The S in ESG – What companies and HR teams can do

More and more companies are recognizing that the "S" in ESG plays a decisive role in their long-term success. But what exactly is behind this letter? In our article, we explain why social responsibility is becoming increasingly important and what measures companies and specifically HR teams can take to promote social benefits and live up to their responsibilities.
ESG im Unternehmen

New requirements for companies

In 2024, a significant development in the area of ESG (environmental, social and governance) will bring a new era of transparency and accountability for companies within the EU.

With the start of the reporting obligation under the CSRD standards, the previous NFDR Directive, which previously required companies with over 500 employees to report, will be replaced. This change means a significant expansion of the scope of application, as the number of companies subject to reporting requirements will increase from around 11,000 to 49,000.

The CSRD standards set clear criteria for reporting, whereby companies must meet at least two of three requirements: a turnover of 40 million euros, more than 250 employees or assets worth 20 million euros. The CSRD Directive will be introduced gradually – the first companies will have to report from 2024, followed by listed SMEs and companies with parent companies in third countries by 2028.

The S in ESG is becoming increasingly important

In the past, companies often focused on the environmental (E) and governance (G) aspects. The “S” for social responsibility was often neglected. But this is increasingly changing. But what does the “S” mean?

The “S” in ESG is aimed at social coexistence in general and includes important aspects such as safety, diversity & equality and respect for human rights. Specifically, this relates to the Supply Chain Act, equal rights in the workplace and fair wages and working hours, for example.

Even if the “S” has often taken a back seat in the past, it will play an increasingly important role in the future. The shortage of skilled workers, inflation and global crises are also forcing companies to rethink their approach. Studies also show that socially sustainable companies tend to be more successful. Not to mention the effect of investing in a healthier and more sustainable society.

In addition, more and more employees today not only attach importance to a company being economically successful, but also to it being in line with their own ecological and social values. This trend is particularly noticeable among young employees, who are increasingly concerned that their employer makes a positive contribution to the environment and assumes social responsibility. Especially as baby boomers approach retirement, it is becoming more important than ever to retain and develop young talent.

One phenomenon that is becoming increasingly common in this context is known as “conscious quitting”. Employees quit their job because it is not in line with their personal values or because the company is doing too little to achieve environmental and social goals. This trend can be observed not only in the USA, where measurable effects have already been identified, but also in Germany.

This is a further incentive for companies to take a closer look at their social responsibility. Not only can strong social responsibility help to attract and retain talented employees, but it can also improve the company’s image and competitiveness.

The new ESG reporting obligations will also tend to reinforce this trend, as they focus on the individual aspects of ESG and create greater transparency.

What HR teams can and should do now

In view of the increasing importance of the social aspect “S” in ESG, companies are faced with the challenge of assuming social responsibility and ensuring long-term success at the same time. However, this obligation can also be seen as an opportunity. Many HR departments are also asking themselves what they can do within their sphere of influence to have a positive impact on the ESG “balance sheet” and, in particular, to promote measures for the social aspects. The list of possibilities is long. In the following, we would like to look at a few key areas in which HR managers can take direct action and explain what HR staff can do.

1. Focus on work-life balance

Companies can improve work-life balance through good HR management. They can do this by trying to ease the burden of employees’ family obligations through targeted offers such as childcare or senior care.

2. Support for voluntary work

Companies also could specifically promote their employees’ volunteering activities, for example by giving them time off work for voluntary work, which not only benefits the employees themselves but also makes a positive contribution to the community. They can also promote further training measures, for example through cooperation with universities or other educational institutions, to promote personal and professional development.

3. Flexible working models

Flexible working models such as job sharing, home office days or flextime models make it possible to accommodate individual living conditions.

4. Cooperation with family-friendly service providers

Counseling, coaching and support offerings can help employees reduce their mental load. Family support offers and benefits (including for example nanny services, homework support or fertility benefits) contribute to employees being supported by their employer in challenging life stages and with offers they would otherwise not have had access to. 

5. Transparent and fair remuneration

Transparent and fair remuneration, regardless of gender, age, ethnicity or religious views, and respect for human rights along the entire value chain are further steps to promote the “S” in ESG and at the same time drive long-term corporate growth.

6. Optimized onboarding and offboarding processes

Optimized onboarding gives employees a direct insight into the corporate culture and the services they can take advantage of. This gives employees the planning security they need to better coordinate their professional and personal interests. Well-structured offboarding is also an important measure, as it can make it easier for returning employees (e.g. after parental leave) to get back to work.

7. Diversity and inclusion

To create an inclusive working environment, companies can offer targeted measures such as unbiased and anonymous recruitment practices or training to raise awareness of the issues of inclusion and diversity.

What role fertility & family building benefits can play

With Fertility & Family Building Benefits, companies can support their employees on their individual path to parenthood and related to female health questions – by providing access to information and advice or financial support for fertility treatments or adoptions. Through Onuava, companies and their employees have access to the most comprehensive services relating to the desire to have children and women’s health.

Fertility & Family Building Benefits are also contributing to a companies ESG scores, as family planning – especially when it is not so easy – is associated with high financial and emotional burdens. On average, one in six company employees is affected by infertility during their working life. Companies that offer Fertility & Family Building Benefits not only show a deep understanding of the individual needs of their employees, but also give them access to the best family planning support, which they would otherwise usually not have access to.

This allows companies to support their employees in difficult phases of their lives and thus assume social responsibility.

The topic of the desire to have children is also an area in which companies should assume social responsibility in light of the declining birth rate. The positive effect of introducing Fertility & Family Building Benefits goes beyond the company’s own workforce and has a positive influence on social and demographic development.

 

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