ESG: Crucial for businesses to engage employees, especially Gen ZWith Generation Z starting to populate the workforce, issues such as the environment, diversity and inclusion, and privacy are more important considerations to them than to their predecessors. Source: © 123rf 123rf With Generation Z starting to populate the workforce, issues such as the environment, diversity and inclusion, and privacy are important considerations Employees, such as Gen Z, are important stakeholders in businesses. Environmental, Social and Governance (ESG) is a crucial element that stakeholders can use to engage with businesses. Against this backdrop, it becomes essential for employers to consider what ESG looks like in the workplace. EnvironmentalFor an employer, the environmental aspect of ESG would mean assessing the business’s impact on the environment, creating policies, and adopting practices that promote sustainability. Such policies and practices should, among other things, reduce greenhouse gas emissions, and promote efficient use of energy and the sustainable use of natural resources. The environmental element would also involve addressing and mitigating occupational risks that can arise from exposure to hazardous substances, poor air or water quality, inadequate pollution and waste management, and other environmental factors. This approach would simultaneously ensure adherence to regulations like the Occupational Health and Safety Act 85 of 1993 (OHSA). Adopting such policies and practices is not only good for the environment but employers can derive incentives and allowances for taking environmentally friendly action and implementing measures to combat issues such as climate change. In terms of the Income Tax Act 58 of 1962, a business can derive allowances and incentives for investing in the use of renewable energy and energy efficiency savings, among other things. SocialThe social aspect of ESG is the biggest consideration for employers as it deals with the relationship between the employer, their employees and the society at large.
GovernanceTraditionally, the governance aspect of ESG would focus on various factors such as ethical and accountable leadership, corporate governance, and board composition, among other things. However, also included in the governance aspect of ESG are data privacy and cybersecurity; in other words, ensuring the protection of data and having strong cybersecurity measures in the workplace. The move towards digitisation and the data-driven economy has heralded the need for data privacy and cybersecurity and, as such, has become a material part of the governance aspect of ESG. A business must ensure that the fundamental rights to privacy and data protection of employees and those who engage with the employer, such as customers, are observed when processing their personal data. In South Africa, the Protection of Personal Information Act 4 of 2013 (POPIA), regulates the processing of information. An employer, as a responsible party, is entrusted with ensuring, among other things, that data is safeguarded from unlawful and unauthorised access and processing, used for its intended purpose, stored safely and securely, and when the purpose of collecting such information is exhausted, it must be disposed of safely and appropriately. Failing to comply with PoPIA may result in fines up to R10m or even imprisonment. A legal foundationESG continues to grow and has an impact on an employer’s business. Employers are to consider ESG not only for investment purposes or reputational reasons. But it also becomes clear that the legislation and the law provide the ESG principles with a legal foundation. ESG therefore aligns and reconciles with the employer’s duties and obligations and provides a framework for an employer to follow. About the authorAndile Mphale is a candidate attorney in the employment department at Lawtons Africa. He is supervised by Darryn Mer, consultant in the employment department at Lawtons Africa. |