Dive Brief:
- Investment in ESG correlates with higher profits, according to research from the Infosys Knowledge Institute published Dec. 8 — and those profits are even higher if employers include social and governance issues, such as board diversity.
- Notably, presence of a chief diversity officer and an ESG board committee can improve profitability, Infosys said. But many employers lack incentive or accountability for ESG changes at the C-suite level; only 19% of respondents said their company ties executive compensation to ESG goals, and only 30% said the C-suite holds responsibility for ESG action.
- According to the report, a 10 percentage point increase in ESG spending correlates with a 1 percentage point increase in profit growth.
Dive Insight:
Improvement of board and leadership diversity — as well as investment in a chief diversity officer — are especially visible ways that employers can advance ESG goals, experts have said, and HR plays a key part in each.
While more companies are appointing CDOs, retention can be difficult without proper investment in diversity programming, one expert previously wrote for HR Dive. To keep leaders on board, he recommended employers understand employees’ limitations; be objective in assessing organizational progress; keep learning; and remember that DEI is for all, not just minority groups or lower-level employees.
Board diversity initiatives have gained momentum, as well. The Society for Human Resource Management announced in August that it would be part of a board diversity initiative, alongside the National Association of Corporate Directors and Vista Equity Partners, and would help provide learning and development courses on HR, governance and “committee readiness,” among other things.
HR’s role in board diversification may only grow. The SEC has upped the ante on HR disclosures in recent years, and a rule that will require further disclosures has been expected for some time — meaning HR must be ready to tell its story to the board and stakeholders.
