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Stakeholder Capitalism Roundup: More Focus on the "S" of ESG; Does HR Remain Oblivious to Reporting?

Here’s a wrap-up of the latest news about Stakeholder Capitalism and Human Capital management and reporting.
 
Why the “S” could become the new “E” of ESG (Environmental, Social, Governance) investing…McKinsey report finds that human capital reporting isn’t even on the radar screen of leading Chief Human Capital Officers…IBM publishes new but unaudited human capital report…Worker voice is critical to Stakeholder Capitalism. These are some of the headlines in Stakeholder Capitalism and Human Capital management and reporting over the last few weeks. 
 

Why the "S" Could Become the New "E" of ESG Investing...

This article in Barron's by Lauren Foster about the failure of Environmental, Social, Governance funds to outperform the market during the war in Ukraine suggests that this is calling into question the value of ESG investing and putting a new focus on the need to address human capital reporting as well as environmental issues. A few key points come out of this article available only to Barron's subscribers:
 
There is a new need for a focus on the "S" of ESG. According to a BNP Paribas report referenced in the article, 51% of respondents say the "S" is the most difficult concept to analyze and embed in investment strategies.
 
Jason Saul, Executive Director of the Center for Impact Sciences at the University of Chicago, writes in a recent paper "Fixing the 'S' in ESG," "to be relevant, the ESG field must modernize the way it measures S factors." This requires an objective standard for reporting social outcomes.
 
Adds Kathryn McDonald (Mohan) of RadiantESG, "social challenges give rise to myriad risks affecting our investments and our economy more generally. These threats aren't on the distant horizon, they are with us now."
 
The article's author, helped by Evie Liu, concludes that how "ESG funds perform ultimately will determine whether the concept flourishes...or whether it becomes a passing fad."
 

McKinsey & Company Report--HR Remains Oblivious to the Coming Focus on Human Capital Management and Reporting...

As more major companies publish human capital reports, as did IBM this month, it’s surprising to see that human resources remains side-lined. 
 
According to this recent McKinsey report by Laura Blumenfeld, Neel Gandhi, Asmus Komm, and Florian Pollner, the need to manage human capital reporting isn’t even on the radar screen among HR leaders at 80 top companies.
 
Here are their priorities for this year, according to the report.
 
Elevating HR through digitalization.
Enabling agility and fluidity.
Refocusing the business partners.
Creating HR practice groups.
Organization around the employee experience.
Virtualizing centers of excellence.
Putting the business in the drivers’ seat.
 

New IBM ESG Report Demonstrates Rising Use of Human Capital Reports as a Marketing Tool, Not Compliance...

As was covered in the Enterprise Engagement Alliance's recent YouTube show on why publishing human capital reports is a marketing issue, IBM's recently published ESG report clearly is for public assumption.
 
Click here for the announcement and a link to the report.
 

The report also demonstrates the benefits of using a comparable framework such as provided by ISO 30414 or other international standards, and the benefits of having reports verified by independent, qualified human capital practitioners.
 
The report includes some laudable goals that demonstrate how Stakeholder Capitalism can be a virtuous circle for society:
 
Skill 30 million people of all ages with new skills needed for the jobs of tomorrow by 2030.
Log 4 million volunteer hours by 2025.
Invest $250 million in apprenticeships and new collar programs by 2025.
Dedicate 15 percent of its first-tier supplier spending to Black-owned suppliers by 2025
Ethical Impact: IBM aims to enhance innovations, policies, and practices that prioritize ethics, trust, transparency, and – above all – accountability.
Reach 1,000 ecosystem partners trained in technology ethics by 2022.
Continue to engage 100% of suppliers on sound practices.
Continue diversity linked pay modifier for senior leaders.
 

CNBC Panel: In Stakeholder Capitalism, It’s Beyond Surveys, It’s About Worker Voice…

Despite large expenditures in employee surveys over the past two decades, employee engagement has remained flat at best, based on Gallup surveys. The big opportunity is to passionately engage employees in the purpose and mission of the organization so that they not only feel engaged but are continually looking after the best interests of the organization. Click here to view the show.
 
Here are some key observations shared by Chipotle Mexican Grill Chief Diversity & Inclusion and People Officer Marissa Andrada, Intel Corporation EVP and Chief People Officer Christy Pambianchi at a JUST Capital event at Nasdaq, “The Strategic Imperative of the ‘S’ of ESG.”
 
“The use of a formal surveys to gain employee feedback doesn’t work anymore,” Andrada of Intel says. The company uses ‘Chip Chats,’ through which C-suite leaders visit restaurants to update the teams in quick presentations and invite questions.
 
Pambianchi says gathering feedback is crucial for retention. The company launched an inclusion survey last year and says its focus now is “on defining the unique value the company provides as an employer. I call it re-recruiting the people that do work for you,” she says. “Like renewing your marriage vows – why did I come work here in the first place?”
 

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Master the “S” of Environmental, Social, Governance (ESG), A.k.a. Stakeholder Capitalism
 
The Enterprise Engagement Alliance at TheEEA.org is the world’s first and only organization that focuses on outreach, certification and training, and advisory services to help organizations achieve their goals by fostering the proactive involvement of all stakeholders. This includes customers, employees, distribution and supply chain partners, and communities, or anyone connected to an organization’s success.
 
Training and Thought Leadership 
  • Founded in 2008, the Enterprise Engagement Alliance provides outreach, learning and certification in Enterprise Engagement, an implementation process for the “S” or Social of Stakeholder Capitalism and Human Capital Management and measurement of engagement across the organization.
  • The Enterprise Engagement Alliance provides a training and certification program for business leaders, practitioners, and solution providers, as well as executive briefings and human capital gap analyses for senior leaders.
  • The EEA produces an education program for CFOs for the CFO.University training program on Human Capital Management.
  • Join the EEA to become a leader in the implementation of the “S” of ESG and Stakeholder Capitalism. 
EE for CEOsEngagement Digital Media and Marketplaces
Video Learning
The EEA Human Capital Management and ROI of Engagement YouTube channel features a growing library of 30- to 60-minute panel discussions with leading experts in all areas of engagement and total rewards.
 
EE RoadmapBooks
Enterprise Engagement Advisory Services 
The Engagement Agency helps:
  • Organizations of all types develop strategic Stakeholder Capitalism and Enterprise Engagement processes and human capital management and reporting strategies; conduct human capital gap analyses; design and implement strategic human capital management and reporting plans that address DEI (Diversity, Equity, and Inclusion), and assist with managed outsourcing of engagement products and services.
  • Human resources, sales and marketing solution providers profit from the emerging discipline of human capital management and ROI of engagement through training and marketing services.
  • Investors make sense of human capital reporting by public companies.
  • Buyers and sellers of companies in the engagement space or business owners or buyers who seek to account for human capital in their mergers and acquistions
For more information: Contact Bruce Bolger at Bolger@TheICEE.org or call 914-591-7600, ext. 230.
 
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