How can HR make a difference in ESG?

I am privileged to have the opportunity to serve the community as a member of the Lions Club of Hong Kong IFC. Our members are leaders from various professional industries and we aim to align our community service efforts to also address some of the macro issues facing societies today. Programs such as Lions Dive Against Debris and Charity Move are recent examples of programs that focus on addressing ESG issues.

You don’t have to be part of the Lions Club of Hong Kong IFC in order to contribute to the ESG cause. If you are a HR professional (the term “HR” is used loosely here to include all HR, talent management, recruiting and learning & development professionals), or regularly work with the HR team in you organisation, please read on for some suggestions on how we can all contribute to creating a more sustainable world.

Take a moment to Google “HR having a seat at the table” and you will see a number of papers advocating HR should be a part of the senior management team to set strategic goals and to drive key initiatives. Given the importance of ESG issues these days, having HR sitting at that senior management table to advise on a wide range of talent management and ESG related issues is no longer a nice-to-have, but a critical element for the success of any organisation.

What is ESG?
Since the early days of being a set of metric for making ethical investment decisions, ESG is now a mainstream set of principles that outlines how companies should behave responsibly. Many countries are already looking at setting regulations and disclosure requirements for companies to comply.

ESG stands for environmental, social and governance. Examples of issues may include:

• Environmental – how is your company reducing your carbon footprint? What sustainable practices do you have in place?
• Social – what is your company doing to take care of your employees’ well-being? What are your positions on important social issues? How are you getting involved in your community?
• Governance – how diverse is your management or leadership team? How do you ensure decisions are being made fairly and ethically?

How does HR fit into the ESG agenda?
At first glance, ESG seems like a “management issue”, not a HR issue. However, having a strong ESG profile not only makes it easier to attract investors and customers, it can also increase your company’s ability to attract and retain top talent, especially as employees are becoming more conscious about aligning their personal values with an organisation’s values.

The social and governance components are the two obvious areas where HR can make an impact.

On the social front, HR can work with key stakeholders in the organisation to bring the organisation’s values into sharper focus and lead the inclusion, diversity and equity (ID&E) initiatives. On the governance front, HR may help the organisation recruit or promote a diverse set of senior talents to strength the organisation’s governance structure and processes.

At my firm, Baker McKenzie, our ID&E team comprises diverse groups of senior leaders and ID&E professions who focus on creating fair access and opportunities for all employees while celebrating individuality and differences as a way to bring everyone closer together. Have a look at our firm’s 2022 ID&E Annual Report to see the various initiatives we have in place (e.g. gender and LGBTQ initiatives) and the results we achieved.

Though not immediately obvious, HR can also make an impact on the environmental front. For example, the accelerated adoption of virtual training programs and virtual company meetings is a direct result of the COVID-19 pandemic’s impact. As we come out of the pandemic, not running everything as in-person experiences, especially when travel is involved, is an example of shifting to a more sustainable, carbon footprint conscious mindset.

How can HR make a practical difference in ESG?
Having a clear picture of what you want to focus on or having a policy for the various focus areas is just a start. The real challenge is implementing your ideas.

As resources are limited and you can’t do everything at once, you are more likely to experience success if you prioritise, plan things out and focus your efforts on achieving small wins that builds the momentum required for big wins.

Here are some ideas for you to consider:

Running a more sustainable HR operation

• Determine where you can digitise (e.g. using HRIS systems), go paperless or streamline key HR processes to create a more sustainable operation. Consider cutting back on travel or energy consumption as other means to work more efficiently.
• Review your HR supply chain to see which suppliers are more aligned with your ESG values and initiatives. Start conversations to discuss expectations and explore how you can collaborate to make a bigger difference. As it can take a lot of time and energy to conduct an audit on all suppliers, consider putting the accountability on your suppliers by requesting them to give you a quarterly report on key metrics that matter to you.
• Design a flexible work arrangements policy that works for your organisation. It’s a bit of a touchy subject these days. While most organisations can see the benefits of offering flexible work arrangements, they have different views on what the policy should look like. Some may set a limit on the number of days employees can work from home while others may allow more autonomy. The key here is to be very clear in designing and communicating a policy that works for your organisation. Consider not only work flow, client preferences, team dynamics, but also consider technology needs such as cyber security (e.g. employees accessing sensitive documents at home) and health and safety issues (e.g. home office set up, work hours)

Determine your strategic focus

• What skills do you need to support your organisation’s ESG initiatives? Review your needs and skills inventory to determine where you should focus your recruitment efforts. When recruiting, perhaps ask for blind CVs (CVs omitting certain aspects of a candidate’s personal details) to create a more equitable opportunity for everyone.
• What is your organisation’s appetite for setting ESG target as part of the executive compensation? How would you structure it? Thinking more broadly, how would you recognise all employees’ contributions (e.g. bonus for volunteering, promoting ESG)?

Make it fun – create fun and meaningful experiences to create more awareness and support

• Host social gatherings and invite guest speakers to share their insights or experience in ESG to help your employees be more familiar with the topics while having fun at the same time.
• Encourage your employees to focus on their physical and mental well-being. Join or organise a walk to bring people together. For example, as a member of the Lions Club of Hong Kong IFC, we recently launched a Charity Move event that may be worth considering. At my firm, we offer free massages for all employees, once a month, amongst other benefits.

The list of suggestions above is not an exhaustive list, obviously. Please explore and share your ideas with others so we could all create a more sustainable world together. If you are keen to find out more about the Lions Club of Hong Kong IFC, or if simply just want to brainstorm some ideas, please don’t be shy and get in touch.

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