The pandemic has heightened focus on social sustainability with people's health, wealth and careers in crisis. What are the considerations and challenges for companies looking at ESG as a workforce strategy?


Today's subject matter expert

Roxanne Cote
Health and Benefits Consultant, Hong Kong, Mercer Marsh Benefits

Border restrictions over the past two years have impacted the flow of human capital. With many businesses planning for post-COVID recovery and finding new opportunities for growth, the competition for talent is stiff but it will be the key to success.

 

Sustainability is now viewed as a competitive differentiator and core focus for organizations globally. Our insights showed that ESG has emerged as a key factor in engaging today’s workforce, with one in three employees preferring to work for organizations that show responsibility towards all stakeholders, not just shareholders and investors. Globally, the employers with the highest ESG scores also achieve +14% in employee satisfaction and are +25% more attractive to prospective talent. In turn, engaged employees strengthen a company’s talent pipeline for long-term success.

 

Given its scale and complexity, incorporating ESG into your agenda can feel like a vast attempt at boiling the ocean. Companies should bear in mind there is low-hanging fruit and it is likely you are already doing some positive work on ESG, but not necessarily formalizing it as such.

 

Organizations that are the most successful in their ESG endeavours not only tie their goals to their organizational purpose, but also keep the process transparent to their employees. According to Mercer’s 2021 Global Talent Trends Report, 63% of businesses in Hong Kong say keeping this purpose visible to their employees has the biggest impact.

 

Assessing and prioritizing material ESG focus areas is the critical first step. Here are three steps to establish a baseline for your organization.

 

  1. Evaluate current initiatives – Set a foundation by evaluating current initiatives with an ESG lens. For example, existing initiatives on wellbeing and mental health contributes to the Social aspect and most employers are already stepping up in that area.

  2. Determine ESG maturity level - Your desired state can also be informed by significant gaps in your business – we have worked with clients to close gaps on a wide array of areas including health and wellbeing, pay equity, diversity and inclusion, and impact investment.

  3. Build a multi-stakeholder framework – ESG requires a people-centric transformation approach, one based on authentic dialogue and true co-creation. Include everyone from investors and the board to regulators, employees and customers to prioritize solutions and accelerate impact.

To embed ESG initiatives into the workforce, companies can also consider a range of practices, including:

 

  • Assigning ESG roles, board-level responsibilities for ESG actions, and KPIs within the company governance structure
  • Conducting regular people training on ESG issues for management and board members and redefine work across the organization in alignment to the ESG goals
  • Embedding ESG metrics into both individual and organizational performance measurements and incentive rewards

As vaccination rates go up and borders reopen, we are likely to see more movement in human capital. Employers should be proactive in thinking about the levers of employee attraction and retention and embedding ESG as a key lever.

 

Contact us today to find out how we can help you design a framework to embed sustainability in the DNA of your organizations.

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