What role do health and safety professionals play in ESG strategies?

WHS professionals are in a crucial position to influence all pillars of an organisation’s environmental, social and governance (ESG) strategy, according to an expert in the area.

While the most obvious impact is in the area of physically and psychologically safe workplaces, the influence of WHS extends well beyond employee safety and reducing workplace incidents. 

“WHS professionals can assess how business operations can affect the environment and develop control measures to reduce negative impact,” said Susan Sadler, CEO of specialist workplace relations consulting firm Red Wagon Workplace Solutions.

“The guidelines and processes that are developed as part of the WHS remit, along with the education of employees and ongoing monitoring and reporting, show that WHS professionals are in a unique position to align an organisation's policy, process and people to an ESG strategy.”

Sadler, who spoke ahead of the AIHS National Health and Safety Conference 2024, which will be held at the Melbourne Convention Centre from 21-23 May, also said that there is an emerging theme of organisations trying to demonstrate engagement with ESG by generating and propagating a lot of information that ticks boxes but lacks substance and impact. 

“ESG has become a bit of a buzzword, and as a concept, it is oversimplified to be aligned mostly with environment and sustainability,” she said.

“The gravitation to the ‘E’ is understandable – environmental impact is easier to understand, easier to measure and easier to implement. In fact, ESG is holistic – at its core, it is related to an organisation's ability to create and sustain value while managing its risks and its opportunities.”

Environmental matters have been highly politicised and widely reported in the media, according to Sadler, who said the glamour of the ‘E’, in addition to its relative ease to address, has resulted in it being the centre of the ESG strategy of many organisations. 

“A quick Google search on ‘ESG strategy examples’ pops out results mostly around environmental management including waste reduction, renewable energy and reducing carbon emissions,” she said.

“In contrast, the more nuanced and complicated areas of social (the ‘S’) and governance (the ‘G’), tend to get overlooked. What results is that many organisations lack holistic ESG strategies, and their outcomes are limited, both in terms of breadth and depth of impact across the three pillars of E, S and G.”

There are a number of common challenges for organisations in this, and Sadler said an important one is ensuring internal alignment before promoting an ESG strategy or position, which could open the organisation to allegations of greenwashing.

“This challenge can arise when ESG is used as a buzzword, and broad representations are made on websites, social media or advertisements, or on products/in the service itself,” she said.

“ESG should not be used as a marketing tool, and the challenge for organisations is to educate all levels within the business that ESG can be a strategic advantage that must be embedded within the organisational culture.”

Similarly, developing and executing an ESG strategy necessitates silos to be broken down within an organisation. 

Where departments and functions don’t usually interact, Sadler said people need to start talking to each other and build relationships.
“This could be WHS working alongside marketing, or HR with procurement – everyone can influence the ESG outcome, whether that be positively or negatively, but they need to be on the same page,” she said.

The ‘social’ (S) pillar of ESG is an organisation’s human capital, according to Sadler, who said this is the value and the heart of every business.

“There have recently been significant legislative amendments in response to the changed societal standards about how people are treated in and about work,” she said.

The names of the amendments speak for themselves, for example, the Respect at Work Act and Secure Jobs Better Pay Act. 

The Respect at Work Act provides better protection for workers from sexual harassment and other forms of sex discrimination, harassment and unfair treatment in the workplace, while the Secure Jobs Better Pay Act considers changes to increase job security, a focus on equal pay and protections for vulnerable workers. 

“Organisations have an obligation to take care of employees while they are at work, and the changes to legislation have strengthened that positive duty. Healthy and happy employees will be more capable of doing their best work and therefore contribute positively to the business,” she said.|

“The importance of the ‘S’ then is twofold – at a basic level, the S is important because there are minimum performance criteria set in legislation about how organisations must treat their people. 

“You must pay them correctly; you must provide a safe working environment. It’s the crossover of the governance pillar with the social – rules and structure for the management of human capital.”

Just as important is the recognition that the bedrock of an organisation is its people: they are crucial to success, so they should be treated for the value that they are rather than seen as a cost, according to Sadler.

“Within ESG, the S matters because, without it, the ability to impact either the E or the G is limited. More broadly, within an organisation, the S matters because a business can’t function without people, and people can’t function if they aren’t protected and supported,” she said.

Sadler will speak about ‘ESG: why the ‘S’ matters now’ at the AIHS National Health and Safety Conference 2024. Held at the Melbourne Convention Centre from 21-23 May, the conference will offer three days of workshops, presentations, keynote speeches, networking events and a conference dinner. Delegates will have the opportunity to learn from their peers, share knowledge and grow their professional networks. For more information, email [email protected], call (03) 8336 1995 or visit the event website.