DLP Insights

Labour law is linked to ESG (ESG governance LAB newsletter – ETicaNews, May 2019 – Vittorio De Luca, Elena Cannone)

Categories: DLP Insights, Publications

10 May 2019

The sustainable approach to investments is increasingly the benchmark for virtuous entrepreneurs, who place sustainability issues at the center of their entrepreneurial decisions. This is also increasingly the case in relation to the management of their own staff. An indication of this has also come from the Excellence & Innovation HR Award, the prize for the best practices and projects in the responsible management of human resources, launched by the De Luca & Partners law firm in 2018. In fact, at least 75% of candidate projects had linked initiatives to enhance human capital to corporate social responsibility activities or policies.

Moreover, the acronym ESG (environmental, social and governance) includes principles such as diversity and integration among human resources, with all that this entails in terms of the protection of human rights (the “S” factor). On the other hand, the “G” factor takes account of variables such as the relationships that exist among employees, the remuneration system and the procedures by which the company’s organisational structure operates.

Therefore, when we talk about ESG, we are also necessarily referring to the policies to be implemented in order to guarantee the fair and sustainability-oriented management of resources. In fact, it is important to plan processes/practices that aim to manage and enhance human capital within businesses, sustaining and promoting the “wellbeing” of all those who work there. Sustainability is a constituent element of the organisation, and is essential for dealing with challenges on the market and attracting talent. And this is where the role of the employment lawyer comes into play, because employment lawyers can support the Human Resources Department in adopting a staff management approach that improves the climate at the company and increases staff satisfaction. This can be done through the implementation of a welfare plan which – if well structured – allows a business (whether small, medium or large) to increase its productivity and employee participation. Specifically, through welfare plans, employees can be provided with complementary remuneration in addition to their so-called “financial” remuneration, which consists of goods or services that fall under advantageous tax rules for both the employer and the employee. Furthermore, the adoption of smart working policies should not be overlooked, as these could certainly guarantee (i) better employee wellbeing, (ii) the possibility for staff to reconcile their free time with their working hours, and (iii) better environmental sustainability in terms of a reduction in traffic and pollution, given the lower number of journeys to the workplace that need to be made. However, a remuneration system that is structured according to principles of equity, equal opportunities and meritocracy is also sustainable. Obviously, this all has a consequent benefit for the business, given that the wellbeing of employees will inexorably be reflected in their performance. So, ESG is both a point of reference and the starting point for all virtuous companies and entrepreneurs who wish to become and remain competitive on the market.

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