How can people analytics put humans at the center of your ESG strategy?

With the rising importance of ESG factors and increased need in transparency, companies are faced with regulatory and public challenges. People analytics can unleash the potential of your ESG strategy, provide you with insights and influence your employee’s behavior

In brief

• Environmental, social and governance (ESG) issues are important drivers of business success.
• Rather than focusing on ESG metric reporting, shifting the focus to people centric metrics can broaden your horizon and give you a better sense of the performance of your ESG strategy. 
• People Analytics offer insights into many facets of ESG issues that are not reflected in typical ESG reporting.

Environmental, social and governance (ESG) issues are becoming increasingly important in today’s corporate climate. They have imperative influence on a firm’s reputation and financial performance. Today, ESG reports are scrutinized by stakeholders and regulators alike, even though there is little standardization of these measures across companies (EY Leadership Insights: The Sustainability Technology Landscape, 2022). Despite these issues, ESG remains an important performance criterion also in the context of employee experience:

Organizations that foster an ESG narrative are also business drivers because focusing on people first increases long term profitable outcomes. Considering recent global megatrends impacting workforce planning such as the Great Resignation and the Race for Talent, the demand for flexible work models, workplace health and safety, as well as diversity and equity concerns, ESG strategies are becoming increasingly important. Organizations that don’t adapt will face challenges attracting and retaining the right talent and investors. ESG can have a detrimental impact on corporate reputation and People Analytics can help companies keep up in today’s market.

People Analytics and the employee lifecycle

People data is an important first step in the process of establishing a sustainable ESG-driven organization. Whilst most companies already have comprehensive reporting in place, People Analytics enable you to measure your ESG impact and effectiveness based on your most valuable resources: your employees. We think a good ESG strategy is closely aligned with an employee’s experience through its different stages. Be it to measure the carbon footprint of an employee including the business travel (environmental), value and care for your employees wellbeing (social) or give the human factor in risk management the right attention (governance).

ESG as corporate benefit

ESG initiatives spur financial performance thanks to better innovation, higher operational efficiency, and improved risk mitigation and risk management (NYU Stern, 2021). Bad PR can have incredibly detrimental effects on your brand and the impact of ESG initiatives on Corporate Reputation and Brand Equity can be difficult to measure directly, as people might not always speak their mind. People Analytics can offer insights through organizational and social listening, leveraging NLP and sentiment analysis to assess reputation amongst stakeholders, clients, and consumers. We know that ESG disclosure on its own does not improve performance – in fact, focusing on disclosure has been found to have a negative valuation effect (NYU Stern, 2021). People Analytics can measure the effectiveness of an ESG strategy across several domains and offer holistic insights into ESG performance.

By putting Humans at the center of your ESG Strategy as well as analyzing and leveraging the data thoroughly, your organization can add value to sustainability goals – and society.

Sources:

Glassdoor workplace trends 2021. NYU Stern, 2021; SCI & Marsh & McLennan Advantage Insights analysis, 2020; BI-Workshop Sustainability humans @ the center; Source: Leadership Insights: The Sustainability Technology Landscape – January 2022; NYU Stern 2020; Pas and Sustainability – Putting Humans at Center, 2022.