People Sustainability Strategy

Delivering business benefits and improving people’s lives

Johannes (Joop) Smits
Partner, PwC Switzerland

David Vaury
Director, PwC Switzerland

We are seeing a monumental global shift in the world and in the workforce. A shift where governments and organisations are facing the challenges of how best to realise the necessary transition to a net-zero economy. Done well, the transition can create huge opportunities. But, without care, it could come at a social and human cost. Many organisations still look at sustainability primarily through an environmental lens without seeing the benefits of focusing on People Sustainability. Addressing People Sustainability will not only positively affect employees but will also bring economic and environmental benefits.

Sustainability begins with the people. Along with the net-zero paradigm shift comes disruption. As we enter the green era, a concern across the board is the impact of the transformation on people and communities. The effect on employment, which we expect to be a mixture of job creation and job loss, is likely to be profound. Like in any change process, people will be interested to change if the proposed solution will bring benefits. It is the people’s choices and behaviours that will determine the trajectory of our collective transition to a sustainable world. It is our conviction that the green transition will only succeed at the pace and scale demanded by the urgency of the climate challenge through the cultivation of a culture of sustainability cross the entire value chain: employees, contingent workers, suppliers’ employees, and people in the communities.

What makes up People Sustainability

People Sustainability can be defined as the intersection of employee engagement, empowerment, and corporate responsibility based on the simple concept to treat people ethically and fairly, across the value chain. Tying this to business goals improves the employee experience which will build stronger companies that are better capable of meeting the needs of customers and stakeholders and managing all sorts of business risk.

A People Sustainability strategy is the umbrella under which a company considers the following topics:

Sustainability engagement: engage, communicate, empower. Engaging employees in the development of the sustainability strategy increases ownership of the goals. Employees need to understand what your ESG strategy entails and how they can influence ESG goals. They must be given the tools, insights and freedom required by them to play their part.
Diversity, Equity, and Inclusion: promoting and supporting diversity in the workplace is an important aspect of good people management. It is about valuing everyone in the organisation as an individual and ensuring equal opportunities for all.
Fair Pay: here are multiple perspectives on fairness at work, including pay outcomes, the process used in making pay decisions and the quality of the treatment people receive when procedures are implemented. Pay equity is fundamental to organisational fairness and trust.
Labour rights: there are certain workers’ rights that employers must guarantee. Workers’ rights are a set of principles that aims to guarantee fair, healthy, and equitable work conditions. Organisations have the responsibility to eradicate forced and child labour from their supply chain.
Employee health and wellbeing: workplace health and well-being are organisational must-haves. No longer a ‘nice to have’ or afterthought. It is about ensuring your employees are first safe and healthy; mentally, physically, and financially. But that is just the basis. Long term sustainability requires organisations to offer career and upskilling opportunities and provide meaningful work.

Addressing this transformation strategically with the aim to get ready for audited reporting will enable sustained outcomes:

Define People Sustainability strategy: your People Sustainability strategy starts with a thorough assessment of your current maturity across pillars. Based on this assessment you will define how you see the future state and where you want to focus first. Ensure your sustainability strategy unites the different people priorities and tying it to business goals will strengthen relevance to leaders and enable a sustainable transition. The strategic objectives will need to be reflected in clear People Sustainability goals.
Drive strategic transformation: a true strategic transformation is not limited to isolated or cosmetic changes to a single process or way of operating. Rather, it involves reimagining and reconfiguring the way a company treats its people across the entire organisation and the value chain. It is paramount to focus on bringing all workers along for the journey
Audit, report and communicate: tell the story, linking to strategy. Employees and other stakeholders need to understand how ESG goals link to the company’s strategy and priorities. Without this alignment, goals will lack credibility. Reporting requirements are developing rapidly, and companies will need to report on topics as gender representation, equal and fair pay, employee health and safety and forced and child labour. Be mindful that increased regulatory requirements require your reporting to be audited.

Key considerations

By following this approach, you can start to integrate ESG into the people agenda in a way that reinforces a sustainable culture and supports the long-term creation of value:

Tell the story, linking to strategy. Employees and other stakeholders need to understand how ESG goals link to the company’s strategy and priorities. Without this alignment, goals will lack credibility.
Lead with culture, support with pay. It is culture, not pay, that drives sustainable behaviour in support of ESG strategies. Pay must be seen as the enabler of culture, not the sole driver of it.
Engage, communicate, empower. Engaging employees in the development of the ESG strategy increases ownership of the goals. Employees need to understand how they can influence ESG goals and must be given the tools and freedom needed to do so.
Build capability and collaboration. Integrating ESG into pay requires, at least, close collaboration between HR (Human Resources) and sustainability functions – and it might also require new capabilities in both. Governance oversight of target setting, and measurement might need to evolve to enable right input from sustainability committees into the reward process.
Maintain a focus on value. Good ESG performance can’t be an excuse for not creating value. The best organisations capture the symbiosis between ESG and long-term financial performance specific to their company, and pay arrangements need to reflect that.

People Sustainability webinar series

People at the center of your efforts. People Sustainability is becoming a priority on business agendas. In this webinar series, we address people-related risks and opportunities across the value and supply chains in order to support you create a sustainable culture within your organisation.

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