Skip to main content

Insight article

February 8, 2024

What is ESG, and what does it mean for employers?

ESG is now a commonly used term growing in relevance for businesses.

ESG Vector of windmills and an electricity cable going into the letters ESG

ESG refers to a range of environmental, social, and governance factors that were once traditionally used by investors to assess the sustainability credentials of companies they were considering for investment.

It is now typical for a company’s customers, workforce and regulators to scrutinise its ESG profile closely. Indeed, an ESG profile communicates the company’s principles, culture and commitment to integrating ethical and sustainable values across its business.

How does ESG impact employers?

Demonstrating a solid commitment to ESG can help employers recruit and retain top talent. It can also positively affect its productivity, reputation, and standing against competitors.

Environmental

The environmental factor measures a company’s environmental impact. It takes account of the company’s carbon footprint. Insofar as it is relevant to employment, this factor might look at incentives for employees to travel greener, encouraging recycling or volunteering days for climate change charities or organisations. 

Social

The social element has gained much more prominence since the COVID-19 pandemic and the # MeToo and Black Lives Matter movements; it is at the forefront of public scrutiny.

There is, rightfully, a demand for employers to do more than point to a dusty workplace policy. An employer’s approach to equality and human rights and how it engages with its workforce are crucial.

Key areas for focus are Diversity, Equity and Inclusion, employee mental and physical well-being, flexible working practices, pay and pay gaps, and employee engagement.

What is Diversity, Equity and Inclusion?

DEI are often terms used independently but interchangeably. Each term, though, has a different meaning, as follows:

  • Diversity: the characteristics that differentiate people. It goes further than the protected characteristics identified in the Equality Act 2010. It includes social, demographic and cultural background and cognitive and personal strengths, such as neurodiversity.
  • Equity: whether people are treated fairly based on their individual needs. It identifies that people may need different resources and opportunities to excel. Equality, often confused with equity, is the same treatment to all, regardless of individual needs.
  • Inclusion: the actions taken to ensure people feel a sense of belonging and value in the workplace.

Governance

Governance measures how a company operates its leadership, executive pay, audits, internal controls and shareholder rights. It covers risk, compliance and regulation, such as anti-bribery, corruption and tax evasion matters, and overlaps and incorporates some of the social elements of ESG, such as pay and pay gap reporting.

Conclusion

The principles of ESG continue to gather momentum, forcing businesses to look beyond their profit line and address their impact on society and the world at large, which can only be good. Putting in place an ESG policy that documents the business’ approach to ESG concepts will only stand an organisation in good stead. It will help to protect a business’ reputation and give transparency to its commitment to its ethical conduct.

An ESG policy should be high on any employer’s agenda.

Contact Karen Cole for assistance with your ESG strategy and policies or for advice on supporting your employees.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Stay in touch

Subscribe to our newsletter

Stay in touch

By completing your details and submitting this form you confirm you are happy for us to send you marketing communications and that you agree to our Website Privacy Policy and Legal Notice and to us using Mailchimp to process your data.


Sending

News/Insight

  • Strategic lifetime gifting
    How to minimise your IHT liability during your lifetime.


    Read more
  • Navigating directors’ duties
    Legal responsibilities and risks for UK company directors


    Read more
  • Preparing a business-lasting power of attorney
    In this article, private client solicitor Herman Cheung of West End law firm RIAA Barker Gillette (UK) considers the advantages, needs and practical examples of creating a bu


    Read more
  • Can you make a WhatsApp will?
    Key legal requirements and future outlook.


    Read more
  • Supporting neurodiverse people in family law matters
    Understanding neurodiversity in the legal context.


    Read more

What they say...

  • Michael, May 2025
    “Very pleased with the services provided by Charlotte Barbaroussis. Particularly found her quick and effective to reply to any queries.”

  • Malcolm & Sheila Blackmore, May 2025
    “My wife and I engaged RIAA Barker Gillette to prepare our wills and LPOA’s. James McMullan and Charlotte Barbaroussis were the epitome of professionalism – responding quickly, talking us through the legalese, clearly answering any

  • Ian, April 2025
    “Martin and his team at Barker Gillette acted for us in our purchase and sale of property. The chain was lengthy and elements of the work became complex. Martin was tenacious and resolved to answer our queries as they arose. He handled all aspe

  • Henry, April 2025
    “We have purchased flats before with 2 different solicitors who were unable to help us this time. Martin came highly recommended and are we glad. He was very professional in every way: knowledgeable, approachable, he has a friendly manner, very

  • Megan Purcell-Jones, April 2025
    “Charlotte was extremely diligent and thorough. She talked us through the process of making our wills and listened to and understood our needs and the complexities involved. Extremely patient and very clear.”

Read more
Send this to a friend