Generational shifts mean ESG is becoming more important to the sustainability of an organisation.
According to Mercer’s Global Talent Trends 2020-2021, business survival will, to a large extent, depend on how companies embed environmental, social and governance (ESG) practices in business models.
In an HR Indaba Online Impact Session, brought to you in partnership with Mercer, Mercer SA CEO Tamara Parker, Exxaro executive head of HR Vanisha Balgobind and Alexander Forbes head of ESG resources Premal Ranchod explored why it’s important for organisations to build ESG goals in their broader people agenda.
“The last year really showed us the importance of being future-fit and change-agile. We don’t know where the next disruptive force will come from, but we need to focus on being sustainable,” Tamara said.
She explained that organisations that score well on ESG also perform better in attracting and retaining better talent. “Seventy-three percent of South Africa’s population are millennials or Gen Z, who are looking for a brighter future. This generational shift means ESG is becoming more important to organisations.”
Some of the key discussions that are starting to shape the HR agenda at board level are around how companies can incorporate ESG into their strategic objectives and measures. Vanisha said that Exxaro looks at its incentive schemes and how to measure ESG as part of the company’s sustainable business impact as an employee offering. “The journey of ESG is a long-term incentive. It has to have a sustainable impact and leave behind sustainable legacies in our organisations,” she said. “Organisations need to become resilient in how they manage ESG.”
Vanisha explained that, along with affecting incentive schemes, ESG also affects the diversity and inclusion initiatives in organisations, as well as employee wellbeing. “HR needs to think about sustaining employee wellbeing from a social impact perspective, which extrapolates into communities.”
Premal said that, with people being the social element within ESG, as well as the most valuable asset for organisations, this responsibility falls in the HR professionals’ courts.
He added that ESG is an investment consideration. “Climate risks and water sustainability have an impact on the planet’s survival. Social factors, like diversity and the fight against gender-based violence, have an impact on our people. And governance impacts our accountability,” he said. “The youth today feel connected to these issues, because they are long-term issues.”
Tamara concluded that an organisation’s sustainability is tied to its ability to look after the world’s sustainability.