Are sustainability and human capital management so very different?

Having recently moved into the world of sustainability after 20-plus years in HR, the similarities between the two fields are striking.

Both struggle with terminology. The evolution from personnel, through human resources to human capital (HC) management – with the implied change in philosophy – is well documented, if not always well understood.

So, too, in my new role. I’m often asked what sustainability is, why it’s important, and how it’s different to corporate social responsibility (CSR), and whether, like the HR debate, changing terms is just a case of the emperor’s new clothes.

Building a sustainable business (‘sustainability’) is taking into account economic impact, and environmental and social considerations. This is different to CSR, which is characterised by ad hoc bolt-on community programmes and philanthropy, rather than the economic contribution of the business.

Benefits for business

So what is the business case for sustainability? We live in a rapidly changing world posing big risks – demographic changes, global warming and poverty, to name just a few. Depressing stuff. But happily, what’s good for society is good for business too, and any company’s long-term financial performance relies on sound stewardship of the social and environmental conditions for economic growth. Governments won’t take care of them, so if companies don’t make a positive and lasting contribution on these fronts, they won’t thrive long term.

Climate change is having a profound effect: drought, floods and desertification are all affecting water supply and food production, and, in turn, economic growth. As a minimum, companies have to reduce the environmental impact of their operations through, say, reducing water and energy consumption, and influencing customers and suppliers to do likewise. Not only does this save resources (and company costs), but there are big commercial opportunities to be grasped. Sustainable, renewable technologies are developing all the time, and the developers and financiers of such technologies have a golden opportunity to prosper while benefiting society.

Turning to society issues, one of our business goals is to educate a million people globally about HIV/Aids, including employees and customers – not just to be a ‘force for good’, but to maintain a healthy and stable workforce wherever we operate around the world.

The second parallel to HR is the move from well-intentioned interventions with unclear outcomes, to measuring their impact.

HR’s role in sustainability?

Sustainability requires change management – not a skillset prevalent in the field. Reducing the impact of a company’s operations, for example, is about motivating employees to change behaviours – switching off equipment, reducing resource consumption etc.

Sustainability is one of the top drivers of employer brand and reputation. And half of our graduates cited our approach as a key attraction. With fierce competition for the best talent, HR has to identify what employees really want and shape the approach to sustainability. We’re building on this by giving all employees an extra two days’ leave to volunteer in their communities using their core skills, and one of our senior executives is about to spend time with a major charity advising on their strategy. HR needs to be involved in shaping such initiatives so that employees have rich learning and development experiences, as well as ‘doing good’.

Finally, good management of all stakeholders – such as socially responsible investors – and reputation management are critical. The interest in approaches to human rights is high, and HR has to help articulate the organisation’s approach in a meaningful way and track how it’s doing on its commitments.

This brings us full circle, back to human capital management and measurement – identifying the important issues for company success and measuring and tracking them.