Adapted from the 2022 “State of Green Business,” published earlier this month by GreenBiz Group. Download the report here.
These are certainly challenging times for chief human resource officers (CHROs), with diversity, equity and inclusion (DEI) initiatives rightfully forced to the top of their agenda; the great resignation leaving many industries scrambling for workers; and, lest we forget, a global pandemic that forced some to work from home while others face challenging frontline risks of infection. Even with all that going on, the human resources department in many organizations is seen as the ultimate check-the-box function; the "R" may just as easily stand for resistance.
The irony is that HR professionals more than ever have a seat in the C-suite, but many have been reluctant to harness that power. Organizations face increased focus on climate change and ESG performance and must reassess their strategy to meet these new demands and ensure they are aligned with increased interest in stakeholder capitalism. For HR professionals, it’s time they walk down the path many sustainability leaders already have traveled to go "beyond compliance" and embrace a purpose-led sustainability strategy.
Working on the 'S' in ESG
The most visible ESG initiatives undertaken by HR departments are social ones, historically those involving philanthropic dollars and employee volunteer hours. The past two years of marches, protests and demonstrations in response to social, racial and economic inequities have brought into clearer focus the systemic nature of these problems in the United States and around the world. These are not new issues, but a greater understanding of the role that business can play in addressing them has been elevated by such initiatives as the pledge to act on supporting more inclusive workplaces, signed by more than 2,000 chief executives as part of the CEO Action for Diversity & Inclusion.
Leading CHROs know that their impact can extend well beyond their DEI remit to focus on aligning the purpose of their organization in a way that brings along all employees. In a recent McKinsey analysis of employee sentiment, 63 percent of employees surveyed said they want their employer to provide more opportunities for purpose in their day-to-day work. Individual purpose is not one-size-fits-all, but HR professionals can establish programs that connect employee purpose with the overall goals of the organization.
Professional services firm Deloitte in August launched a climate learning program that will reach all 330,000 employees. The program, developed in partnership with the World Wildlife Fund, aims to inform, challenge and inspire employees to learn about the impacts of climate change and empower them to make climate-responsible choices at home, at work and in advising clients.
Deloitte is not alone. Firms such as Jones Lang LaSalle and Schneider Electric are leveraging Climate School, an online learning experience from insurance giant AXA, built to support organizations pursuing a sustainable business transition. More persistent engagement can occur using sustainability-centric software platforms such as that offered by WeSpire, which uses gamification and targeted campaigns to encourage employees to continue being active long after training sessions have ended.
Other organizations connect individual purpose with organizational impact through the use of employee resource groups, or ERGs. These voluntary groups are usually led and participated in by employees who share a characteristic, whether it's gender, ethnicity, religious affiliation, lifestyle or interest. These can be particularly effective in raising awareness around social and environmental issues while also acting as listening posts for HR professionals to understand issues of concern and encourage positive actions by their employees.
In a bleak labor market, sustainability shines through
Perhaps the most important priority for CHROs is talent attraction and retention. According to Deloitte’s 2021 Millennial and Gen Z Survey, these younger generations want to work for companies that share their values for a purpose beyond profit and in which they feel more empowered to make a difference as part of an organization. Savvy recruiters are leveraging purpose-driven sustainability and DEI knowledge to attract these workers.
As part of an organization’s recruiting pitch, its purpose-driven culture can be reinforced by the benefits it provides, such as a sustainable investment option in employee 401(k) and retirement plans. According to Mercer, only 8 percent of companies offer that today. Even fewer are linking employee bonuses to the achievement of sustainability goals.
Not all such benefits are monetary. Post-pandemic benefits are expanding to accommodate different expectations of the new work environment. PwC announced in September that moving forward, it will allow 40,000 U.S. client services employees the ability to work from anywhere in the continental U.S. Many other companies are treading lightly as they seek to understand what will constitute their new work environment and the impact it will have on the business.
The rise of ESG issues is a clarion call for HR. Investors are looking at more than the bottom line as they consider the environmental and social impacts of an organization. CHROs are in a unique position to drive a strategy that creates opportunities for their greatest resource — their people — to deliver greater performance for their business and positively impact the communities in which they operate.
Key players to watch
AXA Climate School — offers customizable online learning to engage and upskill employees to understand their role in a sustainable transition.
CEO Action for Diversity & Inclusion — is a purpose-driven initiative to rally the business community to advance diversity and inclusion within the workplace.
Just Capital — the stakeholder capital rating and ranking organization found that how a company invests in its employees and supports communities accounts for 41 and 21 percent of its total score, respectively.
Mercer — its annual global talent trends survey highlights the importance of connecting HR and sustainability work.
WeSpire — provides engagement software and campaigns to encourage employees to make a positive impact at work and in their communities.