Why putting Humans@Centre is critical to successful ESG transformation

Authored by Robert Alexander, Partner, People Advisory Services

People thrive when environmental, social and governance (ESG) frameworks put humans at the heart of strategy design. This thought should fuel ESG transformations.

In brief

• There can be no true ESG success without doubling down on the core, where people converge to make an impact.
• When humans centre prominently at the heart of an ESG framework, their daily interactions and behaviours can bring life to the way an organization values its people.
• Access to capital, talent retention, customer loyalty and sustainable profit all link back to an organization’s ability to take an integrated view of ESG.

People thrive when environmental, social and governance (ESG) frameworks put humans at the heart of strategy design. This single-minded thought should fuel ESG transformations in 2023 and beyond. 

From corporate responsibility to sustainability, a whole host of words and terms are used interchangeably with ESG. When ESG is broken down into milestones and metrics; environmental statistics or regulatory figures tend to grab the headlines. At its core, though, ESG is truly about positioning humans with the best possible opportunity to thrive — at work, on the home front and in society.

With that in mind, the importance of the “S” pillar of ESG should never be underestimated.

Although not always as clearly defined, a strong social pillar in your ESG strategy can make a transformational impact on the long-term value an organization creates. Using the social pillar to put humans at the center of your ESG strategy supports environmental sustainability and good governance alike, a connective thread linking ESG overall. 

This is the pillar where we bring together relationships; leadership; diversity, equity and inclusion; sound labour policies; strong health and safety considerations; financial inclusion and so much more. Not typically the star of the reporting show, the S itself is where investments in people and behaviours come together, accelerating progress against the E and the G.

There can be no true ESG success without doubling down on the core, where people converge to make an impact. And rest assured, your stakeholders are taking note:

• Nearly 85% of employees feel it’s important — or very important — for them to work for an organization that positively impacts society.
• Almost half of global consumers want to buy from more organizations that benefit society, even if the products or services cost more.
• Among investors, 89% have come to expect consistent reporting of ESG performance measures. A further 74% are likely to divest based on ESG performance. Source: How to center sustainability ambitions around people | EY – UK | EY UK

Access to capital, talent retention, customer loyalty and sustainable profit all link back to an organization’s ability to take an integrated view of ESG. Elevating the S and putting humans at the center of your ESG framework is critical to overall success. When humans center prominently at the heart of an ESG framework, their daily interactions and behaviours can bring life to the way an organization values its people, realizes its purpose, and positively contributes to all ESG goals. Employees directly influence the environment and help build a culture of integrity and accountability because the organization has provided platforms, resources and opportunities to do so.

Embracing a successful human-centered approach to ESG will require many organizations to shift mindsets and to have a greater focus on the social pillar as part of an integrated approach to ESG. You’ll need to apply an ESG filter to recruit, engage and develop talent, and you’ll need to carry that focus to harness employee behaviour in ways that accelerate and positively contribute to all ESG goals.

Building sustainable social practices into your organization and workforce becomes an anchor by which ESG is embedded in your culture. This could look like:

• Wellness programs – Develop initiatives that boost employees to live healthier and happier lives — such as fitness challenges, psychological safety campaigns, vaccination clinics, mental health awareness.
• Pay equity – Ensure equal pay for equal work across any demographic segments, including gender, age, cultural background, familial status and others.
• Reducing carbon footprints – Create working environmental incentives that encourage minimal carbon emissions — things like hybrid work models, biking/walking challenges, reduced public transit fares.
• Upskilling/reskilling employees – Employees consistently rate “learning” as a main factor in their job satisfaction and engagement. Coupled with an aging workforce, internal programs to upskill and reskill existing employees can mean greater retention and continued competitive advantage in a shrinking talent pool.

As this overall transformation takes shape, organizations evolve into environments where sustainable behaviours become inevitable. Like any change, this won’t all come together overnight. Reshaping the strategy, accelerating the transformation, building trust and operationalizing sustainability are equally important stages, each with its own nuanced considerations, actions and metrics. Working through them with a holistic view that keeps you focused on the big-picture goal is critical.

Bottom line? Wherever your organization stands on the ESG journey, it is never too early to place Humans@Center and emphasize the “S” in ESG. The most important thing you can do is begin your social transformation now.