘home’ can often be a struggle.“This can result in ESG inertia, where an organisation is unable to identify and fully commit leaders to achieve its ESG goals. Mercer’s research shows that there is a natural home for people sustainability within HR leadership.”This really is an opportunity for HR and GM HR professionals to step up, make their voices heard and flex their expertise with purpose.

DEI, ESG and Global Mobility

June’s Future of Work Festival showed where Global HR and HR Global Mobility practitioners are already carving out this role, linking ESG with employee wellbeing for example. Also showing the importance of both the Global Mobility sector and DEI as key strategic aspects is the announcement that Silk Relo, its Singapore office and sister company Asian Tigers Singapore, have become the first in the global relocation industry to earn certification from the Human Resource Standards Institute SM (HRSISM), and are now HRSI certified for International Organisation for Standardisation’s (ISO) 30415:2021: Human resource management (HRM) – D&I.By earning HRSI certification, the Asia-headquartered end-to-end relocation management services validates that their HR processes are aligned with ISO 30415:2021. It also verifies that their commitment to offering the best in human resources (HR) and D&I practices is backed up with real action. Speaking to Think Global People as the news was announced, Kay Kutt, CEO of Silk Relo, explained what it meant for the companies and the sector.“I think in the mobility world we’ve always had cross-cultural as an element. Unfortunately, it’s one of the areas as a service that often gets left behind or gets cut when cost containment comes into play. We know we need to move household goods and a family or individual into a location and get them up and running as soon as possible, making sure those children get into school, immigration and tax sorted.“Yet at the core of all of this, D&I is the heart and the heartbeat of everything we do at Silk Relo. It’s not just about it being an emotional context, but it’s everything that we are doing for and as an individual and a human being. We want to have a sense of belonging and inclusivity.“Silk Relo’s mission is to make a difference one transferee at a time. When I look at it through the lens of D&I, our mission is to make a difference one person at a time. If we don’t do it for our team members, how are we going to do it for our clients, our customers, our stakeholders, our transferees?”John Lim, Managing Director of Asian Tigers Singapore, agrees that the companies’ certification shows the wider business world that D&I is a priority for the company. “Over the last few years, diversity and inclusion have taken on prime space in everything that we talk about and do as an organisation. D&I is unique because, unlike the other ISO systems, it cuts across the human factor.“Within a country, you have different races, different beliefs and different cultures. Across different countries and different regions, we are all completely different. Our customers want to know that we recognise this and honour those differences both internally and externally.”HRSI is a subsidiary of HRCI, the global leader in credentialing and learning for the HR profession. Explaining what HRSI organisational certification means for companies, Dr Denise Caleb, PHR, President of HRSI, says, “Earning an HRSI organisational certification allows companies to ensure that their HR processes demonstrate cultural intelligence and are aligned with business goals using consensus-based, international HR standards.“We are changing the international business landscape and making history in the diversity and inclusion space by providing a measure for elements, including those mandated for inclusion in ESG reporting, that previously appeared daunting. Now Silk Relo and Asian Tigers Singapore can display the HRSI 30415:2021 badge and seal of excellence to demonstrate to the communities they serve that they are committed to excellence and continuous improvement.”As well as celebrating its own unique organisational culture and team, Silk Relo’s accreditation makes it easier for client companies to identify and align with them as a supplier, and ensure their mobile talent receives services that reflect their corporate culture and values, as well as their individuality.With DEI ever more central in ESG, international HR and Global Mobility teams are critical to enabling sustainable working practices that link with organisational and individual purpose.This article is included in the Autumn issue of Think Global People magazine (5831k) .

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