Future of work: The role of ESG regulations
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June 8, 2023 - Future of work: A transformative era for EHS explores how EHS professionals are leveraging technology to improve worker safety, well-being, productivity, and engagement. Now, we look at how the latest regulatory changes will impact the future of work and whether environmental, social, and governance (ESG) regulations to address issues such as climate change and forced labor are sufficient to tackle these complex challenges.
Global ESG regulations are rising alongside the critical need to address concerns around climate disclosures, forced labor, and ethical business conduct. These regulations are influencing and shaping the future of work by placing a greater emphasis on sustainability, social responsibility, and ethical practices. However, the increasing numbers of people experiencing forced labor and unethical workplace standards sparks the question of whether these regulations are going far enough.
Current regulatory landscape
On the environmental side of ESG, regulations such as the Corporate Sustainability Reporting Directive (CSRD) in the EU stand to ensure that organizations provide detailed reporting on sustainability issues in a bid to boost sustainable investments. Reporting on environmental impacts and social practices, while having supply chain transparency, allows stakeholders and investors to make informed decisions and hold organizations accountable for ESG performance. Failing to do so would incur financial and reputational damages. Similarly, a common taxonomy on ESG reporting and sustainable activities has been issued by the European Commission to help reach 2030 sustainability targets.
Are we making progress?
The social element of ESG is often surpassed by the environmental and governance aspects due to the urgency surrounding net zero targets (read Tackling Decarbonization: ESG Planning Strategies). Progress has been made on social impacts, including diversity, equity, and inclusion (DE&I), with more than 8 in 10 US organizations implementing DE&I initiatives in 2021 (read BSI’s Is your DE&I and well-being strategy actually making an impact?). However, with advancing technologies such as artificial intelligence (AI) continuing to transform the future of work and employment, is enough being done to create a diverse and ethical workforce, one where forced labor is eradicated?
Forced labor includes but is not limited to the following scenarios:
- Child labor refers to employing children in work that deprives them of their childhood and is harmful to their physical or mental development. A March 2023 report by the Economic Policy Institute shows that federal laws like the Fair Labor Standards Act (FLSA), established almost a century ago, are unravelling as many believe that child labor is ancient history. However, between 2015 and 2022, violations in the US surged by over 283 percent, and most recently, 10 states, including Missouri, have weakened their child labor regulations. New child labor policies must be implemented to protect children from the exploitation that is still prevalent in resource-strained societies.
- Human trafficking is a form of modern slavery that is described as the illegal transporting of people for the purpose of forced labor or other exploitative endeavors. Despite the UK Modern Slavery Act 2015, in 2022, the Home Office received 4,580 reports of adult potential victims via the Duty to Notify (DTN) process, compared to 3,193 in 2021 – the highest number received since the DTN process began in 2009. Similarly, in the US, the Trafficking Victims Protection Act of 2000 exists to prevent human trafficking, but a total of 2,198 persons were referred to US attorneys for human trafficking offenses in 2020, a 62 percent increase from the 1,360 persons referred in 2011. Perhaps as the Trafficking in Persons Report 2022 suggests, solutions to combat human trafficking and assist victims may be “most effective when designed and informed by those who have survived it.”
Just as the Trafficking in Persons Report 2022 suggests involving survivors in the design of solutions, it is imperative that the perspectives and insights of those who may face workforce displacement due to AI-driven automations are considered.
AI has the potential to place many types of jobs at risk, with a recent Goldman Sachs study finding that generative AI tools could affect 300 million full-time jobs worldwide, leading to “significant disruption” in the job market. Automation driven by AI and robotics is increasingly taking over manual work in factories and on assembly lines, and experts are now predicting that white-collar jobs will see disruption in years to come. The result of this will be highly skilled workers pushed out of their current roles and into lower-skilled positions.
While ESG regulations are progressing for environmental and governance initiatives, there is still room for improvement in terms of social issues, particularly with AI set to change the workplace landscape for good. It is vital for policymakers, businesses, and individuals to critically evaluate whether ESG regulations are effective in addressing these complex issues. Organizations that collectively strive for a work environment that not only meets the demands of the present but also ensures a sustainable and ethical future that addresses technological advances are those that will thrive in years to come.
Read parts one and two of BSI’s Future of work series, and to learn more about BSI’s innovative modern slavery standard, BS 25700, check out Ryan Lynch’s insights in Behind the Standard. For more information about ESG initiatives, read Tackling Decarbonization: ESG Planning Strategies. Follow along with these and other digital trust, EHS, supply chain, and sustainability topics that should be at the top of your list at BSI’s Experts Corner.
