ESG stands for Environmental, Social and Governance. These are policies that companies are being asked to adopt that are “strategic frameworks that guide businesses in managing their environmental footprint, fostering social responsibility, and upholding strong governance practices.”
Environmental and Governance policies, though important to have, to date have not made their way into employee handbook policies as much. What have shown up as new handbook policies for consideration are in the area of Social policies.
According to ESG Voices, a group that advocates for ESG, “Social policies focus on the company’s relationship with employees, suppliers, customers, and communities where it operates.” Companies that engage other companies for business are looking for their vendors and others to have these policies in place in order to do business with them.
These policies include labor standards, employee health and safety, diversity and inclusion, and community engagement. Specific individual policies that an employer may now need to have in their handbooks are:
- Human Rights
- Policies against Forced or Compulsory Labor
- Child Labor
- Human Trafficking
- Health & Safety Policy
- Diversity Equity and Inclusion
- Pay Equity and Pay Transparency
- Privacy of Personal Data and
- Anti-Discrimination and Anti-Harassment Policies
One other policy that is entering the lexicon of employee handbook topics seen recently and that falls under the Governance area of ESG is a policy statement on Anti-bribery and Anti-corruption.
Though these policies may read or sound very similar from company to company, ESG Voices recommends organizations customize them to their particular “industry risks, operational impacts, stakeholder expectations and strategic goals.” For example, an employer may not desire a policy supporting labor unionization or may not want to invest so much into diversity equity and inclusion. Tailoring those policies accordingly would be well advised.
To develop effective ESG policies that are customized to an organization it is recommended organizations set clear objectives, identify relevant metrics, create an implementation framework, establish monitoring procedures, ensure accountability is in place and track progress and communications of the policies. This would of course include the relevant policies in the organization’s employee handbook.
From recent discussions with HR professionals about including the policies into the company’s handbook the request is coming from the operations side of the business. In some cases, the procurement area of the business is requesting these policies be added to the handbook based upon the customer’s purchase agreements with them. In other cases, the directive may be coming down from the top, such as the organization’s Board of Directors.
It is recommended that Human Resources get ahead of this new policy trend and suggest management look into whether it is time to adopt these policies for the organization and subsequently, for inclusion into the employee handbook.
ASE Connect
In-Person Class: Designing and Updating Employee Handbooks – Participants will receive instruction on on critical legal compliance handbook components and standard and optional policies to include in a handbook. The course will discuss layout tips that will help keep update work to a minimum. This class will be held in Novi on September 18, 2024, 9:00 a.m. – 12:30 p.m. Register here.
ASE Handbook Services – ASE can provide employee handbook review or update. If an organization does not have an employee handbook yet, ASE can develop a complete employee handbook customized to your organization’s policies and practices. If you have a handbook, we can review it for compliance as well as layout for ease of reading. For information about ASE employee handbook review and development services contact Michael Burns.
Sources: ESG Voices. Understanding ESG Policies: A Comprehensive Guide for Businesses (4/12/2024), Morrison & Foerster LLP. ESG’s Ever Expanding “S” (8/15/2024)
By Michael Burns, courtesy of SBAM-approved partner, ASE.
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