REBA Inside Track: Sustainability as a driving force for business and culture change
With investors and business leaders looking ever more closely at sustainability and purpose, there are expected to be huge shifts in business practices, products and services. The fourth report in REBA’s Transforming Engagement series, in association with Mercer Marsh Benefits, shows that nearly eight in 10 (78%) respondent organisations have made changes to at least some of their products or services to meet sustainability objectives, while a similarly high proportion (80%) continue to make changes. In the foreseeable future, over a quarter (27%) will change all their products and services.
This revolution in how business is conducted means that chief human resources officers (CHROs) and their reward and benefits teams will be fundamental to realising organisational aspirations for change. In broader society, consumers have shifted their purchasing behaviour towards being more sustainable. Employees are consumers too, and if businesses don’t demonstrate sustainable products and services as well as values and strategies, both employees and customers will vote with their feet. Part of the pattern of this shift is the increased emphasis on environmental, social and governance (ESG) factors from investors.
Pensions teams will have been aware of this pressure for some years, as regulators, providers and scheme members have been ramping up action on sustainable pensions. Not least because pension funds (via institutional investors and trustee boards) have the most power to drive the companies they invest in to become more sustainable.
CHROs at organisations at the forefront of sustainability, both globally and in the UK, have been working hard to demonstrate their own credentials, align with business purpose and remap their employee value proposition. There has been a visible shift towards sustainability as a business differentiator and employer brand marketing opportunity. Those lagging behind risk losing the competition for talent. Supply chains are also coming under increased scrutiny, including benefits providers.
Although relatively few organisations currently audit benefits suppliers for sustainability practices (just one in six do – 15%), this is set to increase rapidly, with half of respondents (50%) planning to introduce auditing for sustainability within the next two years. In the future, employers may move towards in-house governance structures for all benefits providers (as a third of our respondents already do for pensions) and adopt formal sustainability audits. But for now, it appears that reward and benefits departments are largely looking to suppliers to incorporate sustainability into benefits offerings in a cost-neutral manner.
For many, the first easy step is to provide benefits that allow employees to live more sustainable lives. More than a quarter (26%) of our respondents do this, with nearly two-thirds (63%) planning to do so within the next two years. Sustainability is a business issue, and is increasingly an HR, reward and benefits issue too.