ESG

The importance of ESG has intensified in the past couple of years. ESG is not only about environmental impact; from an HR point of view it includes equal pay, salary transparency, executive pay and diversity and inclusion.

Our discussions revealed that some organisations cited ESG as a top priority, some had ESG strategies which were in their infancy, and others were yet to properly engage with the matter. All attendees recognised the importance of addressing ESG and it was felt that developing an ESG plan was no longer an additional ‘extra’, rather a business necessity.

Participants agreed that ESG is an overall business responsibility. Some companies have designated roles or an ESG committee to devise and drive their ESG agendas. Others have split their ESG objectives into parts and allocated responsibility to the most appropriate existing department. Smaller companies are often still addressing ESG on a more ad hoc basis. Some organisations have set up environmental committees which are comprised of volunteers that they have identified as being passionate about climate change and other related issues. Feedback was that new employees tended to be more engaged with ESG initiatives.

Similarly, in the legal profession, ESG is at the top of the list of priorities when it comes to recruiting new lawyers, particularly junior lawyers. They want to know what our ESG strategies are, how serious we are about addressing inequalities that exist within our society, and what we have achieved within our organisation. Participants agreed that ESG matters are becoming of more interest to candidates.

In addition to interest from candidates, many companies are also experiencing suppliers, customers, investors and regulators asking questions about their ESG impact, particularly in respect of sustainability. This has led to a need for ESG reporting to “have teeth”. Simply publishing statistics will no longer suffice. ESG initiatives need to be measured against objectives so that businesses remain accountable. To this end, organisations are joining alliances whereby they commit to certain targets, often with the results being publicly available. It was noted that lack of action on ESG matters can impact both business opportunities and reputation.

Discussions around the social aspect of ESG can be split into two parts; corporate social responsibility and being a responsible and inclusive employer (the latter of which involved dialogue around diversity and inclusion, pay and improvement strategies for employers).

Corporate social responsibility initiatives are well established in most organisations, mainly involving charity work and community funds. Whilst such programmes were paused over lockdown, they are back with momentum and oversubscribed from staff wishing to participate. Organisations felt that they could not rest on their laurels in this regard as staff expectation is enormous. 

From the responsible and inclusive employer perspective, several participants had social mobility initiatives, offering individuals work experience and supporting students from underprivileged backgrounds. Sometimes these projects were staff-led, sometimes they were employer-led. It was noted that the success of such schemes, including mentoring schemes, often requires staff participation. We  also have a contextual recruitment system to allow us to understand graduate candidates’ achievements and experience within their socio-economic context.

Salary transparency is gaining traction. It was described by one participant as a regular battle, with staff becoming more assertive about their expectations. Most attendees felt that in theory, it was the right thing to do, but that there were practical barriers to its implementation. When one organisation published job adverts with salary information, this caused tension with existing employees. It was agreed that businesses need to have their internal infrastructure organised before they consider salary transparency further, including reviewing their gender and ethnicity pay gaps. Despite pressure on employers, there is presently a reluctance to embrace salary transparency.

Almost all participants had diversity and inclusion initiatives, including for mental health, LGBTQ+ and wellbeing. Diversity and inclusion networks were seen as a necessity to help staff thrive, aiming to create and promote a culture where everyone can be themselves at work. Participants reported candidates being put off by the lack of diversity in some organisations. The benefits that a diverse workforce can bring is often acknowledged but seeing the issues that a lack of diversity can bring in practice was a “wake up call for management”. Hot topics included neurodiversity and menopause.

Neurodiversity covers a range of individuals, including those with autism, ADHD, dyslexia, dyscalculia and dyspraxia. It is estimated that 15% to 20% of the population is neurodivergent. Whilst participants were used to making reasonable adjustments for neurodiverse employees, it was identified that there is a need to move from being reactive to proactive when it comes to neurodiversity in the workplace. Some employers had trained HR on neurodiversity but very few employers have neurodiversity-specific initiatives to attract such candidates.

Recognising that the traditional interview can provide barriers for neurodivergent individuals, we have engaged specialised services to move to a more inclusive behavioural based approach to candidate selection, ensuring the method used has been tested on a neurodiverse control group and we expect that this will become more commonplace.

Earlier this year, a new industry forum was launched to support neurodiverse employees in the workplace and, more recently, Salvensen Mindroom Centre launched its Neuroinclusion at Work programme, backed by the Scottish Government. Burness Paull is excited to be one of the first partners for this programme. However, more needs to be done to attract such candidates, recognising that if businesses are poised to support neurodiversity, they’ll be able reap the benefits that a diverse workforce brings.

Numerous studies have shown that neurodivergent workers can bring increased productivity, strength in data analytics, and innovation to name a few. To be truly inclusive, there remains a need to challenge the perceived norm and ensure that neurodivergent individuals are welcomed and supported in the workplace. Like addressing menopause in the workplace, fostering an open and understanding culture is crucial so that both candidates and employees feel comfortable disclosing that they are neurodiverse without fear of repercussions.

Businesses are also continuing to work on education and support around menopause in the workplace. It was highlighted that some organisations found that discussion around menopause was not welcomed by all employees, and a particular difficulty was encountered when a recipient of an awareness raising message about menopause was not based in the UK, perhaps indicating that the UK has been at the vanguard of normalising the menopause. It is still viewed as a taboo topic in the workplace by some. Interestingly, the government recently confirmed that menopause will not be made a protected characteristic under the Equality Act.

As it stands, clarity from developing case law will be crucial to raising awareness of unlawful treatment and setting precedent. What is clear, and what the government recognises too, is that there is a still a real need for workplace support and education around the menopause. Included as one of the government’s recommendations is a government-backed, employer-led campaign. However, the fact remains that productivity and talent are being lost because of lack of understanding and support. Businesses are losing individuals who should be in senior positions, bringing insightful and diverse views at board level and helping to close the gender pay gap.

The breadth and depth of ESG can be daunting, particularly for organisations yet to embark on a formal ESG journey. Being able to demonstrate that your organisation meets high standards of social and environmental performance is becoming a business imperative, and now is the time to establish or refocus your ESG initiatives.

If you have not already done so, a good starting point would be to sign up to an alliance which assesses your organisation’s ESG credentials. It is no longer about being accountable to just shareholders, but rather all stakeholders. Company ethics often contribute to a candidate’s choice of employer.

Ideally, ESG should be embedded into every aspect of your business, including tailoring staff contracts, job descriptions, executive pay and professional development plans to ensure your ESG goals are met.

The role that D&I initiatives play in an organisation’s success should not be underestimated. We anticipate that salary transparency, menopause and neurodiversity will remain hot topics. Not only is D&I fundamental to a business’ ESG agenda, but investment and strong commitment in this area are required to be a standout employer of choice.