Employees' Input On ESG May Reduce Risks Of Unionization

If this classic tale were a screenplay, social media would probably be portrayed as an antagonizing force stealing the show as tensions begin to build, and ESG reports — like U.S. Securities and Exchange Commission disclosures or sustainability reports — would figure in awkwardly around the beginning of the second act as tensions between management and employees continue to rise.

Unfortunately, the ESG reports in this classic tale might be seen by employees as proof that an employer does no more than pay lip service to the treatment of its employees while taking no action behind the scenes. This would culminate in employees, tired of inaction by management, taking steps toward unionization.

The purpose of this article is to propose an alternative ending to the foregoing tale. In the alternative ending, the employer proactively takes a two-pronged approach to ESG early in the first act, using ESG reporting and qualitative employee feedback to steal the spotlight back from social media and bolster the credibility of its ESG reports.

I hypothesize that employers who build upon their ESG efforts by adopting a qualitative ESG focus grounded in hearing employee feedback are likely to decrease the likelihood of an organizing campaign, and probably be more profitable. Indeed, shares of companies on Barron’s 2022 list of 100 Most Sustainable Companies,¹ ranked according to ESG performance indicators, outperformed the S&P 500 index on average in 2021.

Traditional Warning Bells: Social Media in Employee Relations

It is increasingly apparent that employees use social media as a last, or sometimes first, resort to vocalize any discontentment with their employment and push forward unionization efforts. One recent example is seen in unionizing efforts by Condé Nast employees² who have called for unionization on Instagram, posting videos and calling members of the public to action to obtain their employer’s recognition of a union.

Public statements from these employees suggest that from their point of view, there has been a breakdown in communications between employees and management.

One Epicurious employee said in a press release, “It’s no longer enough to play-act a commitment to diversity, or apply bandaid solutions to issues of discrimination.”³ A popular Instagram post reads, “Prestige doesn’t pay the bills.”

Through social media posts, workers identify specific concerns they want addressed by their employers, including raises, severance and overtime pay. They seize on events such as the Met Gala⁴ to appeal to public sympathy and publicize their concerns. They publicly compare and contrast the conditions of their workplaces with those bargained for by, for example the New Yorker Union.⁵

After all, there are only so many times an employee can be asked, “How do you keep working there?” before it occurs to him or her to do something about it.

Employees see examples of companies treating their human capital better and ask themselves, “What justification does my employer have for not doing this?”

Where Does ESG Come In?

Employees in the middle of an organizing campaign don’t want to hear or read about ESG efforts — they want to experience their effects, although such efforts may, in fact, be too late to stop the campaign.

Employees want to have a conversation with their employer, read a new policy or see an email addressing, for example, diversity issues; evaluating raises and making pay scale considerations; updating policies to allow work-from-home options; or introducing new benefits that they actually want to use.

So, what is an employer to do? Employers can and should certainly consider availing themselves of a number of organizations that create ESG report cards and ratings or provide employers with advice and ideas for achieving ESG key performance indicators.

But many of these methodologies are quantitative or focused on identifying material financial, societal or environmental issues. Employees see ESG through a different, more localized and personal lens.

Employers that want to prevent the kind of breakdown in communication that leads to unionization should consider acting quickly to internally and actively create a program for monitoring and addressing the localized concerns that employees may already be raising on social media and among themselves. Employers should empower human resources and other management personnel to identify and come forward with employee concerns.

How does an employer start with this process? Here are seven ways an employer can conduct a qualitative ESG review of how they are doing on the social part of ESG from the viewpoint of its employees.

1. Do a compensation review.

Money talks, prestige doesn’t pay, and we all have to live. Money is obviously a central demand in social media campaigns related to unionizing efforts.

It’s therefore an important — and increasingly common — factor addressed in sustainability reports. For example, reporting may address pay differentials between management and lower-level employees, as well as pay equity issues.

Ask the following questions to start with, broken down across categories of workers and locations across the company workforce: When did employees last receive a raise? How long have wages been stagnant in a particular position? Which positions have — or need — a pay scale? Are cost-of-living adjustments warranted, particularly with rising inflation? Do employees know when and how wages will be reviewed?

2. Flexibility is queen.

Many employees have a desire to either work entirely from home or at least have the flexibility to sometimes work from home, but are not always comfortable asking for flexible work arrangements if the company isn’t actively offering it as an option.

