Blog post

Embracing Social Sustainability: HR’s Role in Developing Impactful ESG Strategies

In recent years ESG has gone from being a nice-to-have, to a business-critical. And, increasingly, senior HR professionals are expected to promote and drive forward impactful engaging, meaningful ESG strategies.

Surely HR directors and CHROs are well placed to play a pivotal role in enhancing the social element in ESG through strategic policy alignment, promoting employee engagement and creating diversity, equity and inclusion?

This is most certainly the case, but despite the news senior HR professionals are playing a more prominent role in ESG, much remains ‘up for grabs’ with untapped potential yet to be truly utilised as some companies are often said to be guilty of ‘overlooking’ the ‘S’ in ESG.

As several academic papers have recently pointed out, there arguably needs to be more research on the link between HR and ESG, especially when the social factors are much harder to pin down compared to say, the many steps a company can make in its journey to becoming environmentally sustainable or net-zero carbon.

So as ESG continues to rise up the corporate agenda, how do we as CHROs and senior HR professionals monitor and implement the social strategies in particular and how do we proactively measure the effectiveness of our policies?

Let’s explore.


What is ESG and Why is It Important?

ESG stands for Environmental, Social and Governance and it is being increasingly considered high on the agenda for stakeholders when considering potential businesses to invest in. As well as increasing stakeholder transparency by reducing risks and encouraging companies to act responsibly and ethically, it also offers companies the opportunity to focus on important issues and focus on improving their own standards where they deem it is needed.

With ‘S’ standing for ‘social’, this is a unique opportunity for HR leaders to take the reins and help drive people-focused company policies, such as gender equality, diversity, inclusiveness and equity as well as community relations, working conditions, workplace safety, and many more important considerations.

Essentially, the ‘social’ aspect encompasses all aspects of a company’s impact on not only its staff members but also the wider community. Therefore the ‘social’ aspect of ESG is of so much importance because it comes at a time when society as a whole places such importance on companies that serve a social, ethical and community-driven focus. It is also hoped this will help not only attract exciting new talent to apply for job opportunities but also retain them as the social aspect is an instrumental driving force for many who wish to work and remain at a conscious-led company.

Upcoming Free Webinar – Preparing for New Reporting Requirments on Sustainability

On our upcoming webinar, we are delighted to host Darragh Gaffney, Director of Growth and Sustainability at the IRDG, to explore the new legislation and reporting requirements on ESG for business in Ireland.

Preparing For New Reporting Requirements on Sustainability WebinarRegister Now


The Growing Emphasis on Social Metrics

With such a focus on ESG, the way companies record and relay such data is correspondingly becoming even more important as stakeholders seek to protect their investments and more stringent EU directives come into force.

Speaking on Newstalk last year, Conor Holland, Head of ESG Reporting and Assurance at KPMG explained the importance of tracking and reporting, stating:

“One of the key consequences with the CSRD, is that it looks for a whole range of data across various aspects, whether it’s climate change, pollution, biodiversity, and social factors like your own workforce…There’s a quite significant consequence in identifying what data will you have to gather and ensuring you’re in a position to report on that in a relatively short time frame.”

Measurement serves as the foundation of ESG reporting, enabling companies to identify what metrics they track, understand their data, extract actionable insights, and identify gaps. These steps are crucial for making informed decisions that align with both company values and stakeholder expectations.

Holland advises, “Before making any substantial business changes, carry out a materiality analysis to identify the topics material to your business. This helps to ensure you can integrate ESG in a meaningful way.”

Hands joined with nature background - ESG

Focusing on the ‘social’ aspect of ESG, companies should pay attention to their relationships with people and the impact of their policies on areas like ethics, justice, and wellbeing. Important metrics to consider include hiring practices, employee retention rates, training opportunities, and performance management systems. Regularly reviewing these areas can provide critical insights into the company’s social footprint.

For ESG reporting to be effective, it should be conducted at least annually, though more frequent updates may be beneficial in certain areas. For example, human resources departments might benefit from quarterly reviews to make timely adjustments that reflect current data. This frequency ensures that the data remains actionable and that the company can promptly respond to new challenges and opportunities.

Dave Duffy penned a piece recently in which he championed the importance of EDI and employment engagement. Duffy writes:

“Equality, diversity and inclusion conversations are constantly evolving and have gained significant prominence in the public’s consciousness. From the suffragettes to the Civil Rights Act and the rise of the Black Lives Matter movement – EDI has provided the foundation for many of the civil liberties we enjoy today.”

Duffy refers to the #MeToo movement which sadly highlights the fact that issues of sexual harassment and assault are still “all too common in the workplace” which Duffy argues has led, justifiably, to renewed calls for increased attention to office culture and the need for accountability.

This comes as one recent study by Robert Bailey, Jaclyn Yeo, Lingjun Jiang and Angela Ferguson found that top employers, as measured by employee satisfaction and attractiveness to talent, have significantly higher ESG scores than their peers. This pattern is partly due to these employers’ relatively strong environmental performance, though the trend is also evident across specific social and governance issues. This finding suggests that ESG performance can help companies both improve employee satisfaction and attract prospective employees.

Book A Free Demo

Discover how HRLocker empowers organisations to embrace and drive positive change.


Strategic HR Alignment with ESG Goals

In terms of external demands, Stangis says that both private and public companies are being asked for their position more and more on important policies such as diversity, equity and inclusion.

