Integrating employee engagement with CSRD-driven sustainability strategies

A pioneering Stakeholder Engagement Guidance in its first version has recently been released by the Science Based Target Network (SBTN) to support the new SBTNature initiative. The guidance opens with this statement:
"A just world that values and conserves nature (and climate) is a vision that can only be achieved through a focus not only on safe operating space but also on the social and cultural implications of target setting, aiming, and execution of actions."

Sustainability is fundamentally about ensuring a livable planet for humanity, highlighting how dependent our lives and economies are on a healthy environment. While my previous article emphasized the importance of stakeholder engagement generally, this piece has an inward focus, exploring the crucial role of engaging the company’s workforce (employees and non-employee workers) in sustainability—excluding, for the moment, workers within other segments of the value chain (e.g., suppliers).

With the Corporate Sustainability Reporting Directive (CSRD) coming into effect from 2024, businesses in Europe—and in some cases, beyond—must use the European Sustainability Reporting Standards (ESRS) for their annual reports. Assuming readers are already familiar with CSRD basics, this article concentrates on embedding the own workforce within sustainability goals, referencing ESRS S1 – Own Workforce as the key standard.

Dedicating more on sustainability reporting than on sustainability valuable projects themselves

Sustainability in the firm should reduce the negative impacts and risks, innovate and create a great workplace. Thus, the marked evidence-based insights are:

APA research indicates that nearly half of U.S. workers aging from 18 to 35 experience eco-anxiety, which impacts daily life. Eco-anxiety not only affects employee well-being but also decreases productivity, making it (unfortunately just at this late stage) a concern for the firm leadership team.

IBM’s study of 5,000 executives across 22 industries and countries found that companies spend 43% more on sustainability reporting than innovation. Moreover, only 31% of executives integrate sustainability insights into operational improvements, with just 14% applying them to innovation initiatives. Innovation embraces not only R&D and new technologies but also valuable human involvement and education.

Gartner research shows that while 82% of employees value being seen as individuals, only 45% feel their organizations acknowledge this. Currently, employees increasingly seek purpose-driven work. The outdated notion of work purely transactional is giving way to deeper expectations of connection, community, and meaningful contribution.

A Boston Consulting Group (BCG) report surveyed 11,000 workers across various countries and revealed that burnout strongly correlates with low inclusion in the workplace— the Diversity, Equity and Inclusion (DE&I) concern within the “Social” pillar of sustainability.

The 2024 Gallup State of Global Workplace Report reveals that 86% of the global workforce, primarily corporate employees, are categorized as either "struggling" or "suffering" in terms of mental health and well-being. This is partly explained by a lack of engagement and/or sense of purpose inside the workplace. Europe records the lowest engagement numbers in the world (average 13% of workers, compared to 23% worldwide average).

Key takeaways: the missing elements in workforce engagement

The previous data lead to state that firms often lack:

• A sense of inclusive community in the workplace.
• Opportunities for employees to create other than economic value (sense of purpose)
• Shared understanding of sustainability topics, both social (e.g., DE&I) and environmental (e.g., climate action) and how to contribute to solving the global crisis and thus reducing eco-anxiety.

Human rights (which include labour rights) address the full range of negative impacts on people that can occur in the: economic, social, cultural, civil and political spheres. They include the commonly understood social issues of health and safety (in the workplace and beyond), privacy (of data and other), non-discrimination (often addressed in organizational settings through DE&I programs), and are today understood to include impacts on people resulting from climate change and broader environmental harm.

Leveraging CSRD to address broader challenges

Talent retention, talent attraction and employer branding are HR team topics. Leading the market being a firm where it is pleasant to work in, could be a topic of interest for the communication or change teams. Indeed, CSRD compliance can serve as a catalyst for cross-departmental collaboration, addressing these issues while meeting sustainability obligations.

When workforce well-being is identified as a material topic, companies must report on the positive and negative impacts, as well as associated business risks. For example, high turnover driven by burnout can lead to significant costs, including recruitment, onboarding, and lost productivity.

Even companies without a core ethical mission can take steps to foster a sense of purpose among employees. Tools like AWorld help organizations create a culture of sustainability, aligning workforce efforts with broader sustainability goals.

Supporting ESRS S1 compliance with AWorld

Under ESRS S1, companies are required to:

• Engage the workforce in sustainability topics (ESRS S1-2, S1-7).
• Train employees on social and environmental sustainability (ESRS S1-13).
• Involve the workforce in decision-making and materiality assessments (ESRS S1-2, S1-4).

Given the complexity of engaging large, multi-national workforces, AWorld offers solutions such as gamified engagement strategies and rewards which can boost participation and engagement. Through positive competition, employees are motivated to collaborate and participate in sustainability firm efforts, enhancing survey response rates and fostering a shared sense of purpose.

AWorld’s mission is to make sustainability personally relevant for every employee, linking global, organizational, and individual scales. By aligning employees with the firm sustainability goals, companies can cultivate a culture that supports their sustainability teams and ensures meaningful progress toward their objectives. This approach not only enhances workforce engagement but also creates fertile ground for impactful sustainability reporting and long-term success.

In conclusion, aligning your workforce with sustainability goals is not just an ethical imperative—it’s a strategic necessity for achieving compliance, enhancing employee satisfaction, retention, and attraction, and positioning the firm on the market as one that cares about driving meaningful change.

illuminem is proud to partner with AWorld in advancing sustainability oriented stakeholder engagement.