Workplace mediation as an ESG tool

we are talking about the same, just the approach is different


Nowadays, sustainability is one of the most pressing social and at the same time also a legal problem. Companies can no longer be satisfied in this field with fine-sounding marketing-related projects. The EU aims deeper investigation regarding that sustainability of undertakings, it must be more transparent and must be made comparable in relation of companies acting in the same field. In connection with this, large companies have already legal responsibilities regarding this year. The topic is complex and among others, it consists of HR-related questions, moreover – approaching this question from a theoretic point of view- those also involve such topics like conflict resolution at the workplace. If we look at this, the vision of sustainability and workplace mediation are similar from several aspects.

  1. What does ESG mean and why should we talk about it?

Originally, the term of sustainability was made known to the public in connection with environmental protection and climate change some years ago and, nowadays this topic can not be ignored by undertakings either. Recently, we can see more often such abbreviations as ESG, CSR, or NFR. All these are somehow in connection with the sustainable performance of companies.

The most well-known term may be ESG which is the abbreviation of “environment”, “social” and “governance” which basically raises questions how sustainable a company operates and what it is doing to cause as low environmental damage as possible and in order to decrease the negative impacts of its operation on the society. To collect the relevant information, the evaluation thereof, and to improve the comparability of the data the European Union launched some reporting and due-diligence obligations for companies. These were transposed into the national law and some implementing rules are still under development.

It is important to highlight that ESG is about much more than environmental protection or social responsibility. For companies the latter one mostly meant projects such as renovation of a nearby playground or painting the fence of the kindergarten. However, ESG is a much more complex, new approach, from which is expected to obtain a clearer view about the operation of companies, including the sustainability thereof, and that their steps made in favour of sustainability become more visible.

Although, this topic is coming originally from financial markets, from the direction of investments, but ESG – in particular the dimension of “social” and “governance”- affects in addition to the financial perspective such questions as what impact the given corporation has on society and people , how the business strategy of the given corporation respects fundamental human rights and how it takes into consideration the interests of those coming into contact with them.

  1. ESG as a new approach. Importance of sustainability within employment.

The operation of companies has the most direct affect on those who are employed by them. Thus – if it seems to be not obvious at first – the topic includes HR-related issues as well. In case of sustainable operation, it is provided that companies treat their employees well, in a sustainable way. Moreover, they prefer working with suppliers operating under similar standards and respecting human and employees’ rights, not using child labour, not exploiting their employees in favour of rapid growth and profit maximization.

If we analyse this thought deeper, this approach expects from companies regarding employees that – like in case of other resources – not to take advantage of the human resources in a short term, but rather to think in a long-term cooperation, which – in order to be manageable and sustainable –must have advantages for both of the parties. The minimum requirement thereof, that employers adhere to employment law and within this context they take an emphasis on occupational health and safety, realizing that the protection of the physical and mental health of the employees and thus, the maintenance of ability to work for a long-term is a common interest.

Furthermore, to a satisfying, long-term cooperation it is also needed that employers take into consideration the legitimate interests of employees, when making decisions. Related to this, emotional needs are not to be neglected, because even salary rise or other benefits are not able to replace that leaders and colleagues treat the employee with respect, behave properly and to treat the employees as an equal partner in the different workplace situations, and that employees may have an influence on decisions concerning them. All these increase the safety, well-being and satisfaction of employees, thereby they improve the relationship of the parties and help to maintain the employment relationship.

  1. Workplace mediation as an ESG tool

Therefore, employers must review also their HR policies in order to comply with ESG criteria. To this, an important question is what kind of risks shall be counted in relation of the maintenance of employment relationships, and – to minimize those – what kind of arrangements are needed.

Such risk might be the psychosocial burden experienced by employees in connection with their work, which becomes a significant factor by changes of the working activities – for example by computer work or working remotely. Probably it is less known, but among others, conflicts are also listed as a psychosocial risk. Everyone knows that conflict is a fact of life and there is no organization in which neither open nor hidden conflicts are. Who has ever had any conflict, knows how emotionally exhausting is being in a conflict and how much quality time and energy are wasted to handle the conflict, moreover the stress caused by the conflict may lead to health issues.

Within the scope of occupational health and safety employers are obligated and responsible for recognizing conflicts within the organization and for taking steps to prevent or mitigate their harmful effects. Approaching this obligation from sustainability perspective, it is easy to see that it does matter which tools are used to resolve conflicts. If our organization is managed based on the ESG criteria, then we have to find such a conflict resolution method, the tools thereof are in compliance with this spirit and thus, which handles the differences focusing on the maintenance of the employment relationships and on building the relationships at the workplace.

If we compare the principals of the sustainability vision with the characteristic of mediation, we can find numerous parallels. Mediation is an alternative dispute resolution procedure operating under democratic principles, during which the parties are supported by an independent, impartial third party – by the mediator – to settle their conflicts in a way which is acceptable for all parties involved. The parrel with the sustainability vision might be, that in course of mediation the goal is also to improve and maintain the relationship between the parties. In the procedure of the conflict resolution the recognition and acknowledgement of interests and needs plays an important role as well as facilitating the parties in finding mutually beneficial solutions to settle their disputes, ensuring that their agreement is really manageable, sustainable and enforceable in a long term. Further, in mediation mutual respect is very important as well as listening to the other party, fair and equal treatment. It is also crucial that the parties feel empowered to influence matters concerning them and to find solutions for their problems by themselves, for which – in return – they have to take responsibility.

In our opinion, the vision of ESG demands from the companies to strive on constructive and long-term workable solutions in course of conflict resolution, instead of solutions by power, disciplinary actions or litigation and to choose conflict resolution methods fitting to this approach, for instance workplace mediation.

  1. What to do to comply with sustainability requirements?

The things mentioned above shows the complexity of the topic and that the transition to sustainable operation requires essential change of attitude and careful preparation. Employment issues, including occupational health and safety and conflict resolution are only a small layer of sustainable development, however operation in compliance with ESG requires from companies to analyse sustainability-related issues such deeply and to adjust their policies to these principles and values. From social perspective it is key, that – beyond the collection of data and fulfilling reporting obligations – the real operation of companies as a whole be compliant with the sustainability vision. We believe that an important indicator of such operation might be for example, how a company handles conflicts within the organization, whether there are any representatives of employees’ interests and if yes, how they are treated. Companies which are really committed to sustainable operation must fill the mentioned topics with real content. This can lead to a higher level that distinguishes these companies from those formally comply with ESG criteria.

Both the complexity of the topic and the legal obligations and deadlines make it necessary for leaders and HR professionals to deal with this matter more deeply from now. Due diligence obligations and related reports start gradually regarding different sizes of companies from 2025. It is important to know that it is not restricted to each company, but it covers the whole supply chain, meaning that sooner or later almost all companies will face with ESG and the related obligations in some way. Thus, it is worth starting preparation as soon as possible.

The contents of the above article are informative and reflect the professional opinions of the authors. The article covers the relevant topic without claiming to be exhaustive, for the purpose of raising awareness and does not constitute legal advice.