While Governance measures have been around for a while within executive incentives - particularly within annual bonuses and often sitting within a strategic or personal scorecard – policies and targets carrying either a Social or Environmental incentive are less common. Typically, until now they have only been present within organisations with a social purpose or PLCs. That said, it is becoming far more prominent for all three to be considered as part of an overall cultural or organisational strategy piece.

Recent research by Willis Towers Watson found that 81% of global companies include ESG metrics in their executive incentive plans, and the use of climate metrics has expanded significantly in recent times. The research also shows that some of the popular sub-categories in human capital metrics include employee engagement, employee safety, succession / talent management, and management and workforce representation.

Moving beyond executive incentives, organisations are starting to offer employee benefits aligned specifically to their Environmental, Social and Governance (ESG) principles. Motivations for doing this include upping the number and variation of touchpoints between the company and its employees; encouraging workers to take part in order to increase interest in ESG; embedding it deeper into the and psyche and culture of the company; and being seen to be doing the right thing, bearing in mind the direction of travel on climate change and environmental responsibility.

So, what kind of employee benefits can companies provide in order to align with and strengthen their ESG credentials?

Environmental

• Focus on transport - provide incentives and subsidies encouraging workers to use public transport, walk or cycle to work, or car-share. Salary sacrifice schemes can be set up specifically targeting electric vehicle ownership or leasing (cars and bikes). These measures directly reduce an employee's carbon footprint while commuting to work.

• Support remote working - Develop policies that are flexible enough to support remote and/or agile work arrangements. Not only can this promote a better work-life balance, the reduction in commuting also has a positive impact on the environment.

• Eco-Office – Consider creating eco-friendly workspaces by looking carefully at power, lighting, recycling and composting. Installing solar panels and embedding other green building practices into offices and warehouses may carry upfront cost but can save over the long term, depending on the business. ‘Going green’ also helps promote a strong message, demonstrates a commitment to sustainable practices and provides employees with a healthy and eco-conscious workspace that they can try to emulate at home.

• Green Recognition - Building environmental incentives into a recognition scheme can encourage good practice and further strengthen an ESG culture. A free lunch or small gift for carrying out an eco-friendly task, or opting for the green option, can work.

Social

• Wellbeing - Initiatives that focus on physical and mental health, such as gym memberships, mindfulness workshops and mental health support services, promote social wellbeing and employee satisfaction.

• Think DEI - Implementing diversity and inclusion programmes, mentorship and unconscious bias training can support an inclusive culture and promote social equality.

• Consider your carers – Companies will never full realise how many of their workers are carers outside of their full-time or part-time jobs. Policies that help employees carry out these caring or parenting duties cater for their commitments and show a compassionate side that will always create loyalty. This can help to retain the best talent and provide a consistent and powerful message about gender equality and social wellbeing.

• Volunteering – Providing time or funds for employees to engage in volunteering activities can build a strong reputation both inside and outside the company. Whether it is joining environmental clean-ups, community service projects or social impact initiatives, involvement encourages social responsibility and community engagement. The activities themselves also create a priceless opportunity for team members to get to know each other, which can be increasingly difficult with remote and hybrid working.

• Education – Training and Education helps workers recognise ethical business practices and better understand CSR, making them more likely to take ownership.

Governance

• Ownership models - Implementing Employee Ownership Programmes is not feasible for all organisations but there are alternatives such as profit sharing and share options, which also promote a sense of ownership and align an employee's interests with the organization's long-term objectives.

• Pensions and savings plans – these should have socially responsible investment (SRI) options that allow employees to align their short and long-term savings with their personal values and ethical considerations.

The beauty of employee benefits is that we can communicate them in many ways, increasing the chances of the package resonating with every employee. Once we understand how our benefits directly align with our ESG principles our messaging can reinforce a culture of sustainability, social responsibility and ethical governance, which should improve our overall ESG performance.

If you need help or advice reviewing or aligning your benefits strategy to ESG, contact Sarah.Lardner@innecto.com

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