Environmental social governance

Managing environmental and social risks

With recent years characterized by pandemics, climate change, political upheaval, and social unrest, businesses are facing more risks than ever before. Organizations that value their reputations should make tackling environmental, social, and governance (ESG) risks a priority. HR and risk managers must work together to help their organizations face these challenges and find opportunities to thrive.

There has been a marked shift in the role that society requires businesses to play in relation to ESG risks. Firms that fail to support diversity, equity, and inclusion (DEI) or that neglect to tackle climate change risks may face reputational damage, legislative challenges, and even share price falls.

Climate change is also increasing health risks and costs for people and businesses worldwide — and its effects will intensify over time.

Disparities and inequities for disadvantaged groups, including lack of access to healthcare, education, employment opportunities, digital technology, and savings plans has widened the protection gap and poses reputational risks for businesses.

Employers must manage the needs of a multitude of stakeholders, including those focused on environmental and social issues, and also create strong working relationships with unions and work councils.

HR departments have a significant role to play. It is critical that firms’ employee practices reflect their external statements on environmental and social issues. Failing to do so risks criticism from investors, consumers, and the media.

By reviewing your benefit plans through ESG, DEI, and employee relations lenses, you can better understand your stakeholders’ priorities and address them appropriately and cost-effectively.