Environmental, Social and Corporate Governance and their relationship to strategic HR

Although recent, ESG is becoming an important part of a company’s constitution


The so-called ESG (Environmental, Social and Corporate) has increasingly become a priority for companies. Good financial results are more than ever tied to responsibility toward the planet and society. Environmental, social and corporate governance issues are important to strengthen a business, considering the interests of clients, employees and society, and positively influencing the decision-making of investors.

The concept first appeared in the report “Who Cares Wins – 2005”, by the UN Global Compact, Federal Department of Foreign Affairs Switzerland and IFC (International Finance Corporation). The document presents the criteria for evaluating an ethical and sustainable company, which are divided as follows:

Environmental – Evaluates a company’s impact on the planet, e.g., energy consumption, waste disposal, carbon emissions, ecological footprint, water use and recycling processes.

Social – Evaluates a company’s impact on its workforce and the community, e.g., diversity, gender equality, employee rights and community work.

Corporate – Evaluates how a company is managed, e.g., board composition, independent directors, types of shares available, interaction with shareholders, shareholder compensation and rights.

ESG represents a challenge for organizations, as it implies a radical change in values ​​and principles, which produces effects not only on the company itself and its employees, but on society and the planet. Therefore, all sectors need to be involved. In this sense, strategic HR can be a great ally to create high-impact actions within the corporate environment.

Many of the issues addressed by ESG metrics are intrinsically linked to the demands that HR professionals have on a day-to-day basis. The implementation of key policies, such as those related to diversity and inclusion, in addition to a whistleblower channel, can help companies improve the social aspect and deal with cases of discrimination and harassment. When implemented correctly, these policies ensure a healthy work environment.

Organizational culture, board composition and shareholder compensation are important elements of good corporate governance practices. Increasingly, investors want information about the working environment and the modus operandi of companies. Here too, the HR sector can help reinforce the values and principles that must be shared by all.

Finally, HR can propose actions that generate a positive environmental impact, so that the company and all employees adopt a more sustainable lifestyle. From simple attitudes, such as offering cups made of biodegradable material, to more complex ones, such as the correct disposal of the waste produced by their activities, every little action makes a difference.

Although recent, ESG is becoming an important part of a company’s constitution. Investors, potential customers, and employees are interested in whether institutions are committed to the environment and society, as well as whether their businesses are conducted in an ethical and sustainable way.

Incorporating ESG principles into business activities can improve performance and further differentiate the company from its competitors. To be able to focus on this and other strategic issues, it is essential to have a reliable partner that provides full support for BackOffice tasks. Here at Pryor Global, we offer excellent solutions for Payroll and Human Resources issues, so that our clients can focus on their core business. Contact us and find out how we can help you!

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