Businesses have had to get to grips with a range of new criteria in recent years that reflect more socially conscious goals, impacts and metrics. These are often lumped together under the acronym ESG, which refers to environmental, social and governance factors.
They might incorporate these criteria for regulatory purposes or simply to better manage their business risks – whether it’s physical risks from the impact of climate breakdown, financial risks, or risks to their reputation.
When it comes to ESG, the environmental and governance factors have typically been more measurable. You can count your carbon emissions and you can measure how much waste you produce. Similarly, you can set up governance frameworks and follow best practice. But the S part of the acronym has always been trickier to quantify.
This is partly because of a lack of objective and comparable data. Likewise, social factors have often been regarded as subjective and malleable – contingent upon changing social attitudes and individuals’ personal lived experiences. They also vary from company to company and across geographies – taking in everything from diversity and pay disparities to relationships with stakeholder groups, corporate stances on contentious issues and volunteering. Organisations often don’t know where to start, even if they want to do the right thing.
But despite being difficult to get a grasp of, social responsibility can’t be ignored. Companies now need to comply with regulatory disclosure requirements, such as the EU’s corporate sustainability reporting directive and European sustainability reporting standards. Moreover, they might also have to meet the requirements of their own business partners in their supply chains, who may stipulate social disclosure and reporting. They also need to think about how they are viewed by potential new hires. Younger people, in particular, increasingly want to work for businesses that align with their own values. Social responsibility is therefore part of being an employer of choice.
While it can be confusing terrain to navigate, data can provide clarity. As the adage goes: what gets measured, gets managed.
Given that so many social criteria relate to the welfare of a company’s employees, having a robust and dynamic HR platform can help. These platforms provide companies with a wealth of objective data, from deeper insights into the diversity of their workforce to pay gaps at different management levels and social responsibility initiatives.
Steve Watmore, HR and payroll product manager at software company Sage, says high-quality HR data can be a bit like looking in the mirror for a business. It can really help you understand what your culture means, what you stand for as a business, where you’re going, and what you need to do to get there. “This really helps when you are trying to attract and retain the best people,” he notes.
This can make it easier for businesses to do everything from meeting disclosure requirements to demonstrating community engagement.
Of course, all this data still needs to be sifted in order to generate useful insights. Kaustubh Sevak, a principal solutions consultant at Sage, says businesses have often struggled with this. “Traditionally, companies will take all of this data, and it’ll take a team of analysts a week to actually come up with some insights or nuggets on what that data actually is.” Now, he says, companies can take advantage of what Sage calls a “workforce intelligence offering”.
“This is where AI and machine learning-led statistical analysis is really powerful, because it’s bringing those insights to HR at the click of a button. HR practitioners can look at whatever data points are important to them in the jurisdiction that they want to restrict it to, and in a couple of clicks they get real-time insights.”
This is particularly important when it comes to dealing with different disclosure requirements across different countries or geographical territories. It also enables multinational businesses to integrate data from different territories with different HR policies.
There are many other ways that a high-quality HR platform can make it easier for businesses to comply with disclosure requirements.
They can provide transparency about company policies, and also the methodology companies use to measure its performance against ESG criteria – which is particularly important given that some ESG reporting regulations require information about how the data was calculated.
Moreover, a good HR platform can provide all this required data in one place that’s easy to access and collate.
Lampros Sekliziotis, a product leader at Sage, notes how the company’s all-in-one HR and payroll platform, Sage People, can combine HR data insights with responses to employee surveys. “You can use Sage People to gather data on the social side of things and share it with whoever needs it,” he says. “You might, for example, ask staff if enough is being done to support wellbeing or volunteering, or you could look at the backgrounds of new hires – and this could be reported or shared with regulatory bodies.”
Data can also be used to help companies improve their own performance and reach their internal social objectives. One Sage People customer has incorporated social mobility data into KPIs (key performance indicators). The idea here is that you can cascade a top-level goal down the organisation and use data to see how employees are contributing to achieving it and what more needs to be done.
Sekliziotis emphasises that this is very much a two-way flow of information. “You could also communicate the sort of social responsibility programmes you are undertaking and ask staff if they’re interested in participating, or report on community collaboration.”
Another benefit of the platform is that this communication can be targeted. For instance, it can often make sense, if volunteering news is sent to those closest to the communities it takes place in. “[Employees] can even book volunteering days on the system so that the company knows you’re not booking a day’s holiday and that you’re working in your local foodbank,” says Sekliziotis.
An organisation can learn from this data and use it to make improvements. For example, it can look at programmes it has instituted and see what the takeup is. Watmore says that this can be useful when it comes to making comparisons across different parts of a business or across different regions and territories.
“Comparative data is useful, but you sometimes need to use it to recognise that all data should be comparative,” he notes. “You can use software to slice and dice it into different regions – and the richer the data is, the more powerful this becomes.”
Discover more about how HR data can help companies improve their corporate social responsibility
