Diversity, equity and inclusion (DEI) initiatives have long been overlooked as integral to sustainability programs. That changed during the COVID-19 crisis, which has shone a brighter light on social inequities and prompted stronger calls for organizations to spearhead positive change. Sustainability started as a way to measure and mitigate risk. When you consider it through that lens, one risk that has become front and center throughout the pandemic is human capital management.
Now more than ever before, companies are being asked to act rather than simply talk about sustainability, especially after the U.S. Securities and Exchange Commission acted in 2020 with new requirements for human capital management data disclosures. Suffice to say, the requirements for companies regarding how they refer to and measure human capital have changed and will continue to evolve.
The manufacturing industry has a huge opportunity and responsibility to play a strong role in helping advance sustainability, including human capital management. When we think about the social agenda here at Flex, we talk about it in terms of well-being; health and safety; diversity, equity and inclusion; labor practices; talent attraction; development and retention — essentially how we care for our people. DEI is an important lever in ensuring that every team member — each with a unique background, skills, experience and perspective — is empowered to reach their full potential.
Challenges with DEI
Many studies show the increased quality of decision-making when you include diverse opinions on a team, which ultimately leads to higher performance. Yet, cultivating DEI is a highly complicated topic for companies for a variety of reasons — such as the demographics of industries historically dominated by a gender or an ethnicity.
A big challenge with DEI is how U.S.-centric this concern is. This means that global organizations should be careful to ensure they take both a global and local approach. Inclusive of unique cultures and histories, every country and region has its own DEI challenges — there is no one-size-fits-all solution.
For example, as a result of taking an internal pulse of DEI priorities and referencing third-party research, we see varying priorities across our global footprint. In China, gender representation, improved parental benefits and socio-economic bias are top of mind for employees. In parts of Central and South America, pay equity, disability employment and LGBTQ+ rights are important to the local workforce.
One of the most beneficial things a sustainability leader can do, regardless of the maturity level of their company, is to prepare for known challenges.
Another challenge is the balance of privacy with disclosure. Accountability starts with knowing your baseline, but in some instances, it is not possible to get specific data due to privacy regulations in certain countries. For example, in Belgium, companies aren’t allowed to ask employees about their race, ethnicity or if team members have a disability.
On one hand, people want more diverse, equitable workforces — but on the other hand, they want the privacy of not being singled out or having to disclose personal information. Companies are tasked with balancing both as they navigate this area. To help address this, we’re looking to explore initiatives that encourage employees to voluntarily self-identify and disclose information, such as ethnicity and gender identity, to further inform our DEI programs.
Best practices for incorporating DEI into your sustainability strategy
Change does not happen overnight. It takes time and effort to drive meaningful change at any organization, especially legacy organizations with long-standing practices and established systems in place. One of the most beneficial things a sustainability leader can do, regardless of the maturity level of their company, is to prepare for known challenges.
Following are several best practices and actionable steps that Flex has used to incorporate DEI practices into the company’s sustainability strategy. These tried-and-true tips have been key to helping the sustainability program office address some of the most common challenges associated with corporate DEI initiatives.
1. Get the data. Know your baseline. Companies thinking about incorporating DEI practices into their sustainability program should start by getting a baseline of their numbers. This way, your team will know where the organization is starting from and can prioritize focus areas. For example, we know that 44 percent of our workforce at Flex are women with 26 percent of management positions held by women. (These numbers are based on 2020 calendar year data. Also, they refer to all levels of management.) We know the baseline, so now our focus is on developing and promoting women to leadership roles — and we can accurately measure our progress. It comes down to defining the problem for your company and without the baseline data, it is extremely hard to know where to start.
2. Agree on the problem you are solving. Embracing accountability systems is essential, particularly for established companies with a long history of doing things a certain way. Change management and education are foundational to helping the broader organization understand the problem you are trying to solve, and for strategically breaking down goals into milestones that can progress, be tracked and measured over time. We are already seeing more accountability systems being put in place in the U.S., including as a result of the SEC’s recent human capital management (HCM) disclosure requirements. For example, in select SEC filings, Flex discusses and provides specific metrics on various HCM initiatives, including inclusion and diversity and talent development and retention.
3. Involve your leadership team and key business stakeholders. In the past, DEI was mostly managed by human resources. Times have changed, especially with more frameworks and disclosure requirements, and investor sentiment gaining traction around sustainability and specifically the "S" in ESG, demanding stronger cross-functional collaboration. Given the shifting landscape, our legal teams, sustainability program office, boards of directors and executive leaders at Flex look at DEI as part of a company’s human capital management strategy.
Companies beginning to integrate DEI into their sustainability strategy should invite their leadership team into the initial planning conversations. This will ensure alignment to the larger human capital agenda and better integration with company goals and strategy. Having executive buy-in will also reduce roadblocks and allow you to move faster.
4. Team up with organizations that can provide support. Identify organizations that can support your company in its journey and work with them to achieve your DEI goals, along with other sustainability targets. Regardless of where your company is and where you want to be, there is an organization out there that is the right match for you — whether it is through business management consultancies such as Deloitte or McKinsey; nonprofits such as Catalyst, a global nonprofit that works with companies to accelerate women into leadership; or universities, such as Boston College's Center for Corporate Citizenship. Many organizations are available to help your company understand the space — you don’t have to tackle DEI on your own.
5. Develop strategic initiatives to support DEI goals. Once we identified that we needed more women in leadership roles globally at Flex, we asked ourselves: "How do we accelerate getting more manager-level women to the director-level?" The answer for us was to implement specific programs highly focused on the development of female managers and helping them strengthen their leadership skills. One of these includes our SheLeads program designed to accelerate the development of female leaders at Flex.
As businesses and organizations start to really look hard at their sustainability strategy and set new goals for the years ahead that include DEI, sustainability programs and, more broadly, companies will flourish.
It is more important than ever that companies prioritize human capital and that we do everything we can as sustainability leaders and business professionals to not only attract, nurture and retain the people that make our companies great but help forge a more diverse, equitable and inclusive world. I look forward to watching DEI come further into the spotlight through sustainability programs in the coming year.