Esg, An Employment Perspective

Introduction 

ESG, which stands for Environmental, Social, and Governance, is a collective framework or criteria through which stakeholders, investors and organizations use to evaluate a company’s performance. This assessment sheds light as to a company’s risks and opportunities. 

The “S” in ESG focuses on social factors; how a company relates with different stakeholders right from its suppliers, regulatory authorities, customers and ultimately its internal stakeholders, the employees. From an employment perspective, these factors encompass a range of issues related to a company’s relationships with its employees which encompasses their wellbeing. 

Why should ESG be a concern in your workplace? 

ESG considerations are closely tied to risk management and thus companies that proactively monitor ESG issues are better placed in mitigating risk arising from social controversies as well as regulatory matters. 

Companies that operate in a socially responsible manner and are committed to the implementation of ethical business practices have an enhanced positive reputation. They thus stand to reap from the benefits of the reputation which include attracting investors, building supply chain resilience and widening their customer base. 

ESG influences and affects the wellbeing of the employees. While employee wellbeing can be deemed as just a social concern, its impact extends beyond just the individual employees thus creating a ripple effect. Not only does the relationship of a company with its employees influence its chance of attracting top talent, but also determines whether they stay. Thus, where employee wellbeing is prioritized a company is likely to retain skilled staff thereby reducing turnover costs while also maintaining a stable workforce. 

Employee productivity and performance which highly impacts the company’s success can be directly attributed to their levels of job satisfaction. When employees feel valued, they are more likely to put in more effort leading to higher productivity levels.  

From an employment perspective, the following social factors within ESG warrant significant consideration of your organization:  

1. Diversity, Equality and Inclusion 

Companies are increasingly being evaluated on their commitment to diversity, equality and inclusion. This includes ensuring a diverse workforce, equal opportunities for all employees, and fostering an inclusive work environment. 

2. Compliance with labour laws 

In Kenya, the Constitution, the Employment Act, the Labour Institutions Act, the Labour Relations Act, the Occupational Health and Safety Act as well as the Workplace Injury Benefits Act establish a framework governing the relationship between employers and employees thus giving ESG a legal basis. These laws provide for fair remuneration, reasonable working conditions, health and safety measures among other crucial components.  

3. Company policies, culture and practices 

The presence and implementation of policies on the code of conduct, whistleblowing, anti-bribery and corruption, non-discrimination and sexual harassment among others is indicative of a company’s commitment to ethical practices and adherence to ESG principles. Organization should put in place measures to deal with inappropriate behavior and ensure that employees are aware of the channels through which concerns can be reported.  

4. Training and Development 

Organizations are evaluated on their commitment to employee development through training programs, opportunities for skill-building to name but a few. Ultimately this contributes to the long-term success and satisfaction of employees. 

5. Employee engagement  

As companies undertake periodical engagement with their external stakeholders, they are also expected to engage with the employees periodically to gauge the levels of job satisfaction thereby identifying the areas of improvement. Employee participation in matters or decisions that affect them is crucial. 

6. Workplace flexibility 

Companies are evaluated on their commitment to integrate work life balance through taking active steps towards ensuring workplace flexibility. This calls for organizations to assess their policies and practices on flexible hours, telecommuting or remote working. 

7. Respect for human rights  

Respect for human rights is a fundamental social factor. Companies are expected to operate in a manner that upholds basic human rights and avoids involvement in activities that may infringe upon these rights across the supply chain. 

Conclusion 

Investors and consumers are increasingly incorporating these social factors into their decision-making processes, emphasizing the importance of responsible and socially conscious business practices. Companies that prioritize these social aspects are likely to enhance their reputation, contribute positively to society, attract investors and customers while maintaining a skilled and stable workforce.  

Conducting an ESG due diligence, trainings and periodical reviews of policies are a few ways in which organizations can strive to implement a working ESG strategy. Conducting an ESG due diligence in your organization would uncover the organization’s   risk factors thereby informing decision making inclined to reducing risk levels and ensuring compliance. The risk factors so identified inform subsequent disclosure and reporting by the organization. 

How we can help 

The Climate Change and ESG Practice Group at CM Advocates LLP is comprised of lawyers with diverse experience in laws affecting various industrial sectors. The team is well versed in matters relating to ESG integration in organizations to ensure compliance. We are equipped to ensure a well-rounded evaluation of a company’s impact on society, fostering responsible and ethical conduct in alignment with established global standards and frameworks. We also assist in preparing, reviewing and structuring of constitutive documents and policies and provide expert advice on ongoing operations and management issues. 

We are devoted to assisting our clients’ communities by meeting their legal, regulatory and governance needs. 

Should you have any questions on this or any other matter, please do not hesitate to contact Emily Gitau on egitau@cmadvocates.com .