How to Boost Your ESG Performance with DE&I

Environmental, Social, and Governance (ESG) criteria have become pivotal in assessing the sustainability and ethical impact of businesses all over the world. But in recent years there has been a cultural shift that brings a new urgency to ESG compliance that doesn’t end in the boardroom. According to a PwC survey 86% of employees prefer to support or work for companies that care about the same issues they do, while 76% of consumers said they will discontinue relations with companies that treat employees, communities and the environment poorly.

With the proliferation of social media and the increasingly borderless nature of the digital economy, there are few places for today’s unethical companies to hide. And customers will vote with their credit cards, by giving them to one of your competitors.

And these days it’s not just about being eco-friendly or having good work practices. A crucial aspect of the ‘Social’ component is diversity, encompassing inclusivity and equality in the workplace. Some of the benefits a good DE&I strategy can bring to your organisation are:

  • Improving innovation and creativity by bringing diverse ideas and solutions to the table.
  • Enhancing empathy and customer satisfaction by understanding and meeting the needs of diverse markets and stakeholders.
  • Increasing employee engagement and retention by fostering a culture of respect, belonging and empowerment.
  • Strengthening reputation and brand value by showcasing social responsibility and leadership.

D&I can also have a positive impact on the other two components of ESG: environmental and governance. For instance, diverse teams can help to identify and address environmental risks and opportunities, such as climate change, resource efficiency and circular economy. Diverse boards can also improve corporate governance by enhancing oversight, accountability and transparency.

Simply put, the more ‘viewpoints’ you have, the clearer your picture of the challenge at hand. And research has shown that diverse companies report a 59% increase in creativity and openness and a 39% increase in awareness of consumer needs and interest.

The effect is not limited to the west. A recent academic paper found that the ESG performance of manufacturing companies in China has a significant positive effect on corporate value and this effect is stronger for firms with better corporate governance.

Despite the proven benefits of DE&I, many companies still struggle with this topic, especially in technical environments. As well as a persistent, decades-long shortfall in the number of women working in IT, there are significant gaps and barriers in terms of pay, career progression, representation and inclusion for women and other underrepresented groups in the tech sector.

So, it is imperative that companies take proactive and concrete steps to promote and implement DE&I in their organisations. Some examples of the programs that are accepted by ESG are:

  • Implementation of a group-wide diversity policy that sets clear goals, targets and indicators for D&I.
  • Calculation of the gender pay gap and taking measures to close it, such as conducting pay audits, ensuring equal pay for equal work and offering flexible work arrangements.
  • Establishment of organisational structures, such as an Equal Opportunities Officer at Group level, that are responsible for overseeing and monitoring D&I initiatives and outcomes.
  • Introduction and consolidation of continuing education courses on the topic of gender equality and diversity, such as unconscious bias training, mentoring and coaching programs and leadership development programs.
  • Introduction of a grievance mechanism for incidents related to gender discrimination and harassment, such as a confidential hotline, a complaint procedure and a disciplinary policy.

However, implementing these programs is not enough. Companies also need to measure and report on their DE&I performance and progress, as well as benchmark themselves against best practices and standards. This is where organisations like CEPIS can help. CEPIS is the Council of European Professional Informatics Societies, representing over 450,000 ICT and informatics professionals in 29 countries. As part of its work to support DE&I initiatives for its membership, CEPIS launched the DiversIT Charter, a roadmap and recognition scheme for organisations that want to improve equity and inclusion.

The DiversIT Charter contains best practices from all over Europe and provides a framework for assessing and improving DE&I across three levels: Bronze, Silver, and Gold. Participants gain insights into how other companies are embracing this topic and most of all what benefits they see from their efforts. By joining the DiversIT Charter, companies can also demonstrate their alignment with the ESG criteria and the UN Sustainable Development Goals, especially Goal 5: Gender Equality.

We hope you agree that the business case for a more diverse workforce (in any sector) is patently clear. To reap the rewards all you need is a good roadmap, and that means investing in DE&I programs and initiatives, as well as measuring and reporting on your results. DiversIT Charter can support you in this journey by providing guidance, recognition, and networking opportunities. Because DE&I is not only the right thing to do, it is the smart thing to do.


Sources:
PWC 2021 Consumer Intelligence Series survey on ESG
Catalyst “Why Diversity and Inclusion Matter”
Duan, Y.; Yang, F.; Xiong, L. Environmental, Social, and Governance (ESG) Performance and Firm Value: Evidence from Chinese Manufacturing Firms. Sustainability 2023, 15, 12858. https://doi.org/10.3390/su151712858

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