ESG ‘should be driven’ by HR, says CIPD president

Starting the second day of Festival of Work at London’s Olympia and online, Baroness Ruby McGregor-Smith tells delegates that purpose must be at the heart of businesses’ agendas

Peter Spinney/Rehmat Rayatt

People professionals need to be the driver of ESG targets in business, the president of the CIPD has said.

Opening the second day of conference proceedings at this year’s CIPD Festival of Work, Baroness Ruby McGregor-Smith said that business leaders and C-suite executives needed the help of the profession to meet environmental, social and governance goals.

“ESG should be driven by the people function” she said, adding that these issues were all on the board's agendas, but that CEOs and CFOs needed “a lot of support to get it right”.

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McGregor-Smith added that she was a believer in lifelong learning, especially at the boardroom level. “The more senior you get in an organisation, the less you know about the day-to-day activities of the organisation,” she said, stressing that it was the role of HR to support the development of C-suite staff.

Effective leaders in ESG came from those that cared about achieving their targets, even when this was not required of them, McGregor-Smith said, calling on companies to do more than “virtue-signalling” and embed their purpose in their business objectives.

Data collection was another important part of the picture, said McGregor-Smith, particularly for the ‘social’ part of ESG. This is crucial for finding out why people are leaving or progressing within a company, and can help ensure that organisations are being fair on progression.

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Using the example of gender pay gap reporting, she said data on pay gaps should be backed up with explanations and targets, and said that executive remunerations should be tied to these targets.

Organisations that effectively embed ESG into their activities would reap the rewards from their employees, who would feel “empowered” by their workplaces, said McGregor-Smith. ESG was no longer a “fringe issue”, but at the heart of the business agenda, and firms would “fail in the long term” if they did not focus on the issues enough.