The power of a people-led approach to ESG

It may not be immediately apparent why chief people officers, or CPOs, should focus on ESG beyond the obvious DE&I initiatives. How is ESG core to the functions of the people team, in terms of talent management, human resource operations, or organizational culture? In practice, enhancing the full employee experience is central to what we do, and it’s increasingly clear that employees deeply care about all facets of ESG.  

A people-led approach to ESG connects people to concrete efforts and makes goals more accessible. We see the impact these initiatives have on workplace morale, as well as their benefits for the communities in which we work and the climate around us. As such, I think it’s critically important for those of us in CPO roles to take an active leadership role in promoting ESG priorities and initiatives within our firms. We must take the time to understand both what our companies can do in the space to make a difference and the risks of not embedding it in our culture from both an employee and client perspective. 

At AlixPartners, our ESG strategy is embedded into all that we do. In 2022, we bolstered its profile by launching ESG and DE&I as the eighth pillar of the firm’s growth strategy. This was an easy choice, as ESG taps into not just our internal work but also factors heavily into client engagements. Emphasizing our commitment and advancement of responsible business initiatives is a natural lever to further our firm’s mission and business impact.

Our four-pronged approach can ensure that your people team is firmly embedded in your company’s ESG strategy as well.
 

1. Advancing ESG as a core client offering 

As a firm, we understand the standards our clients expect. Recent legislation has made it necessary for global businesses to comply with more stringent ESG regulations—our clients increasingly need to release ESG reports, certifications, and more to prove their compliance. They also require our firm to maintain strong ESG credentials for us to consult for them. This presents a “when it really matters” opportunity as a people team to ensure we have built a comprehensive ESG infrastructure across the firm to meet client needs as well as our own ESG-related goals. We selected EcoVadis, the largest and most trusted global provider of business sustainability ratings, to independently assess our ESG progress and understand areas of improvement we could work towards.  

As a CPO, it is critical to deeply understand how these measurements are calculated and what tasks different departments—from legal, to finance, to procurement, and more—need to carry out to boost ESG effectiveness. Transparency around business practices is the new normal. It creates trust with clients and demonstrates we align with their values.  

As a result of our efforts, our consulting teams were able to help clients across nine industries to make operational and financial improvements related to ESG disruption, and our ESG advancements ensured we were qualified for more than 30 RFPs with ESG requirements. Our teams have strong ESG capabilities—from carbon reduction modeling to ESG due diligence and sustainable supplier selection—so these business wins allowed our firm to highlight our ESG credentials and compete for similar projects in the future.  
 

2. Enacting a firmwide culture change 

Our motivation for becoming a more sustainable firm revolves around four key objectives: 

1. Do the right thing 
2. Create transparency 
3. Respond to clear client expectations 
4. Be an attractive employer 

As a people team, we believe that emphasizing ESG greatly aids the fourth objective, and the data backs this up. According to Gartner research, 65% of employees wish to work for organizations with a strong environmental and social conscience. Meanwhile, an IBM study found that 70% of employees believe sustainability programs make employers more appealing and 80% want to help their employer hit climate or ESG goals.  

As part of this effort, each of our offices has formed a sustainability team to drive environmental awareness at the local level. These teams plan local clean-up days, host educational workshops, and implement planet-friendly office initiatives like composting and recycling.  

Our firm’s ESG learning and development strategy stresses professional development. For colleagues that wish to augment their ESG knowledge base, we offer eight further education options in which any employee can enroll. These include ESG courses offered by Oxford, Cambridge, Yale, and MIT. In 2022, we also added ESG to our fields of interest in which employees can specialize for further development—what we refer to as our “major and minor” system of specialization.  

Over the past decade, Gigi Chow, Partner and Head of Operations for Asia, has witnessed the change. “We have shifted from ESG as a separate concept to integrating within thought processes,” Chow said. “As we have expanded and opened new offices in the region, we have intentionally baked sustainability outcomes into the design. As we have created new benefits for our people, we have done so with their health, well-being, and diversity in mind. And as we have recruited new team members, diversity and sustainability experience are important factors in setting individuals apart.” 
 

3. Amplifying our social impact to align with our cultural changes 

CPOs must reinforce their peoples’ sense of purpose in being part of something larger than their individual selves at work. ESG initiatives—especially those that help employees impact their own communities—are an integral piece of doing so.  

AlixPartners offers all employees eight hours of paid volunteer time they are encouraged to use during business hours to give back in ways that matter most to them. And in 2021, our firm published its inaugural Social Impact Report, detailing our environmental, cultural, community, and governance progress across our business. The 2022 report can be found here, and our 2023 report was published just last month. We also have social impact plans for every AlixPartners office globally, led by office managers and local market leaders to ensure we adapt plans to each region’s specific environmental and social needs.  

It’s these social impact plans, along with our sustainability strategy and improvements, that enabled us to commit to the UN Global Compact, which we signed in December 2021. Of the UN’s 17 Sustainable Development Goals, we focus on the nine that are connected to economic prosperity, equity, well-being, and environment as they align closest with our firm’s core values. We submit an annual Communication of Progress (COP) as part of our reporting duties to the UN Global Compact, with the aim of growing our societal impact each year. 

In 2023, the firm supported more than 170 organizations large and small with volunteerism and contributed more than $2.5 million in charitable donations. We also supported more than 63 organizations with $27 million in pro bono efforts.
 

4. Evolving the firm’s governance processes to ensure we drive desired impacts 

To reach ambitious ESG targets, CPOs must be part of holding their leaders accountable. To track our firm’s progress across all ESG initiatives, our people team utilizes a tailored, measurable goal-setting framework. Here is an example of a well-structured ESG goal:  

Establish a culture of more inclusive environments: Year-over-year increase of employee engagement opportunities aligning with our social responsibility program to reinforce a sense of belonging and value. 

• Benefit: This fosters a more inclusive environment that aligns with our mission of being a top place to work, while signaling our inclusive efforts to clients. It also contributes to the development of our local communities through philanthropy and volunteerism. 
• Measurement: We track the impact of the philanthropy employees engage in, and the impact of the work we do with clients related to sustainable development goals, through a dedicated social impact outcome tracker. We also conduct formal and informal surveys to pulse-check with employees. 

As an example of this culture in action, Andrea Schmitz, our Culture & Talent Integration Coordinator, partnered with marketing and social responsibility colleagues to build an opportunity for our people to make a real difference. “Together with our long-term environmental partner ClimateForce, we launched the concept of an AlixPartners forest as part of their Tropical Regeneration Project,” Schmitz said. “We offered recipients of our annual Achievements in Excellence awards the opportunity to have a tree planted in their name, and to be able to follow the coordinates of that tree as it grows. We had so many people take up this opportunity in the first year that the idea has extended to other departments offering this ‘prize’ to employees, alumni, and clients in place of a physical award or gift. Our forest has grown to more than 4,000 trees, and our people can feel proud that they are personally contributing to this sustainable development goal.”  

Major change does not happen overnight. But the impact of a thoughtful, people-led ESG strategy cannot be overstated with regard to employee morale, retention, and motivation—not to mention business performance. As CPOs, we must do all we can to heighten the employee experience and improve company culture. Taking a leadership role across the full ESG spectrum is a requirement for CPOs now and in the future.