5 minute read 27 Sep 2022
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How can people analytics put humans at the center of your ESG strategy?

Authors
Alexander Locher

Senior Manager, People Analytics Lead | EY Switzerland

People Analytics and Strategic Workforce Planning Lead Switzerland. Passionate boat captain, water and winter sports fan and always with colored socks.

Isabelle Staiger

Partner, People and Workforce | Switzerland

Guides companies through business transformations with a focus on leadership and employees - corporate culture, DE&I, leadership and change management.

5 minute read 27 Sep 2022
Related topics Workforce Sustainability Data and decision intelligence Megatrends
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With the rising importance of ESG factors and increased need in transparency, companies are faced with regulatory and public challenges. People analytics can unleash the potential of your ESG strategy, provide you with insights and influence your employee’s behavior

In brief
  • Environmental, social and governance (ESG) issues are important drivers of business success.
  • Rather than focusing on ESG metric reporting, shifting the focus to people centric metrics can broaden your horizon and give you a better sense of the performance of your ESG strategy. 
  • People Analytics offer insights into many facets of ESG issues that are not reflected in typical ESG reporting.

Environmental, social and governance (ESG) issues are becoming increasingly important in today’s corporate climate. They have imperative influence on a firm’s reputation and financial performance. Today, ESG reports are scrutinized by stakeholders and regulators alike, even though there is little standardization of these measures across companies (EY Leadership Insights: The Sustainability Technology Landscape, 2022). Despite these issues, ESG remains an important performance criterion also in the context of employee experience:

Percentage of millennials that have chosen a job in the past because the company performed better on sustainability

40%

Source: NYU Stern, 2021

Corporate studies that found a positive relationship between ESG and financial performance.

58%

Source: SCI & Marsh & McLennan Advantage Insights analysis, 2020

Environmental scores that are associated with employers who have a highly satisfied workforce compared to the global average

+ 25%

Source: SCI & Marsh & McLennan Advantage Insights analysis, 2020

Percentage of Job seekers that said a diverse workforce is important when considering job offers

67%

Source: Glassdoor workplace trends, 2021

Organizations that foster an ESG narrative are also business drivers because focusing on people first increases long term profitable outcomes. Considering recent global megatrends impacting workforce planning such as the Great Resignation and the Race for Talent, the demand for flexible work models, workplace health and safety, as well as diversity and equity concerns, ESG strategies are becoming increasingly important. Organizations that don’t adapt will face challenges attracting and retaining the right talent and investors. ESG can have a detrimental impact on corporate reputation and People Analytics can help companies keep up in today’s market.

People Analytics and the employee lifecycle

People data is an important first step in the process of establishing a sustainable ESG-driven organization. Whilst most companies already have comprehensive reporting in place, People Analytics enable you to measure your ESG impact and effectiveness based on your most valuable resources: your employees. We think a good ESG strategy is closely aligned with an employee’s experience through its different stages. Be it to measure the carbon footprint of an employee including the business travel (environmental), value and care for your employees wellbeing (social) or give the human factor in risk management the right attention (governance).

When moving forward with an ESG strategy, it is also important to consider ESG topics in the process of candidate selection. You might be asking yourself: why this is important? When filling critical positions, such as leadership or managerial positions, the right candidate to model ESG value can have cascading organizational impacts. To lead by example, influencing employee reception, commitment, and behavioral execution of leadership in line with ESG incentives. An insights-driven approach can guide hiring decisions to find the right candidate with the right values to propel your ESG strategy forward. Moreover, automated succession checkers can offer insights into diversity and inclusion topics in the process of finding suitable successors for an open role. 

More than half of all employees in 2021 were open to leaving their company for new roles, but this percentage drops to 12% if employees believe their company is making a positive impact in the world (Source: PAS and Sustainability – Putting Humans at Center). People Analytics insights using AI and natural language processing (NLP) technologies, i.e., technologies used to enable computers to process human language (e.g., in language translation), allow more than just ESG reporting and descriptive analytics. When combining NLP insights with industry benchmarks, People Analytics can deliver prescriptive insights, allowing data-driven decisions. Further, utilizing NLP, AI and data science, you can monitor changes in employee perception and reception of ESG topics over months or years, delivering real-time insights and forecasting through the analysis of unstructured documents. People Analytics can determine the need for up-skilling employees in ESG matters, measure if ESG strategies are embedded in the culture, measure employee engagement and performance and measure inclusion and diversity – including neurodiversity. Expanded metrics and disclosures set forth by the WEF in 2020 include reporting on employee well-being. People Analytics can deliver continual monitoring and thus determine the need for early intervention to ensure your workforce is happy and healthy, boosting productivity and reducing absenteeism.

How EY can help

Workforce Analytics

People analytics provides data-driven insight for workforce strategy and planning, so that talent can be managed and developed to deliver clear business outcomes.

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ESG as corporate benefit

ESG initiatives spur financial performance thanks to better innovation, higher operational efficiency, and improved risk mitigation and risk management (NYU Stern, 2021). Bad PR can have incredibly detrimental effects on your brand and the impact of ESG initiatives on Corporate Reputation and Brand Equity can be difficult to measure directly, as people might not always speak their mind. People Analytics can offer insights through organizational and social listening, leveraging NLP and sentiment analysis to assess reputation amongst stakeholders, clients, and consumers. We know that ESG disclosure on its own does not improve performance – in fact, focusing on disclosure has been found to have a negative valuation effect (NYU Stern, 2021). People Analytics can measure the effectiveness of an ESG strategy across several domains and offer holistic insights into ESG performance.

By putting Humans at the center of your ESG Strategy as well as analyzing and leveraging the data thoroughly, your organization can add value to sustainability goals – and society.

Sources:

Glassdoor workplace trends 2021. NYU Stern, 2021; SCI & Marsh & McLennan Advantage Insights analysis, 2020; BI-Workshop Sustainability humans @ the center; Source: Leadership Insights: The Sustainability Technology Landscape – January 2022; NYU Stern 2020; Pas and Sustainability – Putting Humans at Center, 2022.

Summary

People analytics offers an advanced opportunity to grow your ESG agenda and measure it’s success beyond reporting.

Acknowledgements:

We thank Marlies Monch for her valuable contribution to this article.

 

About this article

Authors
Alexander Locher

Senior Manager, People Analytics Lead | EY Switzerland

People Analytics and Strategic Workforce Planning Lead Switzerland. Passionate boat captain, water and winter sports fan and always with colored socks.

Isabelle Staiger

Partner, People and Workforce | Switzerland

Guides companies through business transformations with a focus on leadership and employees - corporate culture, DE&I, leadership and change management.

Related topics Workforce Sustainability Data and decision intelligence Megatrends
Upvote