In the previous article, we defined the ‘S’ in ESG as how an organisation treats people, the employees, the suppliers and the customers. Bear in mind that it is a social responsibility of a company to provide good relationships with the employees, the suppliers and the customers.
Since employees are the biggest stakeholders of a company and an active player to ensure the company meets the criteria of ESG metric, our article today will focus on the implementation of ‘S’ on the employees.
WHAT IS ESG METRIC FOR THE ‘S’ ASPECT IN ESG?
| Relationship | The company’s relationship with the employees, the suppliers, the customer. |
| Community & Human Rights | The company’s stance towards human rights in its operations, as well as its morality to the surrounding community. |
| Health & Safety | The company’s priority on the health & safety of workers and their surroundings. |
| Diversity & Inclusion | The company’s policy on diversity and inclusion towards the employees involving gender, race, ethnicity, disability and more. |
| Political Ties | The impact of the company’s involvement with political parties, leaders, and its relationship with the investors. |
AREAS THAT COMPANIES MAY FOCUS TO IMPLEMENT THE ‘S’ IN ESG FROM THE LEGAL PERSPECTIVE
1) Basic Rights & Benefits for Employees
a) Rights Under the Amended Employment Act 1955
- To meet the ‘S’ metric in ESG, the employers must ensure that the employees’ basic rights are guaranteed in line with the latest amendment to the Employment Act 1955. (working hours, flexibility working, wage, maternity & paternity leave & more)
b) Health and Working Condition
- The company must provide sufficient protection of health and safety measures for the workers and/or employees that suit their working condition so as to give assurances of safe working conditions for the employees.
c) Training Employability and Career Development
- One of the aspects that the company may take into account to meet the ‘S’ standard of ESG is by equipping the employees with relevant knowledge and skills. This may improve the career prospects and the productivity of the employees which will eventually contribute to the company’s growth.
2) Peripheral Rights
a) Respect for Employees Dignity
- Employers should take the initiative to understand and identify sexual harassment in the workplace to ensure the dignity of its employees are always protected and secured.
- It is best to ensure that a company’s policy and grievance procedure sufficiently address the issue of sexual harassment in order to create a safe workspace for its employees.
b) Rights to Employees Privacy
- Data breach is one of the ‘S’ indicators under ESG which has a significant impact on both corporate reputation and consumer confidence. As such, employers are required to comply with the Personal Data Protection Act 2010 in processing their employees’ personal data as well as the personal data of their customers and suppliers.
c) Discrimination Policy
- There are many forms of discrimination happening in the course of employment which includes biases towards gender, race, and persons with disability.
- Employers who hire diverse groups of employees regardless of race, religion, gender and disability reflect a good stand on the company and its engagement on human rights.
In a nutshell, to achieve the ESG goal, the companies’ implementation of the ‘S’ aspect must always be in compliance with the laws. The areas mentioned above are only several areas that the companies may focus on implementing ESG within the legal parameters.
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