Role In Corporate Social And Environmental Sustainability

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EPGSHRM Foundation’sEffective Practice Guidelines SeriesHRM’s Role in Corporate Socialand Environmental SustainabilityProduced in partnership with the World Federationof People Management Associations (WFPMA) andthe North American Human Resource ManagementAssociation (NAHRMA)

HRM’s Role in Corporate Social and Environmental SustainabilityThis publication is designed to provide accurate and authoritative information regarding the subject matter covered. Neither the publishernor the author is engaged in rendering legal or other professional service. If legal advice or other expert assistance is required, the servicesof a competent, licensed professional should be sought. Any federal and state laws discussed in this book are subject to frequent revisionand interpretation by amendments or judicial revisions that may significantly affect employer or employee rights and obligations. Readers areencouraged to seek legal counsel regarding specific policies and practices in their organizations.This book is published by the SHRM Foundation, an affiliate of the Society for Human Resource Management (SHRM ). The interpretations,conclusions and recommendations in this book are those of the author and do not necessarily represent those of the SHRM Foundation. 2012 SHRM Foundation. All rights reserved. Printed in the United States of America.This publication may not be reproduced, stored in a retrieval system or transmitted in whole or in part, in any form or by any means, electronic,mechanical, photocopying, recording or otherwise, without the prior written permission of the SHRM Foundation, 1800 Duke Street,Alexandria, VA 22314.Selection of report topics, treatment of issues, interpretation and other editorial decisions for the Effective Practice Guidelines series arehandled by SHRM Foundation staff and the report authors. Report sponsors may review the content prior to publication and provide inputalong with other reviewers; however, the SHRM Foundation retains final editorial control over the reports. Editorial decisions are based solelyon the defined scope of the report, the accuracy of the information and the value it will provide to the readers.The SHRM Foundation does not explicitly or by implication endorse or make any representations or warranties of any kind regarding its sponsors or the products, services or claims made by its sponsors. The SHRM Foundation does not assume any responsibility or liability for theacts, omissions, products or services offered by its sponsors.The Foundation is governed by a volunteer board of directors, comprising distinguished HR academic and practice leaders. Contributions tothe SHRM Foundation are tax-deductible. The SHRM Foundation is a 501(c)(3) nonprofit affiliate of the Society for Human ResourceManagement (SHRM).For more information, contact the SHRM Foundation at (703) 535-6020. Online at www.shrmfoundation.org12-0124

Table of ContentsiiiForewordvAcknowledgmentsviiAbout the Author1 HRM’s Role in Corporate Social and EnvironmentalSustainability1 Introduction: The Business Case for Sustainability36Supporting Business Sustainability5Performing HRM SustainablyThe Role of HRM in Sustainability6Using the Tools of HRM to Embed Sustainability8Sustainable HRM and Its Impact on10Sustainability PerformanceThe Roadmap to Sustainable HRM10Sustainable HRM, Leadership and Strategy11Organizational Readiness for Sustainability14Existing Sustainability Frameworks15The GRI Framework and HRM-Related Indicators23 Community Involvement and EmployeeVolunteering Programs24Employer Branding25Green HRM26A Possible Sustainability Roadmap and Scorecard31 The New HR Skills Required for Sustainable HRM31 Sustainable HRM in Different Organizational Types31Conclusion33References41 Sources and Suggested Readings

