At a time when the focus is increasingly shifting from ecological necessities to questions of social sustainability and responsible corporate behavior, HR departments are facing new challenges. How can HR fulfill its role of being an information provider on sustainability matters and at the same time make sustainability a value-creating topic close to the hearts of employees?
Which HR-relevant aspects does ESG encompass - i.e., environmental, social and governance aspects? And can HR go beyond mere compliance with regulations to create real added value for employees and the organization when it comes to ESG?
hkp.com in conversation with Klaus Konrad, Offering Design Director at Effectory, the experts for employee and pulse surveys with specialized offerings in the field of HR and ESG, and Frank Gierschmann, hkp//group Partner in the HR Strategy consulting division. Together, they are organizing a business breakfast series on this important topic, which will start on April 9, 2024 in Munich and will offer helpful practical tips from a company perspective.
Mr. Gierschmann, Mr. Konrad, what are the current challenges for HR in the context of the sustainability debate?
Klaus Konrad: There are many. One particular issue, however, is certainly sustainability reporting. HR departments often find themselves caught between their role as a provider of figures and the desire to promote sustainability as a value-adding topic i.e., to act sustainably and promote sustainable action.
Frank Gierschmann: At the moment, almost all larger organizations are preparing to meet the mandatory reporting requirements of the new ESRS standard. This is a challenge for many HR organizations. They are getting behind and focusing on generating data around topics such as training costs, diversity rates and the gender pay gap. The proactive approach, the drawing of important strategic lines and the implementation of measures based on them are often neglected.
Business Breakfast: From compliance to business impact – ESG im HR Management
June 7, 2024, 08.30 to 11.15 a.m. @ Effectory Office, Amsterdam
Data such as that mentioned is certainly key when looking at human capital management. Apart from legislation and regulation, more and more institutional investors are also demanding information on this. What has been the feedback so far?
Frank Gierschmann: The statements from the relevant institutional investors are very clear: ESG reporting is not sufficient. They are asking how the HR function manages risks in the area of employees (e.g. in the supply chain, employee health) and what active contribution HR makes to corporate development. Providing information on this matter, but also translating it into concrete measures in practice, is a new task for HR.
Klaus Konrad: When looking at the S, the social issues, there is also the problem of measurability. This is not currently possible for the majority of social objectives – the information is subject to individual perception and cultural variance. This makes it difficult to measure and assess. Overall, the topic is characterized by a high degree of uncertainty, which is why people often tend to wait and see instead of actively and strategically tackling these important issues.
Is there a recommended approach that HR can use to support its own company's sustainability efforts?
Frank Gierschmann: Generally speaking, it's about companies recognizing the materiality of HR work and highlighting this. This is also expected by the regulation as part of future ESG reporting. For example, most large corporations recognize the relevance of employee engagement for retaining and attracting employees. They take a targeted approach here and present this professionally both internally and externally.
Klaus Konrad: In ESG concepts that are already successful, we see above all that a strong communication culture in companies is an absolute prerequisite. This includes, in particular, getting employees on board and involved. The topic of sustainability does not leave anyone unaffected. Many people want to commit to a future worth living and do not want to work where sustainability does not play a role. In this respect, companies that proactively tackle ESG challenges can do a lot to motivate, engage and retain employees.
What can this look like in concrete terms?
Klaus Konrad: For example, we have developed a sustainability scale to measure how employees perceive a company's commitment to sustainability. This makes it possible to use a survey to understand which commitment to sustainability is also received by employees - and motivates them.
Frank Gierschmann: The influence of sustainability on employee engagement and employer branding is also an important aspect of our event series. It will be about employees' perception of ESG, what relevance it has and how employees' view of the sustainable orientation of their own organization affects the company performance.
In the end, is it also this tangibility that the topic needs to experience in order to find broad acceptance in companies - that ESG is not just dealt reactively, but proactively?
Klaus Konrad: That is the case. ESG engagement has an impact - both internally and externally. As tedious as the debates about reporting are, the concrete measures are just as valuable.
Frank Gierschmann: We are definitely seeing some HR managers actively seizing the opportunity and understanding how ESG is expanding the role of HR and what a great opportunity it is - especially in terms of the perceived value of the HR function within the company. At the event, we will provide concrete examples of this and discuss them.
Mr. Gierschmann, Mr. Konrad, thank you very much for the interview!
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