The Relevance of ESG Considerations for CHROs

With ESG going from being a ‘good-to-do’ to a ‘must do’ for every business, its relevance extends well beyond Finance and other ‘technical’ functions. For HR leaders, it is now one among a handful of critical factors that help attract, retain and engage an increasingly socially aware and environmentally conscious workforce. At a recent India CHRO Forum session in Delhi, Dr Sujiv Nair, Global Chief Human Resources Officer, Re Sustainability delved into the HR-specific implications of ESG, examining the ‘S’ (Social) component's impact on employee relations and talent management. He also shared practical insights from successful ESG initiatives will equip HR leaders with strategies to position their organisations as employers of choice.

HR’s Role in ESG Implementation

A critical challenge facing organisations is determining who should take ownership of ESG initiatives. While departments like Operations and Quality Assurance play a role, HR professionals are uniquely positioned to drive the social dimension by ensuring ethical labour practices, employee well-being and diversity. Furthermore, HR can educate employees about claim sustainability and mitigate the risks associated with greenwashing, i.e., misleading claims about a product or practice's environmental benefits that can damage corporate credibility.

Environmental Considerations and Sustainable Waste Management

Addressing climate change and resource depletion is central to ESG. Businesses must implement scientifically sound waste disposal practices for hazardous, biomedical and electronic waste. Hazardous waste must be incinerated or processed using certified disposal methods. For instance, India’s municipal solid waste regulations classify sanitary napkins as hazardous waste that must be disposed of through incineration. Some organisations have already implemented dedicated waste collection systems, hiring authorised agencies to seal and transport sanitary waste to specialised incineration facilities. Failure to comply with these disposal regulations can lead to severe penalties, making it crucial for businesses to adopt structured waste management practices. Compliance with evolving environmental regulations is key to avoiding penalties and improving ESG scores.

Fostering Ethical Workplaces

HR plays a fundamental role in upholding human rights and fostering fair labour practices. Organisations must implement clear policies on equitable pay, fair wages and safe working conditions. Employee well-being should be prioritised through grievance management systems, whistleblower protection and transparent communication channels. By ensuring ethical workplace practices, HR leaders can improve employee satisfaction while strengthening corporate social responsibility initiatives.

 To adhere to fair compensation practices, organisations must understand the distinction between minimum, fair and living wages. A minimum wage is the lowest wage that employers are legally required to pay employees, as set by government regulations. A fair wage is one that is higher than the minimum wage but lower than a living wage, ensuring basic living standards with some additional financial security. Finally, a living wage meets not only basic necessities such as food, shelter and clothing but also allows for education, healthcare and some discretionary spending, providing a decent standard of living. Ensuring fair and living wages fosters employee engagement and long-term retention while improving a company’s ESG score.

Developing a Culture of Workplace Safety

Companies like DuPont have set benchmarks in workplace safety by embedding it into their core values. DuPont’s Bradley Curve, which depicts the relationship between accidents and corporate culture, illustrates how a workplace safety culture can evolve over time. In the initial, reactive stage, safety measures are only implemented after incidents occur and employees do not take personal responsibility for safety. Organisations that are in the dependent stage introduce structured policies, training programmes and compliance monitoring, though employees still view safety as a leadership responsibility. When the business gets to the independent stage, employees start taking accountability for their own safety, self-monitoring compliance – resulting in fewer workplace accidents. Finally, in the interdependent stage, safety becomes a shared responsibility, where employees proactively identify risks, hold each other accountable and foster a culture of continuous safety improvement. Companies can progress through these stages by leveraging digital safety reporting tools and implementing regular training programmes.

Re Sustainability has launched a UAUC (Unsafe Act Unsafe Conditions) initiative, training site workers to identify and report hazards via a simple app and making project heads accountable for fixes. In six months, this resulted in its safety engagement scores rising from 40 to 75. This highlights the need for HR to collaborate with safety teams and for leadership to lead by example.

Measuring CSR Impact through Social Return on Investment

Boards increasingly demand measurable impact from CSR investments, making Social Return on Investment (SROI) a critical metric.  Regular reporting of CSR metrics and independent assessments further improve corporate reputation. For example, Re Sustainability undertook a project in Mumbai, involving 300 students living near a plant that produces hazardous waste. The company trained the students in a range of vocational skills, achieving an 80% placement rate. The modest, ~Rs 3 million investment generated a tenfold return in annual earnings for these students. Thus, by employing structured frameworks to measure both financial and social impact, businesses can effectively demonstrate tangible benefits, reinforcing their ESG commitments.

Fostering Holistic Employee Well-Being 

To enhance employee well-being, organisations should implement initiatives across four key dimensions: physical, social, mental and spiritual. In terms of the physical dimension, promoting awareness of nutrition, exercise, sleep and hydration can significantly impact health and reduce stress. In terms of the social dimension, HR professionals should encourage effective communication and relationship repair to alleviate interpersonal conflicts. With regards to the ‘mental’ dimension, continuous skill development is essential, and organisations should facilitate systems for employees to focus on competencies while encouraging hobbies. Lastly, focusing on the spiritual dimension involves prompting employees to reflect on their values and aspirations, fostering a sense of purpose. By integrating these dimensions into employee engagement strategies, companies can create a supportive environment that promotes overall well-being and resilience.