When people thrive, business thrives: The case for human sustainability

The organizations that embrace this perspective stand to build a beneficial cycle: one in which improving human outcomes enhances organizational outcomes and vice versa, contributing to a better future for all.

But human sustainability isn’t just another name for stakeholder capitalism: simply delivering a wider range of outcomes for a wider range of stakeholders. Some suggest that, in the name of stakeholder capitalism, for example, organizations may make a positive contribution to a stakeholder group to balance out some of the adverse impacts to that group, much as carbon offsets function.⁵ These offsets can sometimes fail to address the root causes in the organization, and the positive impact in one area does not necessarily compensate for the adverse impacts elsewhere. To balance various stakeholder interests, some say priority is often given to interests aligning with organizational objectives or of high importance to individuals with influence, often entrenching social inequities or resulting in organizations defaulting to meeting ESG regulatory requirements or reducing risk.⁶

A focus on stakeholders alone tends to obscure the fact that organizations rely on more than positive stakeholder relations for their long-term organizational success. Being a stakeholder-focused organization is not the same as being a sustainable organization whose success demands long-term, collaborative efforts to create shared value. An organization is sustainable when it addresses the complex problems of the underlying structural and systemic issues that stand in the way of creating value for humans at the systems level. Creating another bolt-on program or employee benefit, such as gym memberships, meditation training, or volunteering time with the community, is not human sustainability. Achieving human sustainability isn’t easy, and often requires important trade-offs and careful balancing of short-term initiatives and longer-term practices that can address some of the root causes of difficult structural and systemic issues.

This approach is in its infancy today. Only 10% of organizations say they are leading in advancing human sustainability. Among those that are, efforts are likely to be fragmented and uncoordinated, pursued in isolation by disparate groups (for example, experiments with nondegree hiring, four-day work weeks, living wages, or employability improvement with skills passports).

Only 43% of workers say their organizations have left them better off than when they started. In our research, workers identified increasing work stress and the threat of technology taking over jobs as the top challenges to organizations embracing human sustainability (figure 3).

There are also many developments in the world and in the workforce that threaten to leave people worse off. Some of them include:

• Rampant worker burnout: Constant change and overwork are taxing workers. Worker stress worldwide hit a record high for the second year in a row in 2022, with about half of workers “always” or “often” feeling exhausted or stressed.⁷ More than four in 10 report feeling burned out at work.⁸
  
• Concerns about AI eliminating jobs: According to a recent study, roughly two-thirds of workers in the United States and Europe will be impacted by generative AI, with generative AI substituting up to one-fourth of current work.⁹ The World Economic Forum estimates that generative AI could result in 83 million job losses globally over the next five years.¹⁰ Women workers are especially vulnerable: Men outnumber women in the workforce, but women are more likely than men to be exposed to the impact of AI.¹¹
  
• Rapidly evolving skill needs: The half life of skills continues to shrink, with skills evolving at a rapid pace.¹² Yet only 5% of executives strongly agree that their organization is investing enough in helping people learn new skills to keep up with the changing world of work.¹³

• Support for gig and contract workers: Approximately 2 billion people globally are working informally (for example, contract work).¹⁴ These workers often do effectively the same work as their hired colleagues but may earn less and receive fewer benefits or protections.¹⁵

• Lack of visible progress on DEI: Although almost all HR leaders (97%) say their organizations have made changes that are improving DEI outcomes, only 37% of workers strongly agree that they’re making progress.¹⁶
  
• Poor conditions for frontline workers: Frontline workers compose about 80% of global workers,¹⁷ but research suggests they feel underserved by training, are less likely to have opportunities to work on purposeful projects, experience low wages, receive little paid time off, and are less likely to have health insurance.¹⁸
• Climate change and the energy transition affecting global workers: The Deloitte Economics Institute estimates that more than 800 million jobs worldwide—one quarter of the global workforce—are highly vulnerable to climate extremes that affect, for example, access to clean air and water, and the economic effects of the transition.¹⁹
  

Executives are on board with the idea of human sustainability in theory: The large majority surveyed in the Deloitte Global skills-based organization research (79%) say their organization has a responsibility to create value for workers as human beings and for society,²⁰ and 81% say human sustainability is very or critically important. But just 12% of executives say they’re leading in this area, while 17% say they have yet to make any progress. Meanwhile, only about a quarter of workers (27%) say their employer is making progress in creating value for them.²¹

An extractive approach to people, in which an organization looks to maximize the immediate value it receives from people while minimizing their cost, stands to exacerbate the trends above. It could lead organizations to use AI to eliminate jobs rather than create or improve them, resist rather than embrace the postcarbon transition, swell the ranks of gig workers with meager safety nets, fail to make the investments needed to move the dial on DEI, and burn out workers.

That said, many of these developments also offer enormous potential for both people and organizations. Human sustainability offers a key to harnessing them to build a better future.

