Connecting with community: how to lead the ‘S’ in ESG
We explore how HR leaders and teams are taking the ‘Social’ aspect of people strategy beyond the workforce and into the community
Responsible business and the role organisations play within society is by no means a new concept – ‘modern’ CSR was created back in the 1950s – but the pandemic has given it a fresh resonance. What began as a health crisis quickly mutated into an economic crisis, with business leaders coming under immense pressure to protect not only public health and jobs, but also to support their wider communities and a complex system of stakeholders.
ESG (environmental, social and governance) issues now sit firmly in the mainstream, with investors expecting more of organisations when it comes to responsible business practice. Indeed, a recent campaign led by Innocent drinks CEO Douglas Lamont and high street champion Mary Portas even lobbied the Government to amend the Companies’ Act to place all stakeholders on a par with shareholders. This helped bring environmental and social considerations to the fore and removed the option for companies to pursue profits at the expense of workers, communities and nature.
While the ‘E’ and ‘G’ of ESG are well understood, with plentiful resources and noise around improving environmental impact and corporate governance, the ‘S’ tends to be overlooked. The people profession can play a key role in righting this. An organisation’s people are an essential part of the 'S' in ESG and the challenges facing boardrooms and leadership teams today require a deep understanding of the people aspects of business.
But the ‘S’ also relates to the community in which an organisation operates. HR leaders and teams are ideally placed to bring focus to the ‘S’ in ESG, not only through their shaping of the people agenda internally, but also through their role in building thriving and sustainable communities outside of the organisation. Organisations do not exist in a vacuum and being a responsible business means doing good for communities and society more broadly, ensuring the employer is just one part of a healthy ecosystem.
Taking this external outlook and whole-systems approach to good work and responsible business is a critical emerging skill for the people profession. In our recent series of case study interviews with senior HR professionals leading on this agenda, it is clear that the people profession can play a key role in connecting organisations with community.
While many organisations offer volunteering days, the approach that those we interviewed are taking goes far beyond this element of CSR. The people profession has been instrumental in creating a more sophisticated mechanism by which organisations can connect with their communities, through understanding the role that the business plays within broader society.
The HR teams we spoke to have also brought focus and rigour to community activities, by ensuring they are aligned to the purpose and core competencies of the organisation. Take technology giant Siemens for example, where community activities are tightly focused around boosting STEM skills. Or fresh produce grower G’s Fresh, which is actively involved in combatting the scourge of modern slavery that is sadly prevalent in its sector.
Such work is worlds apart from many more traditional approaches to CSR and philanthropy, which can be quite scattergun, with ‘pet’ passion projects allowed to proliferate. While such projects no doubt give those involved a warm fuzzy feeling, a disconnected approach dilutes the value that could be created for both parties through a more focused and defined strategy for community engagement.
Many of the HR leaders we interviewed identified the need for good governance of ESG and community activity. For example, at Microsoft, Employee Resource Groups (ERGs) are empowered to create strategic business plans for their activities, working with HR to deliver them and keep focus. Severn Trent provides clear guidelines around the kinds of projects – people, places or environment – it will fund via its community investment grants, rather than encouraging an applications free-for-all.
Siemens UK & Ireland HR director Valerie Todd sees the people function as critical in creating more structure around community engagement. ‘You can’t have chaos and everybody doing things just because they have a passion for it,’ she says. ‘You have to corral that passion into something effective and impactful.’
Also clear through the companies we profile is the understanding and appetite from the people team to engage with the broader ecosystem of the organisation, rather than focusing their time and efforts solely inwards. Taking this bigger-picture, systems approach means that any community work might end up benefitting the organisation more indirectly, but this should be welcomed as it strengthens the whole ecosystem.
Several of the HR leaders mentioned that prioritising ESG will have a knock-on positive effect for their supply chains: upskilling young people, for instance, will also provide a richer talent pool for their suppliers to fish from. It’s likely your supply chain employs far more people than you ever will, and ensuring your suppliers have the skills they need for sustainable success will only be more welcome in the long run.
As ESG issues continue to be a priority for leaders, investors and organisations, the opportunity is there for the people profession to step up and take the lead on social issues. While this means shaping and leading the people strategy internally – a given for a CPO – it also requires looking beyond the workforce and into the community. As Neil Morrison, Group HR Director at Severn Trent, says: ‘The challenge is going to be for organisations to show their net positive contribution to society, and that needs to be owned by HR.’
Top tips for people professionals wanting to lead the ‘S’ in ESG:
• Think outside of your workforce – how can you work with local communities to benefit society and the local economy?
• What is your organisation good at? Leverage core competencies and make sure external activity is aligned to internal specialisms.
• Align activity with your company purpose.
• Put governance structures in place to ensure focused work with impact. Don’t be led by passion projects.
• Partner with specialist organisations where you need to (for example, via charity partnerships when working with under-represented groups).
• Consider local differences – different communities will have different needs so a tailored approach is likely to be more effective than rolling out a ‘one-size-fits-all’ model.
• Be a whole-systems thinker – building stronger communities benefits everyone so think beyond the immediate gain for you as an employer.