about 1 month ago -

ESG and why it matters to HR: Here are the answers to 4 common questions

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​The world is transitioning towards an economy that is both fair and sustainable.

According to ManpowerGroup’s Global Insights report “The Greening World of Work”, green is the future. 70% of employers globally say they are currently or planning to actively recruit for green jobs or skills.

The battle for talent has already begun and it’s imperative for HR and business leaders to ensure their organization doesn’t fall behind.

In Southeast Asia, Jobs That Make Sense x Manpower survey report titled “The Quest for Meaning at Work” revealed that today’s talent are increasingly seeking roles that transcend traditional financial incentives.

Southeast Asian employees are now looking to align their personal values with their professional endeavors, and a big part of it involves the ability to make an impact when it comes to environmental, social, and governance (ESG) issues.

With that in mind, let’s explore 4 common questions HR and business leaders have about ESG to shed light on if it is here to stay, how organizations can implement it, and how HR’s role will evolve in line with it.

Is ESG just a buzzword or is it here to stay?

From a business perspective, many countries have already implemented mandatory ESG reporting.

For instance, in the United States, New York Stock Exchange (NYSE) rules also require listed companies to publish codes of corporate behavior and ethics.

Closer to home, in 2016, the Singapore Exchange also established a comply-or-explain ESG reporting framework which requires listed companies to comply with national ESG reporting standards or to provide detailed reasons for why they have not.

From an HR perspective, having a strong ESG agenda is useful when looking to attract and retain good talent.

Sam Haggag, Head of Manpower and Director of Sales, APME, ManpowerGroup, pointed out, “In our recent survey of Southeast Asians on the meaning at work, we found that 77% will consider a company’s reputation for social responsibility when considering pursuing a career with them.

“The question is not ‘should we embrace ESG’, it's about how fast we can embrace it.”

It’s clear that ESG is here to stay. However, it’s not enough to just do ESG for the sake of reporting or to have it in your employer branding to attract talent.

Almost half of Southeast Asians underscore the necessity for businesses to demonstrate genuine action and adherence to their environmental and social commitments.

For ESG to be genuine, it cannot be run by just one department, it must be embedded and owned by everyone in the organization.

One way to ensure ESG is embedded in the organization is to get each leader to own an aspect of ESG. For example, a CFO can oversee sustainable financing. The key to this is getting leaders to look at how they can push ESG in areas they are in charge of and are passionate about.

ESG can be costly to implement, how can we justify the cost versus benefit of it?

While the implementation of things such as solar panels to reduce emissions can be costly, it’s important to recognize that these can help the organization to save money in the long run, especially as countries across the globe double down on climate action.

For instance, Singapore increased its carbon tax in 2024 to S$25 per tonne of emissions from S$5 a tonne previously.

On the topic of cost versus benefit, Haggag said, “One way to look at ESG is to use it to make the organization more sustainable, effective, and cost-efficient so that the money saved can be reinvested into other areas of the business.”

Not every ESG initiative needs to be costly. Examples of ESG initiatives that reduce emissions while saving cost include being mindful of business travel and only traveling when it’s essential, as well as moving into a smaller office space and implementing flexible work arrangements.

Haggag also gave an example of how organizations can create a positive environmental impact while fostering inclusion, killing two birds with one stone.

“In many organizations, we often have meetings where multiple parties within the organization are required to attend. Instead of using separate vehicles to get to the meeting venue, ridesharing can help reduce emissions while also fostering a sense of inclusion among co-workers.”

With so many aspects of ESG, how can my organization get started?

Typically, our first thought when we look at ESG is about the environment. However, there’s more than that. ESG also has a S, which is the social aspect and a G, which is the governance aspect.

For example, Diversity, Equity, and Inclusion (DEI) would fall under the social aspect of ESG. Whereas fostering trust, transparency, and accountability with internal and external stakeholders would be a focus of the governance aspect of ESG.

In fact, many things HR already does can be thought of to fall under the social aspect of ESG. These include employee wellbeing, learning and development, employability and income prosperity.

Haggag said, “There are so many things that we can do in ESG and it’s easy to get lost. We need to look at which areas matter most to our employees and focus on that.”

When it comes to the areas that matter the most to employees, it’s important to understand the context for different markets.

We found that employees in different countries had different priorities in their search for meaning.

Notably, Singaporeans cared more about societal impact and Filipinos were looking for both societal and environmental impact. Whereas over in Thailand and Vietnam employees advocated for the active promotion of diversity, equity, and inclusion (DEI).

Once HR and business leaders understand the areas that matter to their employees from a localized perspective, they can implement effective ESG initiatives that not only benefit the environment and society, but also help the organization attract talent.

How will my role as an HR leader evolve in line with ESG?

The role of HR has undergone many evolutions over the years - from the early years of providing administrative support with tasks such as recruitment and payroll to being the strategic business partner it is today.

As we move towards a greener economy, Haggag foresees that more of the HR community will become Chief Sustainability Officers for the organizations.

That said, he stressed, “We need to be clear that HR are not the owners of ESG, but a change agent and a major strategic partner to the business when it comes to ESG. Ultimately, for ESG to work, it needs to be everyone’s initiative. It must make sense to everyone in the organization, from CEO to receptionist.”

The above contains insights gained during a panel discussion which ManpowerGroup participated in at the World HR Congress 2024 on the topic of the Strategic Role of HR in Driving ESG Initiatives Within Organizations.