The Conference Board and Esgauge just released research showing that integration of Environmental, Social and Governance (ESG) metrics into compensation plans is higher than ever, now at 76%.  When looking at the Russell 3000, 84% of companies with revenues $50b and higher do the same.  If you thought DEI was going by the wayside, think again.

DEI work is in the “S” in ESG.  The “S” metrics are becoming more quantifiable and longer-term focused, which means they’re moving out of training and programming and into more systemic policy, process and benefits changes such as:

  • stripping bias out of and adding checks and balances to recruiting, hiring and promotion processes

  • developing long term partnerships with suppliers and external organizations that are aligned with your DEI goals

  • incorporating benefits that are fully inclusive of LGBTQ+ employees and their families

  • integrating DEI into succession planning

  • regular pay equity audits, and more

In parallel to this, investor and regulatory scrutiny are increasing, which means analysts and other stakeholders are getting more sophisticated in how they review and grade a company’s performance in these areas.  And the tie to compensation is not just for the CEO, it’s for the full C-suite and beginning to trickle down several levels below.

Why is this happening now?  There are two primary factors at play.  First, organizations recognize the business of investing in DEI work, so it makes sense to keep the foot on the accelerator here.  Second, the SEC is on the cusp of releasing more stringent standards in this space, so companies are building practices and reporting to be ready to align to those.

If you are in a private or smaller organization it is important to pay attention to these trends.  The more normalized they become, the more your employees view DEI as table stakes, in particular those you are recruiting out of school or trying to recruit from larger, public organizations.  You will miss out on great talent, as well as the business benefits, if you wait to invest in DEI.

Need help determining how to best develop your DEI plans and programs to deliver high-impact, measurable results?  Contact us here.

For more information on TCB and Esgauge’s research click here.  Photo by Pepi Stojanovski

by Michelle Bogan

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