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Line managers failing to enact ESG and diversity commitments

by Emma Simon
July 13, 2021
inclusion

diversity ESG

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More than nine out of 10 companies see more responsible business practices being a key driver of future growth, according to new employee benefit research.

However, the findings suggest that for this to be effective, more needs to be done to embed good environmental, societal and governance practices within the wider workplace. 

The report conducted by Reward & Employee Benefits Association (REBA) and Mercer Marsh Benefits (MMB) found organisational purpose, responsible business practices and diversity are growing in importance at board level.

However in many organisations work was needed at line manager level to reflect these priorities. The survey found only 47 per cent of respondents said their line managers cared for employees’ mental wellbeing, and just 21 per cent said their line manager cared about ESG.

In contrast the report — ‘Aligning corporate culture and human value’ — found 78 per cent of respondents said responsible business practices were a ‘high-priority’ board value.

The report said that factors such as employee expectations, pressure from investors, reputation management and a recognition that acting responsibly is the ‘right thing to do’ are contributing to this shift in thinking.

The report also shows six out of 10 (60 per cent) firms said that organisational purpose is enabling them to focus on becoming a long-term sustainable business. 

In practice, however, there is still work to be done with just over half of businesses (58 per cent) citing that climate change and environmental issues are a high priority board level value, and just 28 per cent are linking ESG values and executive pay. 

Climate-related factors are also low on the list of priorities for HR policies, with just 13 per cent saying that HR takes account of net-zero emission targets.  As might be expected, people-related ESG factors rank higher in HR’s priorities, with 80 per cent prioritising employee mental wellbeing.

REBA director Debi O’Donovan says: “CEOs and business leaders are under pressure to set and meet environmental, social and governance  measures within their organisations. We are increasingly seeing shareholders invest elsewhere when businesses cannot demonstrate responsible business values. 

“To meet ESG measures, CEOs need the insights and skills of their HR teams. Many HR and reward teams are increasing their focus on the ‘S’ within ESG, primarily through employee wellbeing, and are also starting to focus on environmental issues.”

The report also found that 78 per cent of respondents cite workplace diversity, equality and inclusivity (DEI) as a high priority at board level and integral to future growth. 

However, while boards and HR teams recognise the value of DEI, only 50 per cent of respondents said that line managers were committed to DEI across their business, and a further 18 per cent stated commitment to DEI was rarely seen within their organisation. 

MMB and REBA says this mismatch between executive DEI goals and day-to-day practice at line manager levels shows that there is still a major gap between employers’ intentions and actual behaviour.

Mercer UK DEI consulting leader Michelle Sequeira says: “Companies are aware that their corporate culture, values and purpose have to align with wider societal views.

“Stakeholders — whether that’s customers, investors or employees — expect organisations to live their company values, clearly demonstrating that their employment policies and employee benefits are aligned with their commitments to the outside world. These changes need to also cascade throughout the workforce to really move the dial on organisational culture.”

Sequeira adds: “DEI and wellbeing currently represent the dominant priorities, however many organisations are taking a more holistic position on the framework of responsible employment practices that raise levels of decency and fairness. Responsible employers will design a complete employee experience, covering rewards, skills and careers, often through a DEI lens”.

 

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