Over the last two years, the emergence of a pandemic and heightened awareness of social issues has altered the roles of HR departments. The objective of this chapter is twofold: (1) to outline and figure out the meaning of ESG and (2) to identify the connection of ESG and human resource management (HRM). A qualitative research design was used to meet the research objectives. This method entailed a thorough assessment of current literature as well as existing case studies. Furthermore, a Cypriot case study is presented to explain in more detail at how ESG concepts were implemented inside the human resource management structure at X pharmaceutical corporation. HRM plays a strategic and vital role in improving a company's ESG credentials. HR can contribute to a comprehensive and environmentally friendly approach to company operations.
Top2. Background Of Esg
Environmental, Social, and Governance (ESG) has grown over time as an umbrella for assessing an organization's social and environmental effect, in addition to its governance standards. ESG has its roots in diverse environmental and social movements, expanding corporate governance norms, and increasing recognition of the connectivity among company activities and wider societal and environmental concerns (Di Meglio, 2023). A quick rundown of the important elements (corporate social responsibility, socially responsible investing, environmental issues and regulations, the global reporting initiative, the triple bottom line, corporate governance reforms, the rise of sustainable finance, the principles for responsible investment of the United Nations, the increased stakeholder activism and regulatory developments) that have led to the evolution of ESG is followed:
The concept of corporate responsibility extends back to the mid-twentieth century, becoming popular in the 1960s and 1970s. Initially, corporate social responsibility (CSR) was centered on philanthropic operations, with firms participating in social projects to benefit the areas in which they functioned. CSR has evolved over time to incorporate environmental effects and business ethics (Torres, et al., 2023).
In the 1970s and 1980s, there was a surge in popularity in environmentally conscious investing, in which individuals attempted to match their financial portfolios with their values of ethics. SRI pioneered the concept of evaluating firms not only on their financial results but additionally on their ethical and ecological standards. In the late twentieth century, there was a greater understanding of environmental issues such as contamination, depletion of resources, and changes in the climate. Ecological rules began to be implemented by governments, and firms started coming under scrutiny for their impact on the environment activities. As a result, there is an increasing recognition of the necessity for businesses to address how they affect the environment.
GRI1 was founded in the late 1990s and early 2000s as a non-profit organization to build a structure for reporting on sustainability. GRI criteria were developed to help businesses report on their performance in the areas of economy, environment, and society. This endeavor was critical in regulating non-financial information reporting. TBL2 was coined by John Elkington in 1994 to underline that firms should be held responsible for not just financial success but also for social and environmental effects. The framework developed by TBL called for a more comprehensive approach to assessing the performance of a business, taking into account its effect on individuals, the environment, and profits.