HRM’s Role in Corporate Social and Environmental SustainabilityForewordDear Colleague:Sustainability is often defined as the “ability to meet the needs of the present withoutcompromising the ability of future generations to meet their needs.” Going beyondenvironmental sustainability, this concept now includes all types of social and environmentalimpacts. As sustainability becomes a key focus for more organizations, employers mustdevelop a new way of doing business. In addition to focusing on financial profits, sustainablecompanies must also consider social and environmental impacts when making businessdecisions. The HR function has a critical role to play.This new SHRM Foundation report, HRM’s Role in Corporate Social and EnvironmentalSustainability, outlines the business case for sustainability and explains how HRM can take aleading role in both developing and implementing sustainability strategy.We created the Effective Practice Guidelines series in 2004 for busy HR professionals. Byintegrating research findings on what works with expert opinion on how to conduct effectiveHR practice, this series provides the tools needed to successfully implement evidence-basedmanagement.This report is the 15th in the series. Other recent reports include Promoting Employee WellBeing, Transforming HR Through Technology and Onboarding New Employees. To ensurethe material is research-based, comprehensive and practical, each report is written by asubject-matter expert and then reviewed by both academics and practitioners. The reportsalso include a “Suggested Readings” section as a convenient reference tool. All reports areavailable online for complimentary download at www.SHRMFoundation.org.The SHRM Foundation provides unmatched knowledge for the benefit of professionalworkforce leaders. Our educational resources, such as the Effective Practice Guidelinesseries, are used in hundreds of college classrooms worldwide. We are also a major funder ofrelevant, high-impact, original research. We award more than 150,000 annually in educationand certification scholarships to SHRM members. And all this good work is made possible bythe generous support of donors like you.I encourage you to learn more. Please visit www.SHRMFoundation.org to find out how youcan get involved with the SHRM Foundation.Mary A. Gowan, Ph.D.Chair, SHRM Foundation Research Evidence CommitteeProfessor of ManagementMartha and Spencer Love School of BusinessElon Universityiii

HRM’s Role in Corporate Social and Environmental SustainabilityAcknowledgmentsThe SHRM Foundation is grateful for the assistance of the following individuals in producingthis report and the companion executive briefing*:Content EditorJennifer SchrammManager, Workplace Trends and ForecastingSociety for Human Resource ManagementReviewersRon AlexandrowichPresident/OwnerWorld Class Human Resources IncPatricia Bader-JohnstonRepresentative Director and CEOSilverbirch Associates KKKathleen K. Collins, SPHRVice President of Human ResourcesMSPCA-AngellKent Fairfield, Ph.D.Associate Professor of Management &Director for Sustainability EducationInstitute for Sustainable Enterprise, FairleighDickinson UniversityCarolyn Gould, SPHR, GPHR, CCPPrincipal, Global Compliance ServicesPricewaterhouseCoopers, LLCJoel Harmon, Ph.D.Professor of Management & ExecutiveDirectorInstitute for Sustainable Enterprise, FairleighDickinson UniversityLynn McFarland, Ph.D.PresidentHuman Capital Solutions, Inc.Andrew W. SavitzPrincipalSustainable Business StrategiesTiisetso TsukuduPresidentAfrican Federation of Human ResourceManagement AssociationsHoward Wallack, GPHRDirector, Global Member ProgramsSociety for Human Resource ManagementJeana Wirtenberg, Ph.D.Co-Founder, Institute for SustainableEnterprisePresident & CEO, Transitioning to Green LLCProject ManagerBeth M. McFarland, CAEManager, Special ProjectsSHRM Foundation* Executive briefing HR’s Role in Corporate SocialResponsibility and Sustainability is available online atwww.shrmfoundation.org.Major funding for the Effective Practice Guidelines series is provided by theHR Certification Institute and the Society for Human Resource Management.v

HRM’s Role in Corporate Social and Environmental SustainabilityABOUT THE AUTHORSELAINE COHENElaine Cohen is CSR Consultant and Sustainability Reporter and aformer country Human Resources VP with Unilever. Elaine is the authorof CSR for HR: A Necessary Partnership for Advancing ResponsibleBusiness Practices (Greenleaf, 2010). Elaine can be contacted atelainec@b-yond.biz.SULLY TAYLORSully Taylor is Professor of International Management and formerAssociate Dean for Graduate Programs at the School of BusinessAdministration, Portland State University. She has publishedextensively in international HRM, global mindset, leadership andcorporate cultures, and also teaches sustainability HRM andleadership. She is currently a guest editor of HRM Journal for a specialissue on sustainable HRM. Sully can be contacted atsullyt@sba.pdx.edu.MICHAEL MULLER-CAMENMichael Muller-Camen has a Chair in HRM at WU Vienna University ofEconomics and Business and is Associate Professor of InternationalHRM at Middlesex University Business School in London. He haspublished extensively in international HRM, green HRM and agemanagement and is the co-editor of a special issue of Zeitschrift fürPersonalforschung (German Journal for Research in Human ResourceManagement) on green HRM. Michael can be contacted atMichael.Muller-Camen@wu.ac.at.vii

Alongside economic considerations of growth and profit, organizations should be heldaccountable for their impacts on society and the environmental risks and opportunitieswhen making all business decisions.

