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In a previous blog we showed how a rewards platform supports good governance, a key aspect of a company’s Environmental, Social, and Governance (ESG) goals. But what about the environmental and social aspects—can your rewards programs support those initiatives as well? Absolutely.

Support for ESG initiatives

So how can your rewards strategy drive ESG initiatives relating to issues like sustainability, carbon emissions, pollution, social justice, health and safety, human rights, education, and so on? Consider that no corporate initiative can succeed without the alignment, motivation, and effective actions of its employees and partners. Rewards are a powerful lever to catalyze action. 

A rewards platform can help companies achieve ESG goals by enabling flexible, targeted reward structures that drive the needed behaviors, by tying incentives to achievement of ESG metrics. Apple recently announced it was going to link executive bonuses to performance with respect to the company’s social and environmental values, which include things like removing carbon emissions from the business by 2030. Rewards enable a company to “put its money where its mouth is.” If you really want to achieve ESG goals, use your rewards platform to communicate those goals and the incentives associated with them. And then, reward those who help you achieve them.

Aside from using rewards as a lever to drive behavior, there are other ways that a capable rewards platform can support ESG efforts.

Fair, effective, and compliant pay

Pay equity is both a social issue and legal and compliance risk element. 60% of organizations report they are working to resolve pay inequities based on gender (SHRM). In the U.S. there is an average 4.5% net pay gap for women (Aon), which is worse for minority women.

Dealing with pay equity in a company can be complex, as it requires granular analysis to identify pay issues and modeling capabilities to explore remediation plans. While improving governance may be the most obvious way that rewards platforms can support ESG initiatives, they can also assist with achieving social goals like pay equity. A robust compensation platform enables pay equity analysis and remediation, for equity in pay across gender and other factors.

Keep in mind that fair pay is defined differently in different localities. What is considered fair pay in Germany may be different than the definition of fair pay in California. A global compensation platform should provide mechanisms to enforce approved pay practices company-wide, but with the ability to have localized pay structures across jurisdictions.

Another element of fair pay that's of interest to investors and regulators is executive pay. Increasingly, investors are calling for executive pay to be tied to company performance, with the ability to claw back incentives over the long term if malfeasance is detected. To manage this requires a system with the ability to relate pay to multiple performance metrics, perhaps with complex cascading calculations.

Supporting today’s workforce

A platform with the ability to implement flexible reward structures can enable a company to tailor rewards programs to increase diversity, improve retention, or meet other talent goals. An agile total rewards platform can enable flexibility in workforce deployment to support a remote workforce or other necessary arrangements during periods of business disruption and can be a tool to support the work-life balance of the workforce, helping to keep employees safe, productive, and engaged.

Pay equity is also rightly viewed as a social responsibility issue. Consider that 50% of minority females in healthcare in the U.S. earn less than $15 per hour, well below the average of their white counterparts, and 1.7 million U.S. female health care workers and their children live in poverty. Women in the workforce have been especially hard hit by COVID-19, adding to the importance of gender pay equity as a social goal.

Data security and privacy

Data security is an important business and compliance issue, relating to governance. But it is also a social issue, as employees and societies in general are increasingly concerned about protecting personal information. A SOC2 certified compensation platform can enable business continuity, and the availability, security, and privacy of data, and the ability to comply with data privacy regulations such as GDPR.

Do the right thing

At beqom we believe in the social responsibility of business. We know that life is bigger than software—yet software can improve lives. Let’s all do our part. Download our Total Rewards and ESG infographic for a summary of how your rewards program can support ESG objectives.

Total Rewards and ESG Infographic


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