What “ESG” factors are, and how to pursue them when managing human resources

23 October 2023

The attention to compliance with provisions on environment, social justice, and governance has lately been progressively imposed as a main topic, not only for large companies. They are now taken into account by consumers spending and market operators’ choices, who positively value companies truly invested in respecting such regulations. That is why ESG factors have become fundamental for a company to be identified as really in step with the times. 

In addition to their profit, companies today are liable for the footprint they leave through their actions on the society in which they operate. ESG (Environmental, Social and Governance) issues fall into several areas of the activities typically carried out by companies, as they translate into compliance with environmental and social rights and applying fair management standards for all stakeholders.

The idea of “sustainable development” – a term that effectively sums up the nature of the ESG goals – was formally created in 2015, when the UN defined a list of 17 global goals which targeted essential outcomes to be achieved, such as the end of poverty and inequalities, as well as the definition of the suitable measures to tackle climate change. The 2015 UN Agenda set out to reach these goals by 2030.

Seen more closely and for the purposes of this essay, applying ESG factors to the area of labour relations and personnel management means administering human resources according to a sustainability-oriented view, which aims at enhancing the well-being of the human capital employed by companies. On a practical level, this can be achieved through the provision of a significant welfare plan for employees or the adoption of policies that make it easier for employees to comply with ESG provisions (e.g., more flexibility in the management of the relationship by allowing more days of the remote working regime, to reduce the environmental and economic effects of the home-work commute). Furthermore, scholars also suggest providing occupational health and safety standards that go beyond the mere and average regulatory training, as it shall contemplate an all-round integration of employees within the company, its processes, and its goals.

Recently, a gender equality certification system has been established by Italian lawmakers. Once it is obtained by companies demonstrating fair integration within their population, it provides economic and tax incentives. This is an excellent example of how Italy, as well, is moving towards introducing a dedicated regulation of such issues.

More specifically, private and public sector companies with more than 50 employees are compelled to draft and transmit a periodic report on their male and female staff situation on a two-year basis. If such a procedure is followed successfully, the involved company can request relief of the social insurance contributions (for no more than 1% of the due amounts and, in any case, up until the maximum amount of EUR 50,000 per year for each company).  

Companies employing less than 50 employees can still comply with such regulations; by doing so, they, too, can access the tax advantages described above. 

In this same direction is the so-called “Home-Work Travel Plan”, which companies with more than 100 employees are required to adopt by December 31st of each year. The latter is a document aimed at developing alternative forms of sustainable mobility and having employees approach them more easily. Furthermore, the plan provides the obligation to appoint a professional figure (the “Mobility Manager”) to design its content and promote its implementation.

Therefore, ESG factors can encompass actions of a different nature and refer to all areas of company life, with the common purpose of defending the well-being of the individuals who populate today's society. As of today, with specific reference to the management of human resources, Italian lawmakers have handled such features through several benchmarks, which, although expressly applying to larger companies, are currently tracing the path for future regulatory interventions.