The Power of ESG in the Workplace: an Employment Lawyer’s Guide

With the rise of environmental, social, and governance (ESG) investing, more and more companies are considering how their employment policies align with ESG principles.  And as the world becomes increasingly focused on sustainability and social responsibility, companies are turning to Environmental, Social, and Governance (ESG) initiatives as a way to drive positive change and make a difference in their communities. But what exactly is ESG? And why is it important for companies to consider ESG when drafting employment policies? Here's a quick overview.

What is ESG?

ESG refers to the three pillars of sustainable business practices: environmental sustainability, social responsibility, and good governance. These concepts are intertwined and address a wide range of issues, including environmental stewardship, human rights, labor practices, and anti-corruption efforts. 

It encompasses a company's impact on the environment, its treatment of employees and other stakeholders, and its overall governance practices. When it comes to employment policies, some of the key areas to consider are diversity and inclusion, pay equity and workplace safety.

Why is ESG important?

There are a few reasons why companies should consider ESG when drafting employment policies. First, it's good for business. ESG initiatives can also have a tangible impact on a company's financial performance. Studies have shown that companies with strong ESG practices tend to outperform those without, with lower risk and higher returns for investors.  Additionally, more and more investors are taking ESG into account when making investment decisions. In fact, according to a 2018 study by Morgan Stanley, nearly 60% of institutional investors now consider ESG factors when making investment decisions. Finally, as society becomes increasingly aware of the importance of environmental and social issues, consumers are increasingly likely to buy from and support companies that align with their values.

How can I incorporate ESG into my employment policies?

There are a few different ways to incorporate ESG into your employment policies. One way is to make sure that your policies reflect your commitment to diversity and inclusion. 

This could include ensuring that your hiring practices are fair and inclusive, offering employee resource groups for underrepresented groups, and offering training on unconscious bias. Another way to incorporate ESG into your employment policies is to make sure that your pay practices are equitable. This includes conducting regular pay audits to ensure that there is no gender or racial pay gap at your company, as well as ensuring that employees are paid a living wage. 

Finally, you can incorporate ESG into your employment policies by ensuring that your workplace is safe for all employees. This includes having clear anti-harassment policies in place and providing employees with the necessary resources and training to report any incidents that occur.

 Here are a few examples:

1. Offer flexible and remote work options to reduce carbon emissions from commuting.

2. Implement fair labor practices, such as paying a living wage and providing benefits.

3. Promote diversity, equity, and inclusion in the workplace and in hiring practices.

4. Support local communities through charitable giving and volunteer programs.

Some leading companies are already taking the lead on ESG integration in their employment practices. For example, Patagonia has a strong commitment to environmental sustainability and ethical labor practices, while Salesforce has made DEI a top priority and has implemented numerous initiatives to support this goal. 

So, what are the top tips for considering implementing ESG into employment practices?

1. Start by conducting a thorough review of your company's current policies and practices to identify areas for improvement.

2. Involve employees and stakeholders in the process, as they can provide valuable insights and ideas.

3. Set clear goals and targets for ESG integration, and regularly measure and report on your progress.

4. Make ESG a top priority, and communicate the importance of these initiatives to your employees, stakeholders, and customers.

Conclusion

ESG is an important consideration for all companies—not just those in the business of investing. By taking steps to incorporate ESG into their employment policies, companies can signal their commitment to these important issues while also improving their financial performance and increasing their appeal to consumers.

ESG is not just a trend or a fad - it's a critical component of sustainable business practices and a key factor in driving positive change in the world. By integrating ESG into your employment policies and practices, companies can not only make a positive impact but also improve bottom lines. 

Questions about drafting employment policies or employment training? Moxie Mediation can help. Contact us today to schedule a consultation to discuss incorporating ESG into your employment policies.