“How are you making sure your employees feel welcome and can bring their full selves to work? Prospective new talent will ask this as well as communities ensuring your company is going to be a good corporate citizen and give back to the community. In terms of risk, are you managing your resources (energy, water and waste), and do you have any issues in your supply chain that can harm you from a reputational standpoint and hurt a stakeholder’s investment?” Stangis

It is important to consider what story we want to tell as senior HR leaders, and what are our customers interested in.

HR professionals can help drive meaningful social sustainability by creating and promoting an inclusive workplace culture with a focus on diversity and equity.

HR policies can also help to protect individuals by implementing health and safety programs, including mental health support and facilitating ergonomic workspaces as well as ensuring adherence to important safety protocols.

When it comes to future talent attraction, HR leaders can also demonstrate their organisation’s ESG commitments as displayed through the company culture, recruitment listings, interviews and more to attract similarly value-aligned individuals.


Practical Strategies for HR Professionals

The benefits of using skills-based volunteering as a strategic tool to get employees actively involved in ESG cannot be overstated.

Employee Smiling Outside
Recent research found that when organisations embed volunteering programs that are aligned with strategic and ESG goals, they can reap benefits including a positive impact on skills development, improved performance, enhanced ethical culture and improved talent attraction.

Making sure volunteering programs and goals align with corporate strategy and are strategically driven, drives benefits for both the organisation and the stakeholders.

CHROs should therefore ensure volunteering programs are embedded through development and talent plans, ensuring skills are leveraged for maximum impact and building a culture of learning and innovation – as well as giving back.

Given the perception of CSR activities comes out as more important than the actual activities themselves, CHROs should consider the role of internal communications, and monitoring and responding to employee feedback around CSR.

Patrice Graves wrote in Forbes back in 2022:

“Companies with a diverse workforce see employee performance improve by 12 per cent and intent to stay rise by 20 per cent. By starting with inclusion, HR leaders can recognise the benefit of their diverse workforce while also continuing to create an inclusive environment where everyone feels like they belong.”


Redefining the Role of HR in Advancing Social Sustainability

The role of the HR professional has changed dramatically along with the workforce and economy, and that evolution will continue, argues Susan Milligan in a piece titled ‘HR 2025: 7 Critical Strategies to Prepare for the Future of HR.’

It is certainly clear that senior HR professionals are extremely well placed in their ‘people’ focused and skilled positions to help shape a sustainable future by championing people-centric practices by fostering a workplace where the people in your organisation can truly thrive.
Indeed, this is clearly why organisations are increasingly realising the important role HR plays in ESG strategy.

Social Sustainability Impact on Organisational Growth and Societal Benefits

As stakeholders are increasingly seeking to ensure the businesses they are investing in are also fulfilling the ‘social’ aspect of ESG when it comes to their talented staff members, HR managers are playing a pivotal role in ensuring that companies are appreciating their staff by attracting new talent, retaining talented employees, investing in appropriate and adequate training and upskilling opportunities, as well as instilling a culture of equity, diversity and inclusion – to name just a few.

This is a truly unique and important role that HR leaders continue to drive forward as ESG continues to rise up the agenda for stakeholders and staff seeking roles at organisations which reflect high morals and esteemed social responsibility.

With recent data revealing top employers’ ESG scores are 14 per cent higher than the global average, the positive connection between employee satisfaction and employer ESG is clear to see.

As Patrice Graves writes in Forbes: “There’s no question. It’s now up to HR leaders and teams to play a greater role in addressing ESG because these initiatives matter to all stakeholders—investors, boards of directors, employees, customers and communities alike.”

Embracing Social Sustainability: HR’s Role in Developing Impactful ESG Strategies was last modified: April 12th, 2024 by Beatriz Araujo

Enquire about using HRLocker in your organisation in 2024

Book a Demo

Join our Newsletter

Receive blog posts, updates & keep up to date with HRLocker!

Frequently Asked Questions about Social Sustainability and ESG Strategies

ESG stands for Environmental, Social, and Governance and it helps investors, stakeholders, and analysts gauge a company’s sustainability and ethical impact.

ESG evaluates a company’s performance in three key areas:

Environmental: Assesses the company’s impact on the environment, including its carbon footprint, energy efficiency, waste management, and adherence to environmental regulations.

Social: Focuses on how the company manages relationships with employees, suppliers, customers, and communities, covering issues such as labour practices, diversity, product safety, and community engagement.

Governance: Evaluates the quality of management and oversight structures, including board diversity, transparency, accountability, and adherence to ethical standards and legal requirements.

Getting your company on board with ESG involves several steps:

1. Educate stakeholders about ESG’s importance.

2. Assess current practices and set goals.

3. Engage internal stakeholders for support.

4. Integrate ESG into business processes.

5. Measure and report progress transparently.

6. Seek partnerships for expertise and collaboration.

7. Continuously improve ESG efforts.

Material ESG issues (MEIs) are business concerns linked to environmental, social, and governance factors that can affect financial performance. Effective ESG practices can help mitigate many associated risks. MEIs encompass topics such as:

  • Corporate governance
  • Access to basic services
  • Bribery and corruption
  • Business ethics
  • Data privacy and security
  • Emissions, effluents, and waste
  • Carbon footprint
  • Impact of products and services
  • Human rights
  • Human resources
  • Land use and biodiversity
  • Occupational health and safety
  • ESG integration in financials
  • Product governance
  • Resilience
  • Resource use

Addressing these MEIs is crucial for companies aiming to enhance sustainability and financial resilience.