People - The key element of your ESG transformation

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:

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.

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.

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.

Businesses undergoing ESG transformation are often stuck with similar questions – What capabilities do we need to meet our ESG commitments? How do we link ESG into our wider employee value proposition? How do we continually embed the right mindset and behaviours throughout our business?

Many of these questions can be answered through the way a workforce is shaped and sourced. Businesses need to establish strong foundations to ensure that they can deliver against their ESG goals, considering aspects such as Inclusion Diversity, and Equity (IDE), Organisational Design, and Employee Value Proposition. Getting these things right will help build an environment that fosters ESG and is able to sustain the evolving landscape of work in the future.

Whilst undergoing ESG transformation, one of the biggest challenges we are seeing across the market is resistance to change, a lack of buy-in and engagement from employees. It’s important that your people are empowered to achieve the desired results and outcomes to make it worthwhile.

Change management has therefore become crucial for ESG transformation to achieve lasting adoption. Employees require the right communications, training, and knowledge to deliver against ESG commitments. Our People Consulting team works with businesses to drive sustainable behaviour change in support of ESG ambitions, helping them to reach their goals and sustain change.

Over the next few months, you can expect a series of blogs spotlighting key areas of PCT in the context of ESG, including how we are supercharging the ‘S’ in ESG, and our point of view on how best to embed ESG in your organisation’s culture and strategy.

At KPMG, our ESG and People Consulting subject matter experts are equipped with the right experience, knowledge, and resources to lead your organisations through an action focused and impactful ESG transformation.

To discuss the key people related ‘get rights’ of ESG Transformation or to find out more about events we are hosting on this topic, feel free to reach out to us at Alexandra.Dean@kpmg.co.uk or Ishi.Juttla@kpmg.co.uk

For more information on our People Consulting services please visit People Consulting - KPMG UK.