In this episode, Chris Taylor examines the relationship between ESG – environmental, social and governance considerations – and HR.
Taking note of an organisation’s ESG factors is now commonplace for the investment community. Today, it’s not enough just to consider financial returns; investors increasingly are concerned a company’s impact on the environment, the structure and make up of the leadership team and really since the pandemic, how businesses interact with their workers.
Simply are organisations doing the right thing and being good ‘corporate’ citizens?
This week’s guest, Emma Burrows, is a partner and head of the Trowers & Hamlins’ employment department and has specialised in employment law for over 30 years. Headquartered in London, Trowers is an international law firm with 160 partners and more than 950 employees.
What is ESG? [1:46]
ESG is a simple matrix of criteria under three broad headings: 1. Environmental, 2. Social and 3. Governance goals that go beyond the usual financial metrics that investors use when deciding to invest in an organisation. Are organisations being good corporate citizens essentially.
Doesn’t ESG interfere with making money? [3:17]
Emma admits there can be at times a conflict between an organisation’s duty to maximise returns for shareholders and their ESG credentials, ESG after all takes investment. But she argues that having a happy workforce in itself helps organisations to make better financial returns.
Isn’t ESG just fairy dust and ‘greenwashing? [4:17]
Emma argues there is evidence of some organisations ‘greenwashing’ – for example, spending more resources on marketing themselves as environmentally friendly than they really are, but she argues investors are wising up to this.
So where does HR come in? [5:36]
Employee voice really drives ESG because most employees want to work for organisations who look after their workers, act responsibly and pay taxes whilst minimising their impact on the environment. Therefore, Emma argues that HR has a key role to play from the very start of the ESG journey.
ESG and the link to Talent [9:32]
Emma explains that ESG is a valuable tool in an organisation’s armoury when it comes to attracting talent. In particular, GenZ and millennial workers will often evaluate an organisation’s ethics and values when job hunting.
Leadership should live ESG values [16.16]
It’s essential that leaders live their ESG values says Emma. As she says there is no point in having statements about diversity if for example the board is entirely male and pale!
ESG and Employment Law [24:26]
Emma believes that legislation to clarify modern employment relationships such as workers in the gig economy is long overdue. She refers to Lord Hendy’s Status of Workers bill, which he discussed with Oven-Ready HR in a previous episode.