In today’s world, firms are being evaluated not only on their bottom line, but also on their environmental, social, and governance (ESG) practices. But what is ESG, and how does it affect your employee benefits strategy? This article will look at the growing relevance of ESG, why it matters for attracting and retaining talent, and how you can use employee benefits to help your organization accomplish its ESG goals.
What is ESG?
ESG (Environmental, Social, and Governance) is a metric for assessing a company’s commitment to achieving a sustainable future. Companies are judged not only on their financial performance, but also on their environmental effect, such as climate change, social issues including diversity, equity, and inclusion, and anti-corruption governance practices. In the workplace, ESG refers to an organization’s commitment to activities such as pollution reduction, retaining a diverse workforce, and providing strong ethical leadership.
Environmental
This section tackles the physical environment’s impact as well as the risk that climate events pose to a firm and its suppliers/partners. Common environmental factors include the following:
- Waste Management
- Biodiversity and ecosystem
- Environmental efficiencies
- Climate change and greenhouse emissions (GHGs)
- Air pollution (non-GHG)
Social
Social considerations refer to how a firm treats its employees, supply chain workers, consumers, community members, and other stakeholders. These variables include fair pay and living wages, diversity, equity, and inclusion initiatives, workplace health and safety standards, and fair customer and supplier treatment. It assesses a company’s social impact within the community in which it works.
Governance
These elements include internal management practices, rules, and controls, regulatory compliance, and risk management.
Why should employers prioritize ESG?
According to the Society for Human Resource Management (SHRM), ESG activities are critical for attracting and maintaining employees, especially younger generations. As Millennials and Generation Z enter the workforce, committing to ESG goals will become increasingly critical in keeping talent since it fits with their priorities. Further study has revealed that these generations dislike working, investing, or purchasing in organizations that they believe are inconsistent with their beliefs; this also applies to companies that use ESG techniques in the workplace.
According to SHRM study, around 41% of US workers believe ESG practices are vital, with 46% of Gen Z and 55% of Millennials emphasizing their significance. A strong ESG commitment, as expressed in employee benefits, can help a company’s brand reputation and attract customers that value sustainability and social responsibility. Additionally, ESG allows socially and ecologically conscientious investors to analyze potential and real investments. These investors are believed to be guided by applicable ESG criteria and a sense of responsible investing (RI). Organisations can attract investors aiming to improve their ESG objectives. This promotes the growth and profitability of a business.
Employee benefits that help accomplish ESG goals
Aligning employee benefits with environmental, social, and governance (ESG) goals results in a win-win situation for both the organization and its employees. Here are some examples of employee benefits that might help organizations prioritize a socially responsible workplace.
Environmental benefits
These are benefits that encourage environmentally sustainable behavior. They include environmental initiatives and public transportation incentives such as electric autos or cycling.
Cycle to work schemes: A cycle to work scheme assists your company in meeting its goals by lowering its carbon footprint.
EV Schemes: An EV wage system allows employees to save thousands of pounds on their automobile costs, making electric vehicles a viable option for many who cannot afford to purchase one. EVs are eco-friendly automobiles that help to reduce emissions and promote clean energy initiatives.
Social benefits
These perks prioritize an employee’s well-being. A complete benefits package that includes programs to promote health and wellbeing can have a good societal impact. Examples of these advantages include:
Assisted Reproduction: Employees can use assisted reproduction benefits, often known as fertility programs, to help them manage their fertility journey while concurrently working. These benefits can help employees pay for reproductive treatments, egg freezing, counseling, and other expenses.
Gender reassignment entails offering support and prolonged paid leave to transgender employees who want to undergo gender reassignment surgery. This employment perk allows a corporation to accommodate employees who are transitioning between genders. This treatment may involve counseling, hormone therapy, egg and sperm storage, gender reassignment surgery, or any other medication that allows each team member to be their actual selves. Other types of social benefits include occupational pensions and financial wellness initiatives.
Governance benefits
Governance perks are often defined as employee benefits and initiatives that encourage strong corporate governance practices within a business. These benefits are intended to promote openness, accountability, and ethical decision-making processes, as well as to develop an integrity and compliance culture. This includes diversity and mentorship programs, which contribute to a more equal and courteous workplace environment.
Like other environmental, social and corporate governance (ESG) metrics, the United Nations Population Fund (UNFPA) the sexual and reproductive health agency of the United Nations – had a a mission to deliver a world where every pregnancy is wanted, every childbirth is safe and every young person’s potential is fulfilled. UNFPA promotes gender equality and empowers women, girls and young people to take control of their bodies and their futures. UNFPA is working with partners in more than 150 countries to provide access to a wide range of sexual and reproductive health services. To advance the rights and health of women and girls, UNFPA is working towards three transformative results: ending unmet need for family planning, ending preventable maternal deaths and ending gender-based violence and harmful practices.
UNFPA works in partnership with the business sector to significantly improve sexual and reproductive health on a global scale. Through this partnership, creative and sustainable programs that enhance environmental, social, and governance (ESG) standards, support corporate social responsibility (CSR), and advance inclusivity across diversity, equality, and inclusion teams are fostered. The health of women workers is undergoing a revolutionary change as a result of UNFPA’s workplace initiatives in collaboration with the private sector. Additionally, workplace environments offer a chance to interact with decision-makers with SRHR treatment and promotion initiatives.
Prioritizing employee sexual and reproductive health can improve morale, decrease absenteeism and reduce employee turnover.
Financial support for fertility treatments, surrogacy, adoption and egg freezing can expand women’s choices and help them thrive in the workplace. Expanded paid parental leave can attract younger workers, both female and male. Private spaces for breastfeeding, free or subsidized menstrual products, and other similar initiatives can create a supportive workplace for everyone.
Amongst the 6 key focus areas of SRHR that companies can make impact on their workforce is the Comprehensive family planning, a holistic approach to family planning and formation. It encompasses family planning services, a variety of contraceptive methods, fertility treatments, adoption, fostering and surrogacy. UNFPA encourages businesses to adapt them for their own contexts and share their progress through their annual ESG reporting.
Conclusion
ESG is having a huge impact on how employee benefits are developed and delivered. Companies are increasingly providing rewards to encourage sustainability, social responsibility, and ethical business practices. This is a favorable trend that is likely to continue in the years ahead. Companies that match their employee perks with their ESG goals can create a more appealing environment for employees while also improving their brand reputation.