Integrating Social Sustainability in Business Process Outsourcing (BPO) through ESG Principles

In the dynamic landscape of business, the integration of Environmental, Social, and Governance (ESG) principles has emerged as a transformative force. Within this paradigm, the realm of Business Process Outsourcing (BPO) stands at the crossroads of innovation and responsibility. As ESG takes centre stage in global business discourse, BPO providers and clients must collaboratively embrace these principles to foster sustainable communities, drive value creation, and align with stakeholders’ expectations. In this article, we delve into the evolution of ESG, the rise of Social Sustainability, the synergy between ESG and BPO, and strategies for effective implementation.

Understanding ESG

ESG has evolved from a niche concept into a pivotal framework that guides companies in managing environmental, social, and governance risks while uncovering avenues for value creation. While BPO inherently leans toward the ‘S’ (Social) aspect of ESG due to its people-centric nature, it is essential to recognise that ESG encompasses the broader context of environmental responsibility and robust governance as well. ESG has evolved from what we knew as CSR (Corporate Social Responsibility) but now with the ‘teeth’ of standards sitting by region guided by the United Nations Sustainable Development Goals.

The stakes are high: BPO’s face the risk of losing valuable business opportunities if they cannot substantiate their ESG commitments and deliverables—a prerequisite for buyers and clients in today’s conscientious supply chains. Major buyers of BPO services are giving ESG 20% of the selection scoring and in many cases if a supplier cannot disclose elements of ESG then they will not be available for selection.

As a prime example we have seen the adoption of the myConsole ESG management platform at leading retail and ecommerce BPO Ascensos. As the first in the BPO space to embed an ESG process and workflow tool into their business, Ascensos is understanding that deployment of the myConsole platform enables the seamless integration of all their existing ESG activities across our entire organisation, putting purpose and value creation firmly at the heart of our business.

To give a sense of dimension, a business like Ascensos will utilise a top down and bottom up approach and will add a RACI based process – from goal setting, stakeholder input and management of responsibilities through to reporting and disclosure. They leveraged ESG Pathway (www.esgpathway.net) to kick start the programme in the first 60 days. With a great proportion of data and processes already available, the need for specific administration is light and can be automated to a great extent within the SaaS management platform.

Embracing ESG: A Global Mandate

The horizon of 2024 beckons with a spectrum of government standards and mandates. Across continents, commitments to ESG are being augmented, making it imperative for companies to extend their ESG considerations to encompass their suppliers’ disclosures.

Distinct regions have their frameworks, including:

• SFDR/ESRS for Europe
• ACSR’s SRG and GRI for APAC
• TCFD/CR22 for the U.K.
• SEC/SASB/GRI for the USA
• JSE’s SDG/GRI for Africa

As the world unifies its stance on the importance of ESG principles, BPO providers and clients must adopt strategies that bolster their businesses while driving positive societal impact.

The Transformation of Social Sustainability

Historically, environmental concerns dominated discussions around sustainability, relegating social aspects to a secondary role. However, the tide has shifted, and businesses are increasingly acknowledging their profound social impact on employees, communities, and stakeholders. Social Sustainability now encompasses diversity and inclusion, employee well-being, community engagement, and ethical supply chain practices. Impact sourcing, a facet of Social Sustainability, leverages outsourcing to create job opportunities for disadvantaged communities, driving both social and operational goals.

Impact Sourcing and BPO: A Synergistic Approach

The marriage of impact sourcing and BPO is an opportunity-rich terrain. By harnessing outsourcing’s power to foster employment and uplift marginalised communities, businesses can concurrently achieve their social and operational objectives. BPO providers stand at a pivotal juncture to pioneer this approach, blending economic advancement with social betterment. We will soon be seeing industry associations defining Impact Sourcing standards and with guidance provide the buyer community with validated input.

The ESG Blueprint for BPO: Navigating Industry Dynamics

At its core, BPO entails outsourcing non-core functions to third-party service providers, enabling clients to channel resources into core activities. With clients hailing from diverse sectors, such as customer service, HR, and accounting, BPO’s allure lies in cost savings, enhanced productivity, and specialised skills access. For BPO providers, the stakes are high—excellence in delivering critical functions necessitates meticulous management practices and rigorous data security.

The Crucial ESG Alignment

ESG and BPO’s intrinsic global nature intersect seamlessly. BPO providers source talent from a spectrum of geographies, emphasising the interconnectedness of ESG strategies. The BPO service’s role in the supply chain interlinks the ESG trajectories of clients and providers, ushering in mutual dependency. Importantly, BPO providers’ influence extends beyond their immediate operations, influencing the ESG performance of their clients. Acknowledging this symbiotic relationship is a linchpin for both parties.

Navigating the ESG Reporting Terrain

The universe of ESG frameworks and metrics can be bewildering, with over 160 frameworks globally. Prominent choices include the GRI framework, SASB standard, and jurisdictional stock exchange requisites. Irrespective of the chosen framework, data collection holds the key, especially for social indicators. Metrics encompassing diversity and inclusion, employee development, and corporate social responsibility hinge on comprehensive data collation and integration.

Confronting Challenges: A Way Forward

While ESG reporting might pose challenges, the value it brings is undeniable. BPO clients and providers must recognize this value and collaborate with experts and ESG consultants to align with social sustainability metrics, gather accurate data, and implement effective reporting frameworks. Tackling data availability, reliability, integration, and verification head-on is paramount. By investing in robust ESG data management, BPO providers can champion transparency, demonstrate dedication to social sustainability, and infuse positive change.

Harmonising the Standards: A Practical Approach

Navigating the complex web of ESG standards requires BPO entities to collaborate with advisors adept at appreciating and leveraging the intricate layers between the various standards and a company’s business activities. This involves utilising ESG management tools such as myConsole, Workiva, and Figbytes; harnessing reporting and disclosure platforms like SustainIQ, IBM Envizi, and DiligentESG; and engaging with certifications and ratings like B Corp, EcoVadis, CDP, and MSCI ESG Ratings.

Conclusion: Pioneering a Socially Conscious Future

The confluence of ESG principles and Social Sustainability is reshaping the contours of the BPO landscape. As ESG evolves into a central pillar of business triumph, BPO clients and providers must wholeheartedly embrace these principles. This embrace can galvanise ethical labour practices, propel sustainable development, and pave the way for a future where business innovation is inextricably woven with social responsibility.

About the Author

Alistair Niederer at ESG Pathway Service

Alistair boasts a career enriched in the realms of technology and business services, with a steadfast focus on Business Process Outsourcing (BPO), encompassing both back-office operations and customer experience for over two decades.

Beginning in 2022, Alistair strategically shifted his career trajectory towards ESG advisory and services for the technology and business service sector, spearheading the establishment of ESG Pathway service.

(www.esgpathway.net).