Environmental, Social, and Governance (ESG) factors have gained significant importance in the corporate world in recent years. Increasingly, organizations are recognizing the need to integrate ESG initiatives into their strategies to drive sustainable growth, mitigate risks, and meet stakeholder expectations.

While ESG strategies have typically been associated with environmental and governance issues, the social aspect is equally important. This trend has placed human resources (HR) departments at the forefront of communicating employees’ perspectives on sustainability to employers and vice versa.

Why is ESG important to HR?

The social component of ESG is naturally linked to the role of HR and has an influence on the employee experience. Key areas of focus for HR include but are not limited to;


  • Promotion of Diversity, Equity, Inclusion and Belonging for the organization to be a true reflection of society.
  • Creation of a culture in which employees are treated in a fair and equal manner.
  • Ensuring that the work environment adheres to safety standards and promotes employee well- being.
  • Psychological safety for employees in their roles and helping them understand their long-term prospects with the organization.

In particular, Generation Z are increasingly seeking employers that share their ideals of being inclusive and responsible. Being a sustainable organization now has a competitive advantage over others when it comes to talent management of current and future employees.

Role of HR in shaping and implementing effective ESG strategies.

The Human Resources (HR) department plays a critical role in making sure that ESG principles are integrated throughout an organization by;

Aligning Organizational Values with ESG Principles

HR serves as a strategic partner in driving organizational change and ensuring that ESG principles align with the company’s core values. Through collaboration with the executive leadership and the Advisory Board, HR can embed ESG considerations into the company’s mission, vision, and overall culture.

This alignment helps create a sense of shared purpose and ownership among employees, leading to increased engagement and commitment to ESG initiatives.

Talent Management and Diversity & Inclusion

A critical role of HR in the context of ESG is talent management. Talent Acquisition, development and retention of a diverse and inclusive workforce is crucial for sustainable business success. HR plays a pivotal role in implementing policies that foster diversity, equity, inclusion and belonging (DEIB) within the organization.

Diverse teams are more innovative, adaptable, and better equipped to address the complex challenges associated with ESG-related matters. (Previous insights on DEIB were shared here)

Employee Engagement and Training

HR practitioners take the lead in fostering employee engagement and driving change across the organization. Through internal communication initiatives and training, HR can raise awareness on ESG priorities and how employees can get involved in supporting such initiatives.

Engaged employees are more likely to embrace sustainability initiatives and actively contribute to achieving the organization’s ESG goals.

Health, Safety, and Well-being

The “S” in ESG places emphasis on the value of social factors, including employee health, safety, and well-being. HR is responsible for designing and implementing comprehensive health and safety programs to ensure employees work in safe environments and have access to wellness resources.

By prioritizing employee well-being, organizations can enhance productivity, reduce absenteeism, improve on work life balance and attract top talent.

Responsible Compensation and Benefits

HR practitioners can also contribute to ESG strategies by implementing transparent compensation and benefits practices. This includes fair and equitable pay structures regardless of gender, transparent performance evaluation systems, and appropriate reward mechanisms in line with ESG related metrics.

Linking compensation with ESG performance reinforces the organization’s commitment to sustainability and encourages employees to prioritize responsible practices.

Ethical Supply Chain Management

ESG strategies extend beyond the organization itself and encompass the entire supply chain. HR can collaborate with supply chain and procurement teams to integrate ESG criteria into supplier selection and evaluation processes ensuring suppliers are aligned to company values. This boosts responsible sourcing and fosters sustainable practices throughout the supply chain.

ESG Reporting and Compliance

HR plays a vital role in supporting ESG reporting and compliance efforts. Working in collaboration with finance, legal, and sustainability teams, HR can provide relevant workforce data, including employee demographics, gender pay gap, employee wellness initiatives, training records, and diversity metrics.

Accountability on key ESG factors is becoming the norm with accurate and transparent ESG reporting enhancing an organization’s reputation with employees, regulators, consumers and investors.


With companies increasingly recognizing the importance of ESG in achieving long term success, the HR department’s role in driving and implementing effective ESG strategies is key. From aligning organizational values with ESG principles to promoting diversity and inclusion, HR practitioners play an important role in creating a sustainable and responsible corporate culture.

