Effective HR is the moral compass for sustainability

By Katreena Pillejera, Country Manager — Philippines, GRI

Now, more than ever before, companies have to get their human resource management (HRM) right in order to be successful. During the pandemic we have seen a swath of research and reports that highlight the need for more equitable and inclusive work policies, transforming how employers approach issues such as flexible working and employee wellbeing.

The diminishment of the COVID-19 crisis will not see these changes reverse; indeed, failing to align with HRM expectations of staff will likely impact on future business growth.

In many societies, women are expected to take on the burden of unpaid care and domestic work — while work-from-home mandates, lockdowns and furloughs have disproportionately affected women. A recent study by McKinsey revealed that, while women make up 39% of global employment, they accounted for 54% of pandemic-related job losses.

In the context of these pressing issues, Global Reporting Initiative held an online session in January to discuss the critical role of HRM in ensuring that the ‘social’ in ESG is given more attention. Part of the Expert Series on Sustainable Business Leadership, it included contributions from HR experts in the Southeast Asia region.

Aligning sustainability values and vision

As Maya Juwita, Executive Director of the Indonesia Business Coalition for Women Empowerment explained: “HR is strategically placed to create a culture of sustainability in any organization, and HR professionals should see their roles beyond the traditional role of personnel and administration. The challenge is to ensure employees are aligned with the vision and values of the organization, while also prioritizing how to enhance the quality of life of the workforce”.

This reflects a study by Future Learn: that HRM can be the company’s guiding light towards sustainable business, by ensuring every hire is compatible with the organization’s mission and vision. By extension, it underlines a continuing HRM paradigm shift, from being an extension of shareholder value creation to one that values employees as key stakeholders, with a responsibility to respond to social and environmental concerns. The multi-stakeholder ethos also lies at the heart of how companies demonstrate accountability for their impacts through the GRI Standards.

An equal footing for the ‘S’ in ESG

Elaine Cohen, Managing Director of the sustainability consultancy Beyond Business, emphasized that HR needs to “wake up” to corporate social responsibility. She advises HR departments to catch up quickly to ensure their workforce is equipped with the right values, skills and knowledge to address the sustainability issues confronting the organization.

This position is underlined by recent Harvard Law School research that concluded: “while companies have made significant progress in disclosure on their environmental impact and governance standards, the same cannot be said of social impact and performance”.

In contrast, the pandemic has forced many corporations to recalibrate their focus to the wellbeing of its people and to society.

A lack of understanding of social metrics is reflected by pressure from key stakeholders, such as investors, asking for more information. The 2019 Global ESG Survey by BNP Paribas found a lack of consensus by companies on what constitutes the ‘S’, which makes it harder to incorporate social factors into investment strategies compared to the ‘E’ and ‘G’.

HR policies that contribute to the common good

While not always easily quantifiable, HR policies have an important role in advancing sustainable development, including how companies support the SDGs. For example, choosing to offer a living wage instead of minimum wage is a significant way for companies to demonstrate how they are contributing to the reduction of poverty.

The pandemic has confirmed that human capital is the most valuable resource of any organization, while putting the spotlight on where HRM systems fall short. As research in the LBS Journal of Management & Research concluded, employers need to have a sustainable approach to talent management — with HR systems that are “designed and developed to foster the sustainability of the business”.

Yet how do you hire people that are the ‘right fit’ for a sustainability focused company? Thomas Ng believes that, above all else, look for those with the right attitude as skills can be learned. Maya Juwita agreed, pointing out that HR professionals should look for open-mindedness and a willingness to learn. On the flipside, Elaine Cohen reminded us of the responsibility of HR leaders to be better listeners and lead by example.

The role of transparency

A commitment to reporting is crucial to assess HR information and determine how the company is approaching both sustainability and HR performance. Three ways in which the GRI Standards, the world’s most widely used for sustainability reporting, enable this include:

1. Effective evaluation — show to what extent the company has effective and sustainability-focused HR policies in place, from employee remuneration to supplier sourcing

2. Express commitment — use measurable indicators to set clear targets for HRM improvement

3. Capture qualitative elements — communicate how impacts are mitigated and on how targets will be met

As the pandemic continues to underline companies seeking to be forward-looking, that care for their workforce and look to be an employer of choice, understand that they must get HRM right. Diversity and inclusion policies, a commitment to the living wage, transparency on social and environmental impacts — these are all examples of what businesses must commit to be sustainable, and successful, in the long term.

ABOUT THE AUTHOR

Ma. Katreena Pillejera joined GRI in 2019, initially in the program implementation team before being appointed Country Manger for the Philippines in 2021. Prior to GRI, she worked as a Sustainability Manager for Business for Sustainable Development. With a Masters in Energy Engineering (University of the Philippines), she is a licensed chemical engineer and has a strong grounding in environmental and energy management.

Katreena is currently studying a Masters in Public Management — Energy Transitions (Ateneo School of Government). On a voluntary basis she is also a Board Member of the Reboot Renewable Energy Transition Institute and the Climate and Energy Literacy Director.

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GRI

GRI is the independent international organization that helps businesses and other organizations communicate and understand their sustainability impacts.