Sustainable Human Resource Management: Incorporating Sustainability and ESG into HR Strategies

May 31, 2023Chelsea Tisdelle, CREW Vancouver

Strategic Human Resource Management (SHRM) (1) has been the traditional approach to human resources (HR) for decades. However, due to the evolving societal landscape and the growing demand for sustainable practices, a new approach called Sustainable Human Resource Management has emerged. This approach recognizes the link between HR and sustainability and strives to achieve positive outcomes in the economic, social, human, and environmental domains, both in the short and long term.

Incorporating sustainability and ESG (environmental, social, and governance) considerations into HR practices is essential for organizations aiming to create long-term value and yield a positive impact (2). One significant advantage of this approach is its ability to attract and retain top-tier talent. The current workforce consists of five different generations, each with unique social and technological backgrounds and priorities. Younger generations are placing a higher emphasis on companies that align with their values and prioritize sustainability and social responsibility. According to a Deloitte report, 76% of surveyed millennials stated that a company's social and environmental commitments influence their decision to work there. (3) In addition to attracting talent, retention is an additional positive biproduct. According to a report by Harvard Business Review, companies that prioritize sustainability are more likely to retain employees, with a 19% lower turnover rate than companies that don't prioritize sustainability. (4)

To align HR strategy with sustainability goals, companies can take several steps, including:

1. Clearly and transparently defining their sustainability and ESG goals and values and effectively communicate them to employees to ensure alignment across all levels of the organization.

2. To bring these goals into fruition, organizations can focus on implementing sustainability-focused benefits and practices such as:

promoting employee well-being
implementing fair labor and employment policies
fostering a diverse and inclusive workplace culture
promoting flexible work arrangements
encouraging company paid time off to volunteer for environmental causes
employee wellness programs that prioritize sustainability and environmental health

3. Integrating sustainability and ESG considerations into HR owned initiatives such as performance evaluations and financial incentive reviews and implement sustainability and ESG metrics directly into HR data collection.

4. Reporting on organizational progress to current employees can provide insight into the positive impact on the environment and society the companies initiatives are having.

While currently there is limited data on the adoption and impact of Sustainable Human Resource Management practices, there are studies that provide insights into the current state and benefits of sustainable HRM to the organizations bottom line. A study on Sustainability by MIT Sloan Management (5) found that companies that prioritize sustainability in their operations and strategies are more likely to see financial benefits, with 70% of surveyed executives reporting that sustainability has contributed to their company's profits.

Incorporating sustainable HRM practices is a win-win approach for organizations, as it not only helps fulfill social and environmental responsibilities as an employer, but also contributes to financial success. (6) It can offer several other benefits to organizations, such as attracting and retaining top talent, demonstrating a commitment to social and environmental responsibility, and contributing to a more sustainable future. By following best practices, companies can successfully integrate sustainability and ESG considerations into their HR practices, create a positive impact, and achieve a competitive advantage.

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