CHAPTER 10 - Sustainability and Corporate Social Responsibility (CSR) in HRM

Both sustainability and CSR are important to HRM strategy, and likely affecting the employee's talent to attraction, engagement and retention. Cone Communications (2023) indicates that 75% of millennials would accept a lower salary to work for a company with a social conscience. In the 12 roles named for the HR function, HR is tasked with integrating sustainability into the organization's culture, development of new green jobs, building an ethical supply chain, and promoting volunteerism aligned with the organization's CSR goals. (Stahl et al., 2020). 

Within corporate sustainability, notions of greenwashing are prevalent, where performative environmentalism is present instead of business-as-usual (Lyon and Montgomery, 2015). There is also potential for literature based on purpose-washing, where diversity is celebrated through marketing while discriminatory practices remain and a focus on biases is absent (Wickert, Vaccaro and Cornelissen, 2017). The authenticity of corporate sustainability is under better scrutiny than ever. The H&M "conscious collection" was criticized for greenwashing while being the second-largest fast fashion polluter. True, authentic sustainability requires changes to the business model, beyond HRM initiatives. 

Integrating ESG Metrics into Human Resources Practices

One powerful way for HR to contribute to true sustainability is by embedding ESG metrics into core HR systems, such as performance management and talent reviews. Rather than treating CSR as peripheral or a “nice-to-have” activity, HR can help ensure that ESG objectives are tied to how people are evaluated, rewarded, and developed. Performance appraisals might include targets related to resource consumption, volunteer programs, or inclusive workplace behaviors. This alignment ensures that individual employee goals reflect-and reinforce-the organization's broader commitment to sustainability. Indeed, research has found that ESG-driven HR practices not only benefit employee welfare but also drive long-term organizational performance.

Green Recruitment and Talent Management

Sustainable HRM also extends to the ways in which organizations attract and retain talent. For example, green recruitment practices—such as advertising a company's CSR values in job postings, incorporating sustainability-themed interview questions, and evaluating candidate commitment to social responsibility—enhance the likelihood that employees will share the company's purpose. Once employed, HR can further cultivate alignment through providing development programs focused on sustainability; for example, training in ethical leadership or environmental awareness. Researchers in both higher education and corporate contexts have identified that such efforts enhance employee engagement while strengthening the organization's reputation as a socially responsible employer.

Creating a Culture of Responsible Leadership

Corporate sustainability is not only about policies; it's deeply shaped by leadership culture. The identification, development, and support of leaders who manifest CSR values are some of the strategic roles of HR. Through leadership development programs, mentoring, and ethical performance appraisals, HR can build a cadre of managers who champion social and environmental responsibility, rather than those that are financially driven. The integration of CSR into leadership development ensures consideration of the long-term impact of business decisions on people, communities, and the environment. Emphasized in research is how critical it is to couple HR with leadership culture: when leaders model sustainability, it trickles down in the organization, improving employee morale, ethical behavior, and building stakeholder trust.

Measuring, Reporting, and Accountability 

To genuinely drive CSR, HR needs to provide not just program launches but also measurement and reporting on those programs. This calls for defining relevant KPIs at the outset-such as volunteer hours, diversity and inclusion metrics, carbon footprint reductions, or employee satisfaction with CSR efforts-and tracking these over time. HR can partner with sustainability teams to build out dashboards and regular reporting mechanisms that link CSR performance back to business outcomes. Transparent reporting creates accountability-to internal stakeholders such as employees and management, as well as external ones including customers, regulators, and investors. It also avoids problems such as "green hushing" (where genuine sustainability efforts are underreported) by ensuring achievements-and challenges-are communicated honestly.

Theory for  Sustainability and CSR

Stakeholder Theory  (Freeman, 1984)

According to Stakeholder Theory, Freeman (1984) postulated that organizations should consider the interests not only of shareholders but also of all other important stakeholders such as employees, the community, and customers, among others. HRM plays a central role in this respect because employees are among the main stakeholders who provide influence for ethical and sustainable decisions.

How the Stakeholder Theory connects with Sustainability and CSR

Stakeholder Theory argues that an organization’s success depends on creating value not only for shareholders but for all stakeholders such as employees, customers, suppliers, communities, and the environment. This theory is one of the most important foundations for understanding Sustainability and CSR in HRM.

Example:

1. A company invests in renewable energy not only to reduce costs but also to meet the expectations of customers who demand environmentally responsible products.
2. A company implements a CSR-based employee volunteering program whereby employees are encouraged to spend paid hours on community projects.
3. HR involves employees in planning environmental activities, such as campaigns for waste reduction, thereby giving them a say as stakeholders.
4. HR assures fair labor practices in the company's supply chain by auditing the working conditions within the partner factories.

References 

• Cone Communications (2023) Millennial Employee Engagement Study. Boston: Porter Novelli. Available at: https://books.google.lk/books?hl=en&lr=&id=DECMEQAAQBAJ&oi=fnd&pg=PA2010
• Stahl, G.K., Brewster, C., Collings, D.G. and Hajro, A. (2020) ‘Enhancing the role of human resource management in corporate sustainability and social responsibility: A multi-stakeholder, multilevel and multidisciplinary review’, Human Resource Management Review, 30(3), pp. 1–16.
• Lyon, T.P. and Montgomery, A.W. (2015) ‘The means and end of greenwash’, Organisation & Environment, 28(2), pp. 223–249.
• Zhao, H., Zhou, Q. and Zhang, M. (2022) ‘How corporate social responsibility influences employee green behaviour: A moderated mediation model’, Frontiers in Psychology, 13, 850283.
• Freeman, R.E. (1984) Strategic Management: A Stakeholder Approach. Boston: Pitman.