{"id":587,"date":"2024-09-05T00:00:00","date_gmt":"2024-09-04T21:00:00","guid":{"rendered":"https:\/\/blogit.metropolia.fi\/masterminds\/2024\/09\/05\/accelerating-dei-agenda-for-companies-their-reporting-and-kpis\/"},"modified":"2024-11-25T17:19:08","modified_gmt":"2024-11-25T15:19:08","slug":"accelerating-dei-agenda-for-companies-their-reporting-and-kpis","status":"publish","type":"post","link":"https:\/\/blogit.metropolia.fi\/masterminds\/en\/2024\/09\/05\/accelerating-dei-agenda-for-companies-their-reporting-and-kpis\/","title":{"rendered":"Accelerating DEI agenda for companies, their reporting and KPIs"},"content":{"rendered":"

Both researchers and industry experts concur that workplaces with diverse and inclusive environments make positive impacts on organizations. They point out that having diversity, equity, and inclusion (hence DEI) initiatives at work improves corporate culture, client relations, enables the organization to move into new markets and even positively affects profitability. The three essential components \u2013 diversity, equity, and inclusion are interlinked and, when combined with business strategies, can help organizations thrive amid societal changes. (Ely and Thomas 2020.)<\/p>\n

These topics inspired me during my MBA studies and I chose them as a topic for my Master\u2019s thesis. In my thesis, I collaborated with a company in Finland that has a nascent DEI strategy and was interested to develop a roadmap to amplify the benefits of having DEI in the workplace to the company\u2019s leadership.<\/p>\n

Why the need to place a focus on DEI?<\/h2>\n

Diversity, Equity, and Inclusion (DEI), as a social pillar of sustainability policies, is part of the global goals in order to make a positive difference in own industry, as well as generate impact on society. DEI topics, as non-financial indicators, may be difficult to measure, unless they are conceptualized and well aligned to the strategy. This may pose a challenge to smaller companies, new to this area, and therefore the experience and developments in big companies deserve attention and dissemination.
\nEspecially the appropriate selection of DEI indicators is the necessary step for any organization in the new era of CSRD. For organizations, key performance indicators (KPIs) are the essential managerial tools to determine whether the company is headed into the right direction. Metrics are vitally important, as evidenced by the proverbs ”if you can’t measure it, you can’t manage it” and ”what gets measured gets done” (Marr 2022). The DEI KPIs are important not only for reporting, but for implementing and truly \u201cliving\u201d the strategy of the organization. They are indicative tools that will shed light on performance and point out the areas that require special care.<\/p>\n

A look at EU\u2019s Corporate Sustainability Reporting Directive (CSRD)<\/h2>\n

For the last two decades, the EU has been a champion in promoting DEI. The latest CSRD regulation (adopted since 5th January 2023) and its newly adopted EU standards (ESRS) include not only sustainability, but also – profoundly – social issues reporting, including DEI (see ESRS S1). As communicated in the EU Commission\u2019s website on Corporate sustainability reporting:<\/p>\n

\u201cCompanies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS). The standards were developed by the EFRAG, previously known as the European Financial Reporting Advisory Group, an independent body bringing together various different stakeholders. The standards will be tailored to EU policies, while building on and contributing to international standardisation initiatives.\u201d<\/em><\/p>\n

This latest EU CSRD legislation requires that all large companies disclose the information on the opportunities and risks they perceive as emerging from social and environmental issues, as well as their effects of their actions on the environment and human population (EU Commission, Press Corner, Q&A, 2023). At the European Commission’s request, EFRAG (European Financial Reporting Advisory Group) drafted the standards to enforce the proposed CSRD, that focus on appropriate due process, transparency, and the knowledge of pertinent stakeholders. The 12 new standards (ESRS) cover the full range of sustainability issues and include the four significant \u201cmust-do\u201d reports under the social facet, namely:<\/p>\n