How flexible working makes for an ESG wonderland

When we talk about ESG, most of the discussion is around the ‘E’ – but let’s talk about the ‘S’ and ‘G’ as they are equally important. In my experience, the people and governance aspects of ESG can have a direct impact on improving a company’s ability to fulfill its sustainability goals.

In the world of HR, a particular topic has become quite symbolic of how well a company is delivering against one of its key ESG goals, namely flexible working. This way of work is now an integral part of the HR policies of many organizations, not just because it allows employees to better balance home and work life, but because it opens up opportunities to create a workforce that is not just a reflection of the ‘local’ market but of a much wider and diverse community. By allowing remote and virtual working, people who need the support of families or friends for care provision can live closer to their support network. For those who have chosen to live outside of cities for cost, lifestyle or health reasons are no longer subject to long commutes or, worse, being excluded from hiring pools.

As such, a company’s approach to flexible working should be seen as integral to its diversity strategy and how it delivers against its ESG goals. My concern is that not every organization has embraced the importance of flexibility, not just as a way to keep employees happy, but to both achieve ESG goals and improve the overall organizational performance. In our annual Business Future Index there was a clear emphasis on flexible working: 92 percent said their organizations have now adopted some form of flexible working policy, but 76 percent said flexible working policies need improvement while 62 percent agreed the tools to support flexible working are not adequate.

The warning in the survey is that 39 percent of organizations said people left their businesses for more flexibility elsewhere over the past year. So if a company’s vision is to be more inclusive and to draw talent from all communities, it is critical that the approach to flexible working is done right. The benefits are very clear: in the Business Future Index organizations that outperformed their business targets for 2021 were more likely to be further ahead in planning changes to their diversity policies compared with organizations that had performed less well.


Off with their head(quarter)s

The improvement in meeting sustainability and ESG goals suggests that the acceleration of digitalization and flexible working has had a positive impact on sustainability. That makes sense in the context of the pandemic. Widespread adoption of remote working, less permanent office space, fewer geographical limitations affecting workforce diversity, less business travel and a greater reliance on data for business decision-making can all contribute to meeting sustainability goals.

However, it is not just flexible working that plays an important role in judging the impact and success of a company’s ESG strategy. Our survey identified other key ‘people-focused’ measures where organizations can make improvements. Respondents said the top challenges to attract and retain talent were the difficulty of attracting a diverse range of talent (36 percent) and being perceived to have poor ESG credentials (20 percent), while only 25 percent are planning to improve diversity within the business. The fact that more than a third of those surveyed say they face challenges with recruiting and retaining diverse staff across multiple categories, and that three-quarters of companies have no plans in place to improve diversity, makes for troubling conclusions.

Adopting a people-centric vision will lead to a happier, more diverse and committed workforce.

The bottom line is that a company’s ESG strategy and its commitment to delivering on it, particularly around people-focused measures, will have a fundamental impact on business success. At Unit4, this has been a priority even before the pandemic, given our foundation is a people-centric one. The pandemic did accelerate our focus bringing this vision to life, but we already had a number of initiatives in place, including the adoption of a “headquarterless” model, so that the senior leadership team could move around our global organization, connect with staff locally and be accessible. We adopted unlimited paid time off plus a flexible working policy for all employees. This has also enabled us to expand where we are able to find talent, creating virtual teams and centers of excellence around the world in places afar as Lisbon and Jakarta.

Investing in people, particularly providing them with greater flexibility in how they work for an organization, has real benefits. In the Index, flexibility led to greater team collaboration and staff being more productive, as well as providing greater work/life balance. If employees are happy and engaged working remotely it will also have the added benefit of reducing reliance on office space and commuting, helping to lower an organization’s carbon footprint.

Of course, such initiatives must be implemented in a coherent, strategic manner underpinned by clear policies so there is no confusion about the expectations of employees. They also require access to the right tools to enable flexible working and collaboration between virtual teams. These tools will keep teams engaged through on-line engagement surveys, learning modules and performance management.

Ultimately, articulating a people-centric vision through initiatives such as flexible working will underline an organization’s cultural commitment to change and deliver on sustainability goals. This will lead to a happier, more diverse and committed workforce, which will help to improve the organization’s performance.

Tania Garrett is CPO at Unit4.