Is a work-from-home option feasible? Has the company polled employees on the kinds of flexibility they’d like to see?

It is increasingly common for employers to address their response to COVID-19, as well as opportunities for flexible employment, in their sustainability reports and on their public websites.

3. Listen to the workforce on diversity and inclusion.

Diversity is a key component of the social pillar of ESG, and there are an abundance of materials available to employers on quantitatively measuring and reporting diversity, equity and inclusion.

To adopt a more qualitative and localized approach, an employer might start by asking some version of this question of its management personnel or its entire workforce: What does diversity mean to each employee, and how can this company do more to meet its employees’ definition?

Obtaining qualitative feedback from the people who either feel the effects of ESG metrics or who are in charge of implementing them should be helpful in building a connection.

And indeed, we sometimes see missed connections between the ESG or sustainability divisions of a company and the human resources or other management personnel in charge of making decisions that impact diversity, equity and inclusion.

When reviewing ESG goals and plans, it is imperative that the right people are in the room. That means the investor relations officers, website content managers and public relations directors need to be present to make sure an employer’s ESG efforts are coordinated and consistently communicated to different interest groups.

4. Consider employee health and wellness in the context of locality.

In the wake of the infamous leaked U.S. Supreme Court draft opinion in Dobbs v. Jackson Women’s Health Organization, purporting to overturn Roe v. Wade, some companies have announced travel benefits⁶ to help employees access reproductive health care resources, publicly linking those benefits to a goal of retaining employees.

Perhaps less controversial ideas include consideration of gym memberships, or virtual personal training discounts for employees required to travel frequently for work or who are in remote areas.

Sustainability reports increasingly give specific details regarding benefits provided to employees, including information regarding wellness plans and insurance policies.

5. Conduct a benefits audit.

A company could review subscription rates to the benefits programs it is already offering.

Are employees actually using the benefits being provided, or are there other benefit options better suited for the employees? Consider polling the workforce.

6. Consider publicizing the benefits the company already offers.

Monitor social media awareness days and participate in them.

Earlier this year, news outlet theSkimm started a social media movement on LinkedIn called #ShowUsYourLeave⁷ encouraging companies to share paid family leave policies and encouraging employees, in turn, to ask their employers about these policies.

Benefits policies such as these have not historically been shared on the internet. Doing so increases the apparent transparency and accountability of an employer, allows employees to begin a dialogue with their employer about any desire for reexamination of a leave policy, and attracts talent through increased credibility.

7. Seek labels and employee satisfaction.

Has the company ever done an employee satisfaction survey? Certifications and awards show employer focus on, and success in, achieving certain ESG goals, but the boots on the ground — i.e., the employees — want their working lives to change.

Take a look at the history of B corporations for more proof. B corps — which have a certification designed to show that a company gives equal weight to people, planet and profit⁸ — are great, but they are not immune to unionization either, as shown by the recent unionization effort at Kickstarter PBC.⁹

More and more, we are seeing sustainability reports or employer websites setting forth the results of employee satisfaction surveys or an employer’s plans to conduct such surveys.

Conclusion

While prestige may not compel a workplace to loyalty, adding a qualitative ESG focus to a company’s ESG program can create a connection between employer and employee that diminishes the likelihood of union organization efforts.

When an employee is asked how they can work where they work, a robust ESG program can give the employee the answers that create a bond of loyalty that just might avoid an expensive and damaging union campaign.

E. Phileda Tennant is a senior associate at Vinson & Elkins LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

¹ https://www.barrons.com/articles/most-sustainable-companies-51644564600.

² https://www.nytimes.com/2022/04/09/nyregion/conde-nast-union.html?referringSource=articleShare.

³ https://www.nyguild.org/front-page-details/conde-nast-employees-form-company-wide-union-covering-500-workers.

⁴ https://www.instagram.com/p/CdEq7HousLy/.

⁵ https://www.newyorkerunion.com/.

⁶ https://www.citigroup.com/citi/investor/quarterly/2022/ar22p.pdf?ieNocache=923.

⁷ https://www.theskimm.com/paid-family-leave-benefits.

⁸ https://theconversation.com/b-corp-certification-wont-guarantee-companies-really-care-for-people-planet-and-profit-124459.

⁹ https://www.wired.com/story/how-kickstarter-employees-formed-union/.