Employees are the key to unlocking organisations’ ESG goals, according to research from consulting firm Mercer.
Its study into environmental, social and governance (ESG) priorities found that employee activism is a key driver for achieving goals in these areas, with 86% of HR directors believing staff to have an influential role.
The findings follow another survey published in The Times in January, which found that four in 10 believe ESG change lies with employees rather than executives or investors.
Customers are the main influencer for integrating sustainability into corporate activities, Mercer found: 93% of HR directors in the UK thought this was the case, compared to 87% across Europe.
More than three-quarters (77%) felt shareholders had a significant influence on ESG activities, and 64% felt politics was driving more investment in this area.
But while the majority of UK HR directors consider ESG to be a top priority, just 70% report it to be part of the company’s HR strategy. Within the pillars of ESG, 96% felt environmental issues were a priority, and 91% social issues.
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Only just over four in 10 UK organisations currently link ESG achievements to long and short-term incentives, according to Mercer. This compares to 50% of organisations in Europe.
Those that are rewarding executives according to ESG targets tend to focus on longer-term (18%) incentives versus shorter-term rewards (11%) – a diversion from the same study in 2020 which found that short-term incentives were preferred.
“While ESG may be on the agenda for many executive boards, identifying appropriate leaders within organisations for specific operational elements can be a challenge,” said David Wreford, a partner at Mercer.
“There can be many internal and external ESG touch points across an organisation and recognising where particular elements have a natural ‘home’ can often be a struggle.
“This can result in ESG inertia, where an organisation is unable to identify and fully commit leaders to achieve its ESG goals.”
Wreford added that HR should break down sustainability into “manageable individual elements” that would improve the employee experience and drive them to be more active in this area.
In addition, people sustainability must be thought of holistically beyond the company‘s own employees and be anchored in the company‘s everyday life,” he said.
Mercer’s survey found that a high proportion of organisations are raising employment standards as part of their commitment to sustainability.
Ninety-five of UK HR directors it polled said they have a responsibility to pay all employees the living wage, for example, while 91% extended this to an adequate pension scheme.
Almost nine in 10 (87%) saw diversity and inclusion as a priority within their EDI goals, higher than Europe as a whole at 80%. Monitoring employment standards in the supply chain also ranked highly, with 53% of UK companies reporting this as a priority, compared to just a third of HR directors in EU companies.
