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There are many reasons that businesses embrace ESG (Environmental, Social, and Governance) goals, among them: risk reduction, reputation, recruitment advantage, employee engagement, investor confidence, market advantage, tax breaks, and social consciousness. 

Does a rewards management platform have any role to play in ESG efforts? In fact, yes, it can.

“What was once purely thought to be a nice to have, a thoughtful ESG program is now commonly viewed as a must-have for companies, as companies are now routinely being evaluated on these non-financial metrics alongside more common financial ESG metrics,” says Mike Stiller of Nasdaq ESG Advisory.

An automated rewards platform enables compensation practices that support the social and governance aspects of ESG, while helping companies achieve broader ESG goals through effective performance management. 

A centralized rewards platform provides transparency and consistency, inspiring trust among employees and investors, removing bias from compensation decisions, and enabling fair pay practices. This supports not only the social goal of pay equity but also, together with providing data security and privacy, reduces risk and increases regulatory compliance. 

Let’s look at how this works.

Reducing risk, increasing investor confidence 

To date, 49 stock exchanges globally have committed to publishing ESG disclosure guidelines. Investors like visibility into company practices and processes, with compensation being a key area of interest. An automated rewards platform enforces good governance by ensuring accountability, pay accuracy, and transparency into how pay is calculated and approved, along with the needed reporting.

As an example, one beqom customer reported an 80% reduction in spreadsheets used for compensation tracking and management after implementing the beqom total rewards platform, meaning improved pay accuracy, data security, and compliance. Another reported a 35% reduction in the salary and bonus error rate with beqom, by using automation to enforce good governance in pay operations. These results are typical for companies who digitize their compensation processes and move away from spreadsheet-based methods. 

A digital pay platform with analytic capabilities also can help companies proactively avoid pay equity issues, reducing legal risk. It facilitates the auditing process and reduces compliance risk. All in all, as data quality, security, and transparency increase, legal exposure and legal expense risk diminish, good news for the board and for investors. Investors and directors also like the visibility into performance results and projected earnings that a central compensation platform can provide. In these ways a digital compensation platform can boost investor trust and confidence in the firm, and directly affect the value of a firm’s stock.

Business continuity and managing change

Part of good governance is ensuring business continuity in the event of catastrophic events —like a pandemic. Compensation systems are considered critical systems to keep a business running, and a disruptive event can present special challenges. 

In fact, 48% of non-essential businesses in North America made unplanned adjustments to compensation due to COVID-19, and 72% of firms identified functions and roles that can operate remotely going forward. So not only does a business need a compensation platform that can continue to function during a crisis, it needs to be able to adapt quickly to change and should provide the flexibility and mobility to support a remote or mixed workforce model without business interruption. Human Resources firm Adecco actually implemented a compensation system while working remotely during COVID-19 and used it to manage compensation processes for their remote workforce.

Clearly a digital compensation platform supports good governance. Can it support other ESG initiatives as well? We will explore that in a future blog. At beqom we believe in the social responsibility of business. We know that life is bigger than software—yet software can improve lives.


Jeff Yoder is Content Marketing Manager at beqom and a professor of Business Ethics.