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Small Businesses, ESG, and Human Resources Support

Updated: Mar 26

By: Dr. Brittany Castonguay 16 Mar 2023 #SmallBusinesses

ESG and human resources support
ESG is Social Awareness of Waste

The byproducts of consumption have triggered global consequences that have resulted in the disruption and reduction/elimination of Earth’s finite resources. While it may not seem like a lot when one organization produces fossil fuels or waste from production, those side effects build up and have drastically reduced key resources. Environmentally conscious consumers have made deliberate decisions not to support organizations that do not foster support of environmentally friendly and sustainable practices. The practices these consumers seek are called environmental, social, and governmental (ESG) business regulations.

ESG is designed to mitigate operational risks that cause due harm to the environment. The integration of high ESG practices allows an organization to redefine practices in a conscious and deliberate effort to reduce waste, raise awareness, and protect the finite resources the Earth provides us so future generations may have access to similar resources. Efforts to support ESG can be accomplished by considering the key Human Resource Management (HRM) practices that define ESG.

  1. Environmental. Steps were taken to reduce climate change, pollution, waste, and natural resources and protect natural resources.

  2. Social. Steps were taken to protect human capital, product liability, stakeholder interests, and social opportunities to reduce disparities.

  3. Governmental. Steps taken to regulate appropriate government and corporate behavior.

ESG and Human Resources Support

Of these three areas, HRM plays a central role in the development of policy, implementation, and adherence to standards that will regulate ESB. ESG supports sustainable practices that boost profitability and mitigate risk. Small businesses may be concerned that ESG applies only to large corporations and may be questioning why ESG is something they should consider. For many, ESG can be achievable by targeting a triple-bottom-line approach. The triple-bottom-line was first coined in 1994 by John Elkington to help C-Suite leaders re-evaluate how they calculate profits and sustainability.

ESG and human resources support
ESG Model

The bottom-line, or the profits, only tells one side of the story. The triple-bottom-line is a sustainable framework that promotes strategic thinking about the organization's future and capitalism. Elkington’s introduction of the triple-bottom-line still holds true today as stakeholders, including consumers, advocate for conscious capitalism. Conscious capitalism is a concept of sustainable practices that support ESG. In essence, leaders of small businesses with a mindful capitalist approach to their strategic vision for the organization will inherently adapt and develop ESG practices.

Conscious Capitalism

Four Principles of Conscious Capitalism:

  1. Higher Purpose. Strive for more than just profits.

  2. Stakeholder Orientation. Priorities balance the needs of the stakeholders.

  3. Conscious Leadership. Develop an inclusive culture.

  4. Conscious Culture. Promote a culture that develops employee values and purpose.

Conscious Capitalism
Four Principles of Conscious Capitalism

These terms and frameworks all work together to design a strategic, operational plan promoting sustainability. HRM practices can help small businesses develop a triple-bottom-line approach to drive ESG and satisfy conscious capitalism. A strategic, operational plan that is feasible for small businesses will begin by developing a 3-part approach. Each approach will operate dynamically with the other to ultimately promote a bearable, equitable, and viable plan to become sustainable.

Consider a three-part Venn diagram. People, Planet, and Profit will intersect with sustainability at the center. A clear, concise, and focal HRM department can help small businesses drive these changes to evaluate current standards and offer improvements for future growth. ESG and sustainability are not gimmicks for businesses to buy into. Companies with high ESG ratings consistently outperform their competitors in medium and long-term studies. The strives to implement ESG standards are further supported by consciously-aware consumers and stakeholders more willing to support businesses with sustainable practices.

Integrating ESB into any size operation offers a competitive edge that will drive long-term profitability and the business's overall success.

ESG and human resources support

Contact Strategic Human Resources and Innovations (SHRI)

To learn how SHRI and Dr. Brittany Castonguay can help your business thrive, contact us today for a FREE consultation.


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