Environmental, Social and Governance factors (ESG) have become a top priority for many organisations’ business agendas in recent years, following changes in compliance, employer and employee trends, and global legislation such as the UK Environment Act 2021 and legally binding Net Zero commitments. As a result, companies are feeling increasing pressure to remain competitive, build resilience, and attract investors.
In response to this, organisations are taking the opportunity to create alignment between the ESG agenda and their business goals, while seeking buy-in and engagement from their employees to unlock the businesses’ full ESG potential through ESG transformation.
This involves making fundamental changes to an organisation’s business model to reflect key ESG factors such as human rights, climate change and sustainability. At KPMG, we are proud to have been named a global market leader in climate change consulting, supporting organisations in their ESG journey.
Transformations span the entire organisation, and too often organisations downplay the key element to success – their people. Placing people at the heart is what enables the organisation to be successful in their ESG transformation journey, while attracting and retaining top talent, and building the required skills to make ESG transformation stick. Our approach to support ESG transformation is therefore underpinned by People-Centric Transformation (PCT), which is made up of four key components:
- Upskilling through transformation to release the potential for success.
- Unlocking value to focus on the behaviours and interventions needed to drive the right ways of working.
- Workforce of the future to plan for the unknown with the right people.
- Change by design to put your people at the centre of your organisation.
Our People Consulting team applies a PCT lens to ESG, enabling us to consider the key people components that are vital for successful transformations and drawing on key components including workforce, learning, HR and change.
1. Upskilling though transformation - Engaging your people with learning
ESG is evolving at speed, meaning that businesses must prioritise creating a learning strategy that promotes awareness and understanding of ESG, enabling employees to make sustainable, inclusive and effective decisions. Learning can take many different forms, including workshops, E-Learnings, and seminars, which provide employees with the skills and capabilities needed to deliver ESG transformation.
During any transformation, it’s critical that the learning content provides employees with an understanding of what’s changing, why it’s changing, and what this means for specific role-holders, teams, or areas of the business. Overall, the ESG learning suite should demonstrate how ESG impacts the businesses strategy and outcomes, the impact on individuals and the decisions they take day to day, with topics ranging from climate resilience and net zero, to sustainable supply chain and sustainable finance.
2. Unlocking value - Using HR to deliver on your ESG commitments
HR teams must collaborate with leadership to ensure ESG requirements and considerations are embedded, such as adopting standards and reporting frameworks to inform ESG reporting in support the organisation’s goals. Examples include analysing workforce data for ESG reporting purposes and leveraging information in the form of KPIs and metrics (Forbes, 2022).
KPMG has supported clients with establishing bespoke HR KPIs and metrics that enable them to track impact and progress against overall ESG aims, enabling them to deliver their business model and meet stakeholder expectations. Our approach requires establishing both compliant and ambitious targets for ESG reporting across several business functions. This way true adherence to ESG values can be shown, as a token ‘green sticker’ with no substance to back it up will no longer suffice.
