ESGgo’s Diversity and Inclusion Series: DEI Initiatives

Successful DEI initiatives are not only beneficials for employees but are also better for business and profitability. How does a company develop them successfully and what does it have to do with ESG?

By ESGgo TeamNovember 14, 2022 7 min read

The corporate side of the world has constantly experienced social issues such as gender inequality and harassment on the basis of religion, race, age, and ethnicity. However, companies have been making efforts to improve equality and limit harassment by developing and launching diversity, equity & inclusion initiatives to counter these challenges. Their attempts to foster a thriving environment in the workplace help employees rest assured that they’re valued and heard. 

What are DEI initiatives?

Diversity, equity, and inclusion (DEI or DE&I) initiatives consider many factors in an applicant’s background during the hiring process, and they also create a just and fair working environment for all existing employees. When that happens, team members with diverse qualities can share their voices, thoughts, and beliefs and be heard and respected. This benefits businesses by offering them an array of perspectives on any topic.

In today’s business climate, where companies focus on prioritizing and fulfilling their environmental, social, and governance (ESG) responsibilities, DEI initiatives hold maximum importance. 

The definition of DEI initiatives means that organizations develop initiatives or policies to promote a diverse employee workforce from all walks of life. Defining all three individually illuminates how these initiatives help: 

Successful DEI initiatives not only form workplaces with broad perspectives and increased cooperation, but they’re also better for business. A study by McKinsey & Company notes: “Our latest analysis reaffirms the strong business case for both gender diversity and ethnic and cultural diversity in corporate leadership — and shows that this business case continues to strengthen. The most diverse companies are now more likely than ever to outperform less diverse peers on profitability.”

Because of that, DEI efforts should work toward advancing diverse talent into management, executive, and board roles as more senior roles will lead to more diversity throughout the organization. Identifying specific objectives for representation can help companies reach their DEI targets and ensure a fair, welcoming environment for all. 

Developing DEI initiatives

Developing DEI initiatives takes considerable planning and can be broken down into four main phases: 

Once a company defines the details of each phase, it can specify action steps to work toward them. Similar to a corporation establishing financial targets and implementing a plan to achieve them, these four phases better spell out what needs to be done to meet DEI objectives. With concrete metrics and DEI goals to aim for, business leaders can create a company-wide strategy, implement it, and analyze the results to identify improvement areas. 

DEI initiative examples

It is organizations’ responsibility to foster a working environment where employees learn and develop hard skills while thriving in terms of soft skills. They’ll always need a setting where they can freely express themselves and form strong interpersonal relationships to feel at ease. Take a look at some examples to inspire your own action plan. 

Emphasize motivation

While rules and penalties may help your initiative achieve results, focusing on the positive aspects of DEI programs and why they matter can be a more useful tool, as noted by the World Economic Forum. A negative aspect of strict policies regarding harassment based on race, religion, age or gender is that employees may become afraid or resistant. But explaining the need for DEI initiatives and how they benefit business and society can positively motivate leaders and employees to willingly be a part of the change. 

Improve the complaints system

The key to a successful DEI framework is a complaint system where employees feel safe from retaliation. More than 50% of cases involving harassment or bullying on the basis of race, gender, age and religion are carried out by those in positions of power, translating to reporter comfort and security being essential. Otherwise, victims may fear coming forward and be concerned about harsh treatment by management. 

One way to make victims feel safe is by implementing an Employee Assistance Program (EAP). Third-party vendors provide EAPs, which serve as intervention programs and offer a method of reporting complaints without fear of retaliation. For an EAP to be impactful, it should have leadership support across the company. 

Promote inclusive language in the workplace

Sometimes, certain phrases or words can leave people feeling excluded or uncomfortable, even if it’s unintentional. In that situation, employee morale can suffer, making some feel unwelcome. This can be true for all diverse team members and management.  

A recent study by Deloitte notes the significance of leaders using inclusive language and how using it positively affects employees’ feelings of belonging. Leaders should advocate the use of gender-neutral pronouns such as “they” or “them” instead of “he”. Another step can be asking employees their preferred pronouns and encouraging everyone to share their pronouns before a meeting. 

Foster inclusivity in workplaces

Beyond people’s behaviors, the physical design of a workplace should consider the needs of diverse sets of people. Instead of being weighed down the line, a workspace should have an inclusive design from the start. That can mean planning ahead for the potential accessibility needs of employees with diverse abilities and designing spaces that don’t draw attention to specific requirements. 

Analyze employee satisfaction

To accurately understand the effects of DEI initiatives in the workplace, companies can track employee satisfaction and see if there’s room for improvement. A positive workplace atmosphere, recognition, communication and career development are some ways in which employees feel valued. Since diversity and equity play a role in each of those, surveying employees on DEI-related topics can provide a clearer window into their thoughts and opinions. 

One way to do that is by using an existing Employee Satisfaction Index (ESI) questionnaire or turning to a third party that can tailor a study specific to a company’s unique needs. Conducting an annual survey can help companies assess if their DEI initiatives are impactful and provide them with thorough data shared by respondents. 

Why is intersectionality important in DEI initiatives?

Intersectionality describes the convergence of someone’s unique attributes that can lead to discrimination in the workplace. When a person’s gender, race, sexuality, or disability intersect, it can lead to increased discrimination, higher than for someone who belongs to only one underrepresented demographic. 

Those who experience discrimination due to intersectionality may obtain unequal outcomes and struggle to catch up to their peers. For that reason, intersectionality is meaningful in diversity initiatives to ensure those who belong to multiple underrepresented groups receive fair treatment and support. 

Companies that don’t factor in intersectionality may encounter drawbacks such as wage inequality, lack of professional development, increased sexual harassment, and more. Each of those elements affects employee success and well-being, which in turn can hurt the bottom line. Leadership figures such as executives and CEOs should lead the quest in addressing this critical issue, ensuring an inclusive environment and the overall well-being of companies and their employees.

How does ESG relate to DEI ?

ESG frameworks are checking for several firms’ risks that result from problematic DEI policies. Some examples of DEI disclosures across ESG frameworks are Gender pay ratio, which is covered by the GRI framework number 405 (Social disclosures). UNGC principle number 6 refers to the elimination of discrimination in respect of employment and occupation and SASB refers to disclosures on “Employee Engagement, Diversity & Inclusion”.

Other data points that could refer to risks as a result of broken DEI policies or culture are GRI 401 – employee turnover and GRI 2 Gender diversity and non discrimination policies in GRI 406 and in SASB in UNGC.

At ESGgo, we aim to help organizations count for the data that show a risk to the company’s ESG and do good at the same time. Aligning to the different data points across the different reporting frameworks and understanding the risks as investors view them, can help companies not only better society and the environment but also lower their risks and make stakeholders content at the same time.