HR’s Role In An Effective ESG Strategy
According to Talentnet experts, HR can implement the ESG framework and create practical values for the business.
ESG (Environmental, Social & Governance) has become essential to businesses worldwide. According to Edelman, 88% of investors agree that companies that prioritize ESG initiatives represent better opportunities for long-term returns than companies that do not. Especially, the downsizing of enterprises’ production scale in 2022 and recession in 2023 have emphasized sustainability as a crucial part of businesses against all obstacles.
"ESG is a concept to cover the whole company's policies, but small actions can contribute to creating an effective ESG strategy. Understanding the ESG framework, HR now plays an important role in addressing ESG initiatives”, said Ms. Nguyễn Thị Thanh Hương, Deputy CEO of Talentnet. Ms. Hương also suggested three solutions for HR to lead the way with ESG initiatives.
Creating a sense of "belonging"
The environmental factor in the ESG framework is not just about reducing the negative impact on the environment, but also about building the working environment. HR can create a friendly and cohesive working environment by creating a sense of "belonging" - which is the letter B (Belonging) in the popular DEI-B model.
For example, open communication creates an environment where employees are at ease, and even more than that – they feel safe and supported. Companies can create anonymous feedback forums for employees to share their issues as well as solutions to resolve them. When their opinions and feedback are noticed, employees will strengthen attachment among employees and the organization.
The "Social" factor addresses how businesses how a company manages employees’ total well-being. This requires HR to provide benefits that meet all the facets of your employees’ such as family, hobbies, love, etc. rather than just at work.
To meet employees’ expectations and desires, HR can offer employee benefits packages personalized to individual needs. Instead of a one-size-fits-all benefits package applied to all employees.
A real case from PepsiCo Foods Vietnam, they create an app, which allows employees to appreciate their colleagues and also redeem reward points for various activities such as shopping, healthcare, food, movies, etc. for themselves or their family.
"Business ethics and governance includes in the letter “G”. HR can start by creating transparent policies to build trust among employees as in payment and compensation package”, said Ms. Hương.
According to Ms. Hương, businesses should establish and public their payment and compensation package policy, including fixed salaries and other allowances such as subsidies, performance bonuses, support, etc. for each position. Many large businesses in Vietnam have been using salary reports such as the Talentnet-Mercer Total Remuneration Survey Report to refer to salary benchmarking, thereby helping to build fair pay grades and salary ranges. In addition, using a payroll system or payroll outsourcing services also helps businesses improve pay transparency, limit errors or late salary disbursements as well as ensure business ethics.
“Internal factors are important in helping businesses overcome external challenges.ESG is not just a standard for leaders to refer to but also a way to help HR and businesses confidently move forward in 2023," Ms. Huong commented.