Companies of all sizes are engaged in an effort to make Environmental, Social, and Governance (ESG) factors a part of their businesses in both vision and practice. ESG initiatives vary widely, from reducing carbon emissions to ensuring equal representation in board makeup to funding anti-corruption initiatives in developing countries. Whether your business has committed to Global Reporting Initiative (GRI) or Sustainability Accounting Standards Board (SASB) standards or identified other frameworks or standards for measuring or reporting your ESG success, one common element in nearly every ESG factor and goal is the vital role that the company’s employees play.
Employee involvement in a company’s ESG assessment and goal implementation is critical because:
- Employees are the hands and feet of accomplishing ESG goals in practice; and
- Employees are the group of stakeholders most likely to hold a company accountable if its ESG claims in public are not lived out in the company’s private work.
Thus, the impact of personnel policies and practices extend far beyond the “S” portion of ESG. Companies should consider paying close attention to how policies and practices support all of the company’s chosen ESG goals. Husch Blackwell’s Labor and Employment team is prepared to help you assess existing policies and practice in conjunction with your specific ESG goals.
To begin, here are five policies and practices to consider that may support ESG priorities for many companies:
- Provide implicit bias training to all recruiting personnel and hiring managers.
The gatekeepers to employment at your company should be equipped with the knowledge and skills to combat bias in hiring—both explicit and implicit. Providing required implicit bias training to recruiting personnel and management involved in the hiring process is a simple way to back your company’s commitment to diversity, equity, and inclusion. There are many steps that your company can take to support DE&I efforts, and this one may not only result in a more diverse workforce, but also communicates the dedication to intentional diversity from the beginning of recruitment.
- Offer clean environment incentives to employees at all levels.
While companies should consider addressing corporate level environmental impact, they can also partner with employees to incentivize smaller-scale environmentally friendly decisions like carpooling to in-person work or, where appropriate, choosing to attend a virtual conference, rather than flying to an in-person location. While tying ESG incentives to executive compensation can generate more headlines, companies of any size can consider perks for environmentally conscious conduct for all levels of employees.
- Build in room for relief from strict attendance policies.
Many personnel policies include strict attendance rules, particularly for shift-work employees. Most businesses cannot simply remove these policies, but companies committed to incorporating ESG considerations into personnel practices should ensure that attendance policies build in an opportunity for exceptions based on real world problems. A “three strikes” late attendance policy that results in termination of an otherwise reliable single parent based on one week of multiple instances of car trouble and/or late babysitters may not fit into the stated commitment of your company to supporting its workers. Companies should consider taking a look at who administrates these policies to ensure there is a way for manager discretion to take into account appropriate situations.
- Refresh how decision-makers think about wages.
If minimum wage and legal compliance with other wage and hour laws is the standard for your company right now, consider setting a higher threshold that aligns with your ESG goals. Determining what constitutes a “living wage” or “fair wage” for the relevant geography may result in changes to the compensation floor and opportunities for growth (providing it also meets the law’s requirements, of course). Make a point of evaluating whether your pay structure for employees at all levels actually reflects what leaders are saying about the value of the company.
- Consider eliminating Nondisclosure Agreements as a condition of employment and/or as part of a standard separation package.
Many companies have a standard practice of requiring employees to execute confidentiality agreements, either as a condition of employment or as part of a separation or severance package. Confidentiality obligations that relate narrowly to a company’s trade secrets or proprietary information are generally unobjectionable, but broader covenants that could be perceived to “cover up” illegal conduct or wrongdoing by the company carry new risk. An increasing number of jurisdictions are prohibiting these clauses, and even where they are permitted by law, a company should consider the reputational and employee-relations consequences of continuing to require these as a matter of course.
Contact us
If you have further questions or would like assistance in assessing existing policies and practice in conjunction with your specific ESG goals, please contact Erik Eisenmann, Larissa Whittingham, or another member of Husch Blackwell’s ESG Strategy & Compliance Team.