A recent report from Marsh & McLennan Advantage found that ESG performance will become increasingly important when attracting and retaining employees, a serious consideration during a time when finding and keeping top talent is seemingly difficult. The data also showed that top employers’ ESG scores are 14% higher than the global average, making a positive connection between employee satisfaction and employer ESG.
ESG as a strategic driver with the HR function supporting implementation will not only enhance a company’s corporate reputation but also help with positioning in a rapidly evolving and socially conscious global business environment.

Companies across the world are struggling with a shortage of talent that has been driven by a number of factors such as the Covid -19 pandemic that changed employee needs, adoption of technology like automation and Artificial Intelligence faster than employees can learn the required skills, business landscape changes, inability of organizations to effectively train job seekers and employees.

According to research done by McKinsey, based on the changing business landscape the traditional workforce is shifting and by 2030 there could be a 20% increased demand for managers, technology specialists with a decrease in the manual jobs. The McKinsey report also states that about 67% of the workforce could lack basic digital skills, leadership, communication and decision making by 2030.

Suffice to say while businesses face a shortage of skilled workers, countries across Africa and the globe are facing high numbers of unemployment. A Talent Shortage Survey by the ManpowerGroup found that 69% of companies across the globe have reported a talent shortage.

Companies therefore need to take a different approach to not only create opportunities for present and future talent requirements but also prepare for the changes in the business landscape that will definitely happen.

What can organizations do?

  • Developing a sustainable Graduate Trainee Program

A graduate program is a structured training program run by an employer aimed at developing future leaders of their organization. The programs typically last one and two years or longer in some cases and are available in a number of specialisms e.g. Finance, Risk Management, ICT, Analytics, HR, End to End Supply Chain, Marketing and law.

The program focuses on time specific placements in the different departments of the organization giving the trainee a 360 – degree perspective of not only the organization but different specialties. Graduate Programs support succession planning, improve productivity as they are agile and adopt easily to a changing environment but more importantly by providing clear career paths, retention is improved in companies.

Given that a culture of continuous learning and training will be central to the future of work, organizations that implement and investing in training the talent themselves will easily respond to the changing business landscape.

  • Developing the internal talent

With the ever-changing technology landscape, reskilling and upskilling is becoming a key capability for both organizations and individuals.

A report by McKinsey found that over 50% of C- Suite employees believe that development of existing employees is the most useful way to address organizational skills gaps. Helping the employees to build competence, upskill and grow within the organization creates the agility needed to succeed in the unpredictable environment in which businesses operate. Internal career growth also supports attraction and retention of top talent.

  • Building a Strong Employer Brand

Most company organizations as part of their strategy would want to be known as the Employer of Choice. To be able to have the competitive advantage in the market internally and externally Employer branding is key.

Employer Branding helps in two ways -One to attract top talent and two retention of the existing employees as employees would want to work in a healthy environment that places value on the most critical asset- the Human Capital.

  • Creating a culture focused on the employee experience

From the time an employee applies for a job to the time he or she resigns, the employee will have had many moments that shape the employee experience. Employee experience entails all of the touchpoints people come across when they work for an organization e.g. hiring, onboarding, performance management, and day-to-day relation with co -workers. These touch points shape how employees collaborate, their performance on the job and whether or not they will challenge themselves to succeed in the workplace.

A company that offers an excellent experience for its teams, has a higher chance of retaining them in the long run. Research from Jacob Morgan suggests that companies that invest in employee experience are 4x more profitable than those that do not.

  • Designing competitive benefits and compensation schemes

One important way to attract and retain top talent is to provide a competitive compensation and benefits package or the employee value proposition. The benefits package offered by a potential employer is an important factor in whether or not a job offer will be accepted.

According to Paycor’s survey, 70% of organizations are currently offering increased compensation, while 53% offer health and wellness benefits to attract talent.

When companies strengthen the compensation package, they are able to attract a better pool of skilled talent and also retain existing employees.

Employers today need to prepare for the workplace of the future through adaption to meet the needs of the future employee, up skill as well as offer attractive compensation and benefits packages. Change is a constant and every workplace will need to adapt in line with the needs of the business landscape. Companies that are agile and quick to respond will have an advantage in preparing for the workplace of tomorrow and winning the war on talent.

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