HRM’s Role in Corporate Social and Environmental SustainabilityINTRODUCTIONSustainability has become a key focus for many organizations asclimate change, regulatory pressures and societal demands forgreater environmental and social responsibility have increased.For employers, this focus means a different way of doingbusiness. Alongside economic considerations of growth and profit,organizations should be held accountable for their impacts onsociety and the environment. In addition, they should assess socialand environmental risks and opportunities when making all businessdecisions. This approach is often referred to as “the triple bottomline,”1 the simultaneous delivery of positive results for people, planetand profit. Indeed, aspects of sustainability, such as environmentalstewardship, workplace responsibility, human rights protection andgood corporate citizenship, are increasingly part of an organization’ssocial legitimacy.The HR function is critical to achieving success in a sustainabilitydriven organization. Sustainability practice pervades every aspect ofdoing business and needs to be embedded across an organizationat all levels, becoming an ongoing change process. Since the primefocus and skills of HR professionals include organizational process,change management and culture stewardship, they should take aleading role in developing and implementing sustainability strategy.This report aids human resource management (HRM) practitionersin understanding sustainability in an organizational context. It canbe used as a guide for the HR function to support sustainablebusiness and perform HRM sustainably. Divided into two mainsections, this report begins by examining the critical role HRM playsin sustainability and the HRM tools available to embed sustainabilitystrategy in the organization. The second section introduces aroadmap to sustainable HRM. It outlines global business approachesto sustainability, labor standards and specific aspects of sustainablepractice such as employee volunteering, employer branding andgreen HRM. Finally, the report explores the new HR skills requiredfor practicing sustainable HRM and the applicability of sustainableHRM in different types of organizations.1

HRM’s Role in Corporate Social and Environmental SustainabilityThe Business Casefor SustainabilitySustainability is more than simplymeeting responsibilities to society—itcan create significant competitiveadvantage. Therefore, organizationsincreasingly regard sustainability asa business strategy that enhancesshared value 2 —for both businessand society—by delivering greatershareholder value and accessto capital as well as strongerperformance over time. 3 In fact,research suggests that social andenvironmental responsibility is likelyto pay off in a number of tangibleways. 4 Firms can gain “improvementsin reputation, productivity, talentacquisition, employee retention andengagement, cost effectiveness, riskavoidance/mitigation, innovation andmarket expansion, and access tocapital.”5 However, the relationshipbetween sustainability investmentsand organizational performance iscomplex, and other factors suchas industry positioning and marketstructure also affect the strength ofthe relationship. 6 Porter and Kramer7argue that in order to unleash thenext wave of innovation and growth,corporations must help redefinecapitalism through addressing thesocial and environmental challengesof society, in a “shared value” model ofbusiness activity.Practically speaking, sustainabilitysignificantly affects an organization’sbusiness model, structure andprocesses. First, organizationsconsider a wider set of stakeholderswhen setting strategy. Sustainablebusiness strategy requiresresponsiveness to stakeholders,defined as those individuals or groupsthat influence an organization’sactivities and are influenced bythem, going beyond the traditionaldominance of financial shareholders.2Stakeholders typically includeemployees, customers, suppliers,regulators, local communities andthe natural environment. Sustainableorganizations seek out stakeholdersto understand their expectations,concerns and risks relating tooperations before developingsustainability strategy.Also, stakeholders help withsustainability strategy implementation.Increasingly, employers realizethe benefits of partnerships withexternal stakeholder organizations,such as community organizations,nongovernmental organizations(NGOs) or industry alliances. Thesealliances help advance sustainabledevelopment, as the demands ofglobal corporate sustainability oftengo beyond the capability of oneorganization to respond.Finally, a sustainability approachaffects corporate practices,requires greater involvement andaccountability of boards, anddemands business transparency, asis manifested in the growing numberof organizations issuing annualsustainability reports.As organizations have increasinglypursued sustainability strategies, anemerging vocabulary has developedin this area. Researchers alreadyestablished the link betweensustainability and business functionssuch as marketing, accounting andoperations management, but now theyare also studying sustainable HRM. 8This recent literature portrays HRM asa traditionally introspective function,focusing on the effective and efficientuse of people to achieve short-termfinancial results. Instead, a moresustainable approach to HRM woulddevelop managers who can deal withboth present and future sustainabilitychallenges facing organizations;consider employees as stakeholders,How SustainabilityAffects theBusiness Model1. Stakeholders are definedmore broadly as shareholders,employees, customers, suppliers,regulators, local communities andthe natural environment, that is,individuals and organizations thathave influence on a business andthose affected by it. Sustainabilityleads to greater interaction withstakeholders, which influencesbusiness strategy.2. A ll stakeholders play a role inimplementing sustainabilitystrategy.3. S uch a model offers both greaterinvolvement and accountabilityof corporate boards and greaterbusiness transparency, all ofwhich leads to greater trust andimproved reputation.including those in the extendedsupply chain in vendor operations;place more emphasis on the longterm impacts of HRM activities on allstakeholders; and, generally, adopt amore holistic and integrated view ofpeople management. 9The HRM function has the potentialto contribute important skills, as notedabove, to support the transformationof business and the HRM functionitself for greater sustainability.These skills in organizationalprocess, change management andculture stewardship enable HRMto take a leading partnership rolein developing and implementingsustainable business strategy. HRMunique skills and knowledge aresources of competitive advantagethat can be leveraged, for example,to create sustainability-linkedperformance targets, compensationand benefits, training and education,

