In our previous article, What Is ESG posted here, we discussed what Environmental, Social and Governance or ESG means for your business. In this article, we will focus on the social part of ESG and how effectively implementing a social framework within your business can directly impact your company culture.
Recently, topics and issues such as mental health, diversity and inclusion and well-being have become pressure points for business owners and leaders to step up and engage with their social contributions. Now more than ever, investors and potential employees are looking at a company’s culture as a central indicator of a business’s overall value, not just in a monetary sense but in the sense of employee satisfaction, brand perception and growth potential.
Company Culture
“Company Culture” is a buzz term that you may have heard a lot in recent years as it has become a hot topic within human resources, recruitment and in the media as employees and business owners have begun to discuss the broader impact of how it feels to work at a company. But what does “Company Culture” really mean?
Company culture is a somewhat indefinite term given its nature of personal experience and its difference dependent on the company or industry. However, company culture generally refers to a shared set of values between management, employees and even clients/customers, including goals, attitudes, and practices. In principle, company culture is not only about how a company acts but how it makes those involved in its operations feel.
How ESG can anchor a company’s culture
If you care about your company’s culture – you must show it. An ESG strategy is one clear way to show you are actively acting to improve and develop your business’s culture. At the top of many business owners’ agendas is Equality, Diversity, and Inclusion (EDI) which means focusing on how you can create an inviting, socially positive workplace for everyone regardless of their background. EDI considers differences individuals may have from ethnicity, sexual orientation, disabilities, region, and gender. Practical EDI training and hiring processes ensure that all individual needs can be assessed and given equal opportunities within their roles.
Further to this, training and structures focused on mental health and wellbeing, such as mental health first aider training and offering appropriate safe spaces where people feel they can talk should they need it, is also an example of positive ESG practice. Following the 2020 pandemic, this has never been more prevalent in company strategies, especially when assessing their ESG impact; as more and more teams begin to work from home, creating a clear wellbeing strategy and lines for communication are fundamental for exemplary company culture.
ESG is the foundation in which you can assess other areas affecting your company cultures, such as human rights, fair trade policies, health and safety, investment in your community, care for your customers, and hiring, training, and educating your team. Each part of this framework allows you to reflect on areas of improvement you may not have considered or realised you are responsible for. Once structured as part of an ESG framework, you have a benchmark in which you can continually assess your business’ progress and how you wish to develop in future or set higher goals that you may have previously thought unobtainable. Proper ESG frameworks and implementation hold you accountable for doing what you say you’ll do. It also reassures your employees and potential investors that you follow through on your actions and are committed to creating a better future for all.
Measuring the impact of ESG on company culture
Unfortunately, culture cannot be directly seen; therefore, measuring the impact of ESG practices on company culture can pose difficulties. However, it has been widely reported that companies who rank the highest for workplace enjoyment on employment sites such as Glassdoor have been known to “significantly outperform the S&P 500 with an annualised excess return of 265%”. This is a critical indicator that happy teams deliver higher results which is one way of measuring the success of your company culture.
Other areas of consideration when assessing your ESG impact include employee turnover rates, number of sick days taken, productivity levels, revenue, client retention and feedback, employee feedback and development measuring, and marketing metrics that determine engagement from your broader audience. There is a plethora of ways to gather information on your ESG performance, but to begin, you must have a clear strategy and implementation plan along with timeframes of when you will measure any progress.
It is also imperative to note that ESG is not something you do once. It is a constantly moving and adaptive piece of work that affects every area of your business and practice. ESG is a learning and development process that will enable you to grow your teams, revenue and investments and have a positive environmental, social and governance impact on the rest of the world.
The first step is getting an ESG framework in place; if you haven’t done so already and aren’t sure where to start, our ESG experts at Sustain are on hand to answer any questions and help you get started. Our ESG Knowledge Hub is also a library of information, guides and tools that are all free to access.
Become a champion of good business practice today and sign up for the ESG Knowledge Hub updates here.