When people thrive, business thrives

Focusing on human sustainability can help organizations create beneficial outcomes for people and for themselves.

A focus on human sustainability can help organizations develop even more robust measures than evolving government policies related to people issues, which typically lag behind the pace and necessary scope of change. Regulations—such as the US Human Capital Disclosure Rule, Japan’s recently instituted Amendment on Disclosure of Corporate Affairs, and the European Union's new European Sustainability Reporting Standards—may be necessary, but not always sufficient.

While people can represent risks to an organization, they also represent great opportunities. Consider that intangible assets—the ideas, technologies, brand attributes, and other differentiators created by an organization’s people—made up 90% of US corporate assets in 2022.²² Intangible assets approached comparable levels in other developed markets, though they were lower in emerging markets.²³

Studies have consistently found that organizations engaged in practices related to human sustainability produce stronger business results. Analysis by the University of Oxford Wellbeing Research Center finds a “strong positive relationship between employee well-being and firm performance,” including stronger profits and stock returns among organizations with the highest levels of well-being.²⁴ In addition, organizations that rank the highest on addressing human sustainability issues consistently outperform the Russell 1000.²⁵

In fact, the organizations that score highest on treatment of their workforce had a 2.2% higher five-year return on equity, emit 50% less CO2 per dollar of revenue, and are more than twice as likely to pay a family-sustaining living wage.²⁶

A number of factors could help explain a connection between human sustainability and improved organizational value:

• A focus on human sustainability may help organizations receive the benefits of greater diversity, equity, and inclusion. Organizations with greater diversity are 2.4 times more likely to outperform competitors financially.²⁷
  
• Organizations that invest in skills development have better business results. Eighty-four percent of workers at high-performing organizations say they receive the training they need to do their jobs well.²⁸
  
• Pinching pennies on the workforce often backfires. Low wages often lead to higher turnover, lost sales, low productivity, weak attendance, low levels of innovation, poor execution, mistakes, and frustration among customers and managers.²⁹
• Improving worker health and well-being can reduce workforce risk. A majority of workers say that improving their health is more important than advancing their career and that they are seriously considering quitting for a job that better supports their well-being.³⁰
• Consumers are more likely to support socially responsible organizations. Three-quarters (76%) of consumers say they’re more likely to buy from organizations that are socially responsible.³¹

For these reasons and others, a human sustainability agenda can help future-proof organizations: bolstering their ability to access, engage and develop a diverse workforce; develop a strong, diverse pipeline of talent; become more rewarding and productive places to work; inoculate against a variety of risks; and appeal to consumers.

A human sustainability mindset replaces extractive, transactional thinking about people with a focus on creating greater value for each person connected to the organization. This shift can set the stage for leaders to implement broader actions in support of a human sustainability agenda using trust as the critical glue.

Consider starting with the following actions:

• Focus on metrics that measure human outcomes. Organizations often design people metrics either to quantify worker outputs and activities or as a box-checking exercise, rather than as an assessment of progress on outcomes and impact. For example, nearly a quarter (23%) of organizations measure progress on diversity commitments based on adherence to compliance standards.³²

Consider measuring factors like the ones highlighted below that the organization can act on to create a better future for both people and the organization, and which include workers like external supply chain or contract workers in the analysis.

• Make the business case for human sustainability. Making the mindset shift toward human sustainability often requires that leaders, executives, and board members have a clear picture of the business advantages of making this shift. Organizations may in fact be taking many steps toward human sustainability, but in a siloed or disconnected way. Connecting the dots between initiatives can help provide a holistic picture of the business impact of human sustainability.

As discussed above, a number of factors can demonstrate the benefits, and driving this change may mean creating models, pilot initiatives, and new metrics that focus on these factors. When PayPal, for example, began an initiative to improve the financial well-being of its entry-level and frontline workers, it needed to justify the additional costs from both a business and human perspective. The organization estimated that for every one percent reduction in attrition, it would save US$500,000 a year from reduced recruiting, onboarding, and training costs and through improved productivity (read the full case study below).

• Tie leader and manager rewards to human sustainability metrics. To make progress on anything, an organization needs to hold leaders accountable. Organizations should set goals to advance on key human sustainability outcome metrics and drivers and attach incentives to achieving them.
  

Many organizations are already taking steps in this direction. Almost three-quarters of S&P 500 organizations now connect executive compensation to sustainability metrics.³⁸ Genpact, for example, uses a suite of internal tech tools, including its AI chatbot, to check in regularly with workers and learn what is or isn’t working well for them and to gauge their mood and sentiment. The tools aggregate a workforce “mood score” that is linked to 10% of bonuses for the organization's top 150 leaders, including its CEO.³⁹ Mastercard takes this a step further, determining bonuses for all workers in part based on the organization's performance on carbon neutrality, financial inclusion, and gender pay parity.⁴⁰ That said, there appears to be a long way to go. Less than half of our survey respondents told us their organization holds itself and leaders accountable for the holistic well-being of its workers.

