The perks of being green: Linking your benefits to your ESG values

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Sustainability is rising in employee and candidate estimation. Is it time to revisit your perk plans?

WITH ENVIRONMENTAL, social, and governance (ESG) policies growing in importance, employees are expecting big things from their organizations. Many organizations are already reporting ESG risk voluntarily, while others see mandatory requirements on the horizon. It’s high time HR leaders got their policies in line – and this includes benefits. A recent survey from Aon found that 63 percent of HR leaders say ESG objectives form a part of their benefits plan decision-making process, with 71 percent adding that their current benefits meet the diversity, equity, inclusion, and belonging (DEIB) needs of their workforce, too. But what does this mean in practice?

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“Most HR leaders have a sense that ESG is important, but are still working through what it means for people strategy”

Kelly Higgins, AoN

“Most HR leaders have a sense that ESG is important, but are still working through what it means for people strategy,” says Kelly Higgins, vice president, knowledge management of health solutions at Aon. “On the environmental and governance front, regulatory reporting requirements or voluntary commitments to good corporate citizenship provide a somewhat structured starting point. The path between corporate ESG initiatives and people strategy is less immediately clear. What we know is that employment culture continues to dominate people discussions, and we believe, as most do, that people strategy is central to the social aspects of ESG. “Boards and executives are focused on fulfilling corporate requirements and commitments to ESG. HR professionals are looking for ways to support and align human capital programs with organizational ESG initiatives and obligations.”

This shift toward rewarding greener practices, such as tying executive bonuses to sustainability goals, is representative of the societal shift that we’re currently experiencing. Candidates are actively looking for companies that share their ESG-based values, ones that can demonstrate their commitments and goals. This is where benefits come in. Aon’s global well-being survey notes that 80 percent of organizations think about DEI&B, ESG, health and safety, and total rewards when it comes to employee well-being – making it top of mind in organizational strategy. But while that’s easy to say, it’s less easy to demonstrate.

“To truly solidify commitment to ESG, companies put their values into practice through the benefits they offer to their employees,” says Higgins. “Benefits plans bring ESG goals to life for employees. It is true that benefits plans have bottom-line objectives, but they represent much more to current and future employees. They embody company values and create an outward expression of those values shared with employees and the community at large. “The way an organization identifies, addresses, measures, and reports its ESG priorities is an expression of the way it supports and protects its people. A commitment to ESG principles creates value and, in doing so, proves the relevance of benefits when it comes to a people strategy that contributes to companywide ESG objectives.” As Higgins tells HRD, when that commitment has been defined, HR leaders should look at measuring the outcomes – especially their people’s capacity for resilience. “Measurement can create a baseline for building change that speaks to a company’s social values. Once the starting point and the end goal are identified, organizations can strategize on ways to build a resilient and inclusive employee community that reflects and projects the social values of the organization.”

And this is where open and consistent communication is integral. After all, you could have the most comprehensive benefits plans going, but if you don’t tell employees, if you don’t help them access them, your benefit plans are not maximized. According to Aon’s report, 63 percent of employers agree – saying that their main concern was helping their people understand the perks on offer – with 61 percent committing to the notion of spending less on benefits and communicating more instead. So, how can benefits strategy be adapted to ESG-based thinking? Well, it all comes down to looking at those external factors that inadvertently drive ESG and values-led commitments. “Aon survey data indicates that HR professionals are sharply focused on the priority areas of employee resilience, labour market challenges, and diversity, equity, inclusion, and belonging,” says Higgins. “Whether by intention or default, employers focused on these areas are already taking steps toward the fulfilment of the ‘social’ part of ESG goals. “Employee resilience – the ability to ‘weather a storm’ – is frequently tied to health and financial well-being. Benefits that address employees’ mental and physical health needs, provide financial security, and promote a balanced lifestyle clearly fulfil an ESG promise.”

“To truly solidify commitment to ESG, companies put their values into practice through the benefits they offer to their employees”

Kelly Higgins, AoN

Aon’s recent global well-being survey reported 38 percent of employers list employee well-being — or the overall physical, emotional, social, career, and financial health of their employees — as a top priority over the next five years. “Benefits that speak to DEI&B demonstrate a commitment to a caring and inclusive employee community,” adds Higgins. “Support for gender affirmation, or family formation initiatives like paid new-parent leave and adoption and surrogacy support, are outward expressions of progressive social values.”

And while the umbrella of “ESG values” is rather vast, there’s one area that’s rapidly growing in interest for both employers and employees alike: green benefits. With endless media reports of wildfires, droughts, flash floods, and failing crops, it’s no wonder that employees are keen to align themselves with organizations that believe in saving the Earth. However, it’s still new – and somewhat grey – ground. Not to be lost in the mix is the physical and mental health impact climate-related crises have on employees, whether experiencing them firsthand or observing them from afar. Employers have a role to play in the health and safety of employees who are affected by climate-related events. Attention to well-being and resilience wears many hats – and one of them could be green.

Putting ESG promises into practice

Consistent commitment is key

Published 04 Sep 2023

ASIA

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Source: Aon Pulse Survey – Setting the Agenda for 2023/24

63%

of employers say their ESG objectives form a part of their benefits plan decision-making process

of employers think there’s a current need to know more about green benefits

44%

of employers think their current benefits meet their workforce’s DEI needs

71%

“The concept of ‘green’ benefits is an emerging and largely undefined area,” says Higgins. “At the moment, it is likely tied more to workplace culture and physical work environment than benefits. What could count as a ‘green benefit’? Public transit subsidies are focused that support a commitment to carbon reduction, for one, or financial assistance for bike-share or purchase. “Green initiatives that may form part of a larger people strategy could incorporate corporate charitable or paid volunteering options or office reconfiguration, or reflect carbon-reduction initiatives and low-carbon travel directives. Overall ESG actions and reputation can contribute to company culture and an organization’s ability to attract and retain the workers it needs.”

Embracing green benefits

Source: Aon Pulse Survey – Setting the Agenda for 2023/24

of employers think they need to help their employees understand existing benefits better

63%

of employers will be spending less on and communicating more about their benefits

61%

of employers are promoting employee consumerism

52%

So where does that leave Canadian organizations looking to really commit to both their benefits strategy and their ESG values? Well, it’s clear that employees’ and candidates’ desire to work with companies that authentically support the important issues isn’t going to go away – in fact, there’s evidence that this desire is actually building. “ESG is an evolving area and is likely to develop further and change in scope over time,” says Higgins. “Though companies may have formal or voluntary ESG commitments in place, many may not have fully developed policies that incorporate all aspects of their business. “As a fundamental principle, benefits strategy should directly support broader people strategy and corporate goals, like ESG goals. But in a developing area like ESG, an overarching policy may be in its infancy, or it may not exist at all. This doesn’t mean we shouldn’t incorporate ESG into our thinking. We all have to start somewhere and be ready to adapt as ESG needs and objectives evolve.”