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What is ESG and why does it matter to employers?

What is ESG and why does it matter to employers?

ESG stands for ‘Environmental, Social and Governance’ and is becoming of increasing importance to candidates in their choice of which employers to work for, as well as being of importance to existing employees, customers, investors etc and to the organisation’s overall reputation.


Employees are increasingly expecting their employers to act ethically and responsibly and to be climate conscious. An organisation’s ethical values are important for attracting and retaining talent.


Environmental 

Environmental includes the organisation’s impact on the environment, for example manufacturing sustainable products, reducing its own carbon footprint or supporting sustainable commuting by introducing a cycle to work scheme or having a working from home rota to reduce carbon emissions from commuting. Some employers offer paid time off for employees to volunteer for climate related causes.


Social

Social includes how the employer treats its staff, its policies on pay equity and whether it supports the Living Wage, its policies on diversity and inclusion, health and well-being and whistle-blower protection, and also steps it has taken to ensure transparency in its supply chains and identifying modern slavery risks.


Governance

Governance includes how the organisation operates, for example its structure, whether the decisions it makes are ethical and fair, its tax strategy, and its anti-bribery and corruption policies. It also includes the organisation’s compliance with data reporting requirements, such as the gender pay gap. 


How can employers improve their ESG credentials? 

An employer could consider:

  • Collecting and reporting diversity data beyond the statutory requirements
  • Reviewing and updating its family friendly policies and considering, for example, whether to enhance statutory leave and pay
  • Introducing mental health initiatives, for example trained mental health first aiders in the workplace 
  • Increasing employee engagement on ESG policies and initiatives



In conclusion, we trust that this article has offered you valuable insights and useful information. Please be aware that the contents of this article do not constitute legal advice. For specific guidance tailored to your situation, or if you have any further questions, Marianne Wright is readily available to assist you. You can contact her at 0800 9157777 or via email at hello@kilgannonlaw.co.uk. We welcome your queries and are committed to providing the support and advice you require, ensuring you are well-informed and confident in your decisions.

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