HRM’s Role in Corporate Social and Environmental SustainabilityGlossary of TermsSustainability is often defined as the “ability to meet the needs of the present without compromising the ability offuture generations to meet their needs.”10 Sustainability initially meant environmental sustainability, but today theterm is used to refer to all aspects of social and environmental impacts.Sustainable development is “a process of achieving human development . . . in an inclusive, connected, equitable,prudent, and secure manner.”11Triple bottom line is the performance measurement of an organization pursuing a sustainable strategy. “Asustainable enterprise, therefore, is one that contributes to sustainable development by delivering simultaneouslyeconomic, social, and environmental benefits—the so-called triple bottom line.”12CSR (corporate social responsibility) is “the sum of the voluntary actions taken by a company to addressthe economic, social and environmental impacts of its business operations and the concerns of its principalstakeholders.”13 In October 2011, the European Commission published a new definition of CSR: “The responsibilityof enterprises for their impacts on society.”14Difference between sustainability and CSR: Sustainability at the corporate level is the focus on creatinga business model that is sustainable from an ecological, financial and social point of view and that identifies“strategies and practices that contribute to a more sustainable world and, simultaneously, drive shareholder value;this we define as the creation of sustainable value for the firm.”15 Addressing sustainability issues thus becomesdeeply embedded in the organization’s basic business operations and integral to its business strategy. CSR,however, is concerned with decreasing the negative impacts of corporate actions in pursuit of a business strategyand is thus considered largely voluntary and is often practiced at a tactical level without affecting core businessprocesses.Sustainable HRM is the utilization of HR tools to help embed a sustainability strategy in the organization and thecreation of an HRM system that contributes to the sustainable performance of the firm. Sustainable HRM createsthe skills, motivation, values and trust to achieve a triple bottom line and at the same time ensures the long-termhealth and sustainability of both the organization’s internal and external stakeholders, with policies that reflectequity, development and well-being and help support environmentally friendly practices.and values-based recruitmentusing sustainability-informedemployer branding. The tangibleoutcomes of strong sustainableHRM performance include not onlysupport for the achievement of broadsustainability business objectives,but also measurable contributionsto HRM performance, includinglower employee turnover, lowerabsenteeism, improved employeewell-being, and an overall increasein employee engagement, motivationand productivity.In order for HRM to redirect itself andthe organization toward sustainability,corporate sustainability leadershipmust regard HRM as a criticalcontributor. Organizational leadersshould involve HR managers throughcollaboration and consultation aswell as demand HRM accountabilityfor sustainable HRM practices. Atthe same time, HR professionalsmust update their approach fromtransactional or transformationalHRM to sustainable HRM. HRM hastwo main roles in the implementationof sustainability strategy in anyorganization, each of which will bediscussed in greater detail in theremainder of

environmental sustainability, this concept now includes all types of social and environmental impacts. As sustainability becomes a key focus for more organizations, employers must

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