Legal Advisors as Partners of Sustainable HR (ESG Business Review – ETicaNews, January 2019 – Vittorio De Luca)

Contribution of De Luca & Partners on human resources as a sustainability objective. The HR is expected to have an increasingly substantial impact, as it can focus the whole organisation on ESG criteria. A sustainability trend was also identified in the projects that competed in the first edition of the Excellence & Innovation HR Award, promoted by the Law Firm ito select the best business operations or practices in Italy.

In recent years – in Italy too – we have noticed an exponentially increased attention on “sustainable finance” or “ethical finance”, as it is called , commonly identified with the acronym ESG, which stands for environment, social and corporate governance. This increased attention is not only the result of recent legislative actions, as Legislative Decree no. 254/2016 has transposed EU Directive 95/2014 as regards disclosure of non-financial and diversity information by certain large undertakings and groups, but it is also the result of a general and ever-increasing focus of economic operators on sustainability issues; and this was unprecedented since the industrial revolution. These aspects should clearly be – and increasingly are – used as a reference not only in large corporations, which are compelled to do so by law, but also by any companies (including small and medium sized businesses) that aim to be competitive and stand out at the national and international level. On the other hand, Legislative Decree no. 254/2016 is highly innovative in the legislative area, as for the first time companies have been required to issue a “non-financial balance sheet”, highlighting environmental and social issues related to personnel, respect for human rights and the fight against active and passive corruption. In such context, it’s more important than ever to have a well implemented organisation, management and control model pursuant to the Legislative Decree no. 231/01, with its code of ethics, which is an integral and essential part of it. However, the code of ethics takes on a new meaning, which is completely independent from the “231 system” – of which it is sometimes considered as a necessary corollary – since it becomes an actual charter of corporate values, with the aim of leading the actions of the parties involved in its organisation and operation. From an ESG perspective, the Human Resources Management (HRM) role – not the Human Resources Department – has a key role to play. For instance, the HRM – together with the managers in charge of sustainability – will have an increasingly substantial impact on the company organisation, as a result of its ability to focus the entire organisation on ESG values that are promoted by the company, for example by introdcing incentive systems. Therefore, human resources will play a key role in supporting the Sustainability strategy of corporations, actively contributing to the development of objectives to achieve sustainable performance on these issues. This is how the Strategic or Sustainable HRM has introduced the role of creating or strengthening the motivation and skills to achieve social and environmental objectives. Regarding in more details the “Social” area of ESG criteria, the goals and strategies of any Sustainable HRM are: equity, development and health, including the psychological well-being, of the individual. In other words, this means meeting personal and professional needs and expectations of employees. HRM has many tools at its disposal to achieve these objectives. Training, personnel performance assessements, remuneration system and active involvement of the staff in the corporate activities and to achieveany relevant objectives are just a few examples. In this context, the role of the labour lawyer evolves from “litigator” to “business partner” of the company that, in cooperation with HRM and with with Sustainability managers, contribute to develop a synergistic relation aimed at preventing any corporate issue with employees, i.e. a major category of stakeholders. A “sustainable” company that takes ESG criteria into account as its guiding principles will certainly have a limited number of lawsuits with its employees. Or rather, any high level of litigation with the employees, in our opinion, must certainly be carefully assessed as an indicator of a possible area for improvement n terms of sustainability. The major trend amoung companies in the Social area has also been identified in the projects that competed in the first edition of the Excellence & Innovation HR Award, promoted by our Firm, to select the best operations or practices in the labour and HRM sector in Italy. Reviewing the high number of projects that were submitted, it became clear how companies today invest in Sustainability, i.e. the promotion of social cohesion, of systems aimed at preventing rather than resolving conflicts and at pursuing the development and well-being of individuals. However, when employee-centered projects are implemented, paradoxically companies claim that a sustainable work enviroment encorages employees to “overperform” and to deploy efforts that may make a difference n terms of competitiveness and ability to attract talents as well as to maintain a high level of engagement. Therefore, business sustainability means efficiency, productivity and, basically quality.