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ESG: Environmental, Social, and Corporate Governance and HR

The recent pandemic and growing recognition of social and environmental concerns caused by the services/byproducts of companies and industries have increased demands for organizations to perform socially conscientiously. The world, from investors to consumers, needs sustainability.

But how do we measure how sustainable an organization is? The answer is ESG.

ESG is a management and analysis framework that evaluates the operational sustainability of an organization. Below we'll cover everything you need to know about ESG and why it's essential to hiring teams.

What does ESG stand for?

ESG stands for Environmental, Social, and Governance. It adopts the broad view that sustainability encompasses more than simply environmental concerns. While ESG is typically associated with investors, stakeholders now involve customers, suppliers, and workers in ESG conversations who are increasingly concerned with how environmentally sustainable an organization's operations are. Moreover, some of the most significant factors for stakeholders also include how equitable an organization's hiring practices and ethical governing practices are.

What is environmental, social and governance?

Environmental: These are a company's environmental impacts and risk management methods. Environmental factors include natural biodiversity, air, and water quality, natural resource conservation, Energy consumption, Carbon footprint, Animal treatment, and waste and pollution management.

Social: The social factor refers to your relationship with customers, employees, and local communities. Some social factors include community connections and the influence of the organization on the local communities in which it works and serves; customer satisfaction; data protection and privacy policies; employee diversity, equity, and inclusion; employee engagement and relations; health, safety, and human rights.

Governance: Corporate governance relates to how a company is led and governed. It investigates how a firm polices itself, especially on internal system controls and compliance methods. Here are a few examples: diversity and structure in board composition; corruption; donations and political lobbying; executive terms and policies; tax strategy, and audit committee structure.

Who is responsible for ESG?

Organizations are now recognizing the critical role that HR plays in ESG strategy. According to a recent analysis by Marsh & McLennan Advantage, top employers' ESG ratings are 14% higher than the worldwide average, indicating a strong relationship between employee contentment and company ESG. 

It is now up to HR teams to play a more prominent role in tackling ESG since these programs are essential to all stakeholders, including investors, executives, workers, and consumers. The social component of ESG is the prime field for HR to take the lead. Furthermore, as firms travel the challenging road toward societal transformation and transparency needs, HR plays a critical role in shaping the narrative about social concerns.

What are the main ESG challenges?

Implementing healthy practices has always been challenging. Here are some of the most prominent ESG challenges businesses. An ESG strategy that works for one firm may only work for one firm. The policy must be legitimate in all aspects, not just advertising. Market performance is not guaranteed. Reporting across all ESG criteria could be complicated.

Why is ESG important for employees?

Aside from training, top practices for ESG employee involvement include developing a clear vision and objective for the ESG program and identifying areas where workers may participate. It provides a structure and support for workers to participate, such as holding in-house hackathons addressing material concerns or secondments in ESG-related jobs. 

Most importantly, the influence of ESG performance on employee attitude can be a source of competitive advantage. ESG performance might assist the company by enhancing employee satisfaction and attracting new staff.

What are ESG best practices?

Consumer behavior has evolved throughout time. They aim to recycle, reduce trash, and make more environmentally conscious decisions. To meet the demands of the time, your company needs to cultivate a planet-conscious culture. 

As a result, HR teams should embrace healthy principles laid out by ESG practices. Here are some examples of ESG best practices: 


What are good goals for ESG?

The goals of ESG hold a massive scope. Some of the reasonable goals for ESG are include: 

  • Creating an inclusion and diversity paradigm to allow more varied talent recruitment and retention. 
  • Changing employee terms and perks to encourage sustainability, reduced carbon emissions, and inclusion and diversity is a reasonable goal. 
  • Examining variable pay and its relationship to ESG-driven aims. 
  • Placing employee welfare and I&D at the center of procurement 
  • Reshaping some business rules and practices to establish a stronger emphasis on ESG.

Examples of ESG

The recruiting software services of Crosschq can help your organization set a good ESG example by meeting crucial criteria like supporting diversity in all forms, removing unconscious bias in recruiting processes, and gathering data on applicant skills and opportunities.

ESG checklist

The first step in implementing ESG is to foster a welcoming environment in which all workers feel appreciated and connected to the firm. It is important to coordinate with executive leadership and investment management departments to understand what ESG criteria your company measures against and how you can help. Later, use this data to track and measure the company's human capital Key performance metrics. Make a list of the company's initiatives and actions to foster an inclusive and engaged workforce and make it available to all stakeholders. Collaborate with your ESG reporting team to effectively communicate the 'S' (social) narrative. Ensure that team members have the authority to make decisions and contribute to the story as needed.

Environmental, social, and governance: Final thoughts

Crosschq helps companies find better talent with more equitable hiring practices. Its advanced software removes unconscious bias with IO Psychologist vetted surveys and a robust system that objectively aggregates data on candidate skills, strengths, and opportunities. 

With Crosschq, recruiters can align with ESG practices by hiring diverse, winning teams and enabling equitable and data-driven hiring practices. To learn more about Crosschq's cutting-edge technology, try the demo today.

Mark Ko

by Mark Ko

Content Writer

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