Introduction
In the evolving landscape of Environmental, Social, and Governance (ESG) reporting, understanding and accurately measuring social metrics is crucial for organizations committed to sustainability and ethical practices. This article addresses frequently asked questions related to key social ESG metrics, including Full-Time Equivalent (FTE), Net New Hires, the Unadjusted Gender Pay Gap, adherence to UN Global Compact (UNGC) Principles, the OECD Guidelines for Multinational Enterprises, Employee Turnover Rate, and Work-Related Injuries. By providing clear definitions and calculation methods, we aim to equip businesses with the knowledge needed to enhance their social performance and transparency in ESG reporting.
Frequently Asked Questions on Social ESG Metrics
What is a Full Time Equivalent (FTE) and how do I calculate my FTE for the reporting year?
The FTE at the end of the reporting year, as required under the EDCI framework is a reflection of the total number of employees at the point in time of the last day of the year, and their proportion of hours contracted (relative to a full time employee).
To calculate FTE, follow these steps:
The app requires you to report FTE at the start and end of the reporting year. To do this, calculate the average hours worked for all employees on the books at you organization at the start of the year (so the total number of employees working as of 1st January 2023). Any employee who worked for < 120 days would be excluded from this list.
Repeat this step to calculate FTE for the end of the year (as of 31st December 2023).
When an employer has a 40-hour workweek, employees who are scheduled to work 40 hours per week are counted as 1.0 FTEs.
Remember that employees scheduled to work 20 hours per week are 0.5 FTEs.
What is Net New hires and how do I calculate it?
Net New Hires is a measure of the growth in an organization's workforce, indicating the difference between the number of new hires and the number of employees who left the organization over a specific period.
Net new hires is calculated automatically within the KEY ESG app. To calculate this in the app, follow these steps:
Enter your country for your office location. Be sure to include a new row for each office location in your organisation.
Enter the number of FTEs that have been gained or lost through Mergers and Acquisitions (M&A).
Enter the number of FTE organic leavers: these are the FTE of all persons who have left your employment for any reason other than via M&A.
What is the unadjusted gender pay hap and how do I calculate it?
The Unadjusted Gender Pay Gap measures the difference in average earnings between men and women within an organization, without accounting for differences in roles, experience, or education.
Unadjusted gender pay gap is calculated by following these steps:
Unadjusted Gender Pay Gap = (Average male earnings − Average female earnings / Average male earnings)×100%
Input this % value into the app
Remember that the unadjusted gender pay gap can be a positive or negative percentage.
What are the UN Global Compact (UNGC) Principles and how do they relate to ESG?
The UN Global Compact (UNGC) Principles are ten principles that guide businesses in adopting sustainable and socially responsible policies. These principles cover human rights, labor, environment, and anti-corruption.
These principles provide a framework for organizations to incorporate social and environmental standards into their operations, thereby enhancing their ESG performance. Companies are encouraged to align their strategies and operations with these principles to contribute to a more sustainable and inclusive global economy.
What are the OECD Guidelines for Multinational Enterprises and their importance in ESG reporting?
The OECD Guidelines for Multinational Enterprises are recommendations addressed by governments to multinational enterprises, providing principles and standards for responsible business conduct in areas such as employment, human rights, environment, and transparency.
Adhering to these guidelines helps organizations enhance their ESG performance by ensuring ethical practices and social responsibility. They serve as a benchmark for companies to measure and report their social impact, thereby promoting accountability and transparency.
What are work-related injuries and how can I calculate it?
Work-Related Injuries are incidents that result in harm or injury to an employee while performing work-related activities. This metric helps in understanding workplace safety and health standards.
Calculation: To calculate the total impact of work-related injuries, the following data points are required:
Fatalities: The number of work-related deaths.
Injuries: The number of reported work-related injuries.
Days Lost: The total number of days lost due to injuries.
What is LTIFR and how is it calculated?
LTIFR stands for Lost Time Injury Frequency Rate. It is a key safety metric used by organizations to measure the number of lost time injuries (LTIs) occurring in a workplace per a standardized number of hours worked. This rate helps businesses assess the effectiveness of their safety programs and identify areas for improvement in their safety practices.
Calculation: To caluclate the LTIFR, follow these steps:
Count Lost Time Injuries: Identify the total number of injuries or illnesses that caused employees to miss at least one full workday.
Total Hours Worked: Add up all the hours worked by all employees during the reporting period. This includes regular and overtime hours.
Calculate LTIFR: Use the formula to determine the rate:
LTIFR = (Number of Lost Time Injuries / Total Hours worked) * 1,000,000
Conclusion
Accurate measurement and reporting of social ESG metrics are fundamental to demonstrating a company's commitment to ethical practices and sustainability. By understanding how to calculate and interpret key metrics such as FTE, Net New Hires, the Unadjusted Gender Pay Gap, and Work-Related Injuries, organizations can improve their social impact and align with global standards like the UNGC Principles and OECD Guidelines. Utilizing these insights helps businesses foster a more inclusive and responsible workplace, ultimately contributing to their overall ESG performance and sustainability goals.