• Integrate human sustainability governance into the board and C-suite. Human sustainability is increasingly taking center stage on the boardroom agenda, as the board provides oversight on the intersection of strategy, risk, culture, and ESG and its relationship to business results. “We’re seeing increasing discussion at the board level of topics like DEI and ESG—and topics like changing workforce expectations, purpose, and skills now matter at the board level,” said Larry Quinlan, board member of six organizations. In one Deloitte US study, board members and C-suite leaders ranked human sustainability issues among the top internal workforce risks, yet many don’t feel confident in their ability to manage them (figure 5).⁴¹
  

While the board can provide oversight, ultimately, it is the C-suite’s responsibility to operationalize human sustainability and ensure all parts of the organization are actively working to help humans thrive. The vast majority of C-level executives (95%) agree that executives should be responsible for worker well-being, a leading indicator of effective human sustainability efforts.⁴² But living up to that responsibility can require thoughtful, cross-functional governance at the highest levels.

People-related issues traditionally have fallen under HR. But managing human sustainability crosses almost all parts of an organization, including finance, information technology, and operations, so HR can’t do the job on its own. Organizations should embrace a boundaryless HR approach that orchestrates the pursuit of human sustainability across disciplines to achieve it. They might also consider appointing a chief human sustainability officer to connect the dots between functions or create new roles in charge of key aspects of human sustainability, such as work redesigner, steward of purpose, or upskilling advocate.

• Involve workers, future workers, and others in cocreating their roles and human sustainability initiatives. To create value for individuals, organizations need input from individuals. Leaders can engage workers, future workers, contingent workers, community members, and other members of the organization’s human ecosystem in dialogue about what they value and how it can be pursued together.
  

While these discussions may take shape in many ways, one important thread may center around reimagining workers’ roles—for example, integrating well-being into work design, building roles around purpose, or giving workers the freedom and autonomy to define “how” their work gets done. Consider tomato processor Morning Star, where each worker drafts their own outcomes and problems to be solved. For example, one worker’s personal mission is to turn tomatoes into juice in a way that is highly efficient and environmentally responsible. The statement then describes how they will work to achieve the objectives, including whom they will collaborate with and what decision responsibilities they will have.⁴³

Approaches like this can create autonomy, continual learning and development in the flow of work, and the cultivation of human capabilities like imagination and curiosity used to identify problems and opportunities and then develop, test, and iterate on solutions.

Alternatively, worker roles may become more fluid through matching their skills, human capabilities, and unique motivations and passions to a portfolio of ever-evolving projects and assignments—unleashing greater agility, DEI, and greater growth, agency, and choice for workers.⁴⁴ Both approaches rethink work by negotiating what and how it is done with the workers themselves.

• Elevate managers’ human sustainability role and empower them to own it. Managers can play a crucial role in advancing human sustainability, as they are the frontline leadership helping workers develop skills and creating psychological safety and belonging in teams. In one study, six in 10 workers worldwide said their job is the biggest factor influencing their mental health. The same study revealed that managers have as great an impact on a worker’s mental health as their spouse, and a greater impact than their doctor or therapist. Roughly seven in 10 said they would like their organization and managers to do more to support their mental health.⁴⁵ Organizations should empower managers with training, resources, and the autonomy to align policies and workloads with human sustainability priorities. In addition, ensuring managers have a clear window into human sustainability metrics can enable them to help the organization achieve its commitments.
  
• Learn from leading organizations’ workplace practices.Organizations in the forefront of human sustainability are implementing initiatives—and in some cases, rewiring organizational practices—to add greater value for workers and society. Consider the following practices adopted by some organizations as they work toward embracing human sustainability:
  • AT&T: Fewer than 5% of job openings require college degrees. In addition, the organization trains heavily and recruits top managers from its own ranks—including CEO John Stankey, who does have a college degree and started his career at AT&T taking customer requests for phone service.⁴⁶
  • Zurich Insurance Group: People analytics assess workers’ current skills and future skill requirements, and technology curates learning and development opportunities. Capability network mapping helps identify areas where the organization has networks of particular skills and capabilities and suggests ways for workers to strengthen their networks.⁴⁷
  • Chobani: Workers in its plants have an average tenure of six years, longer than industry average. This could be due to the organization's emphasis on hiring refugees and offering ESL classes, language programs for managers, a child-care stipend, and relatively high starting wages.⁴⁸
  • Unilever: Unilever’s U-Work program offers temporary workers who contract with the company for a series of short-term engagements a guaranteed minimum retainer, access to organizational resources, and a core set of benefits like modified health care and retirement funding.⁴⁹
  • Hitachi: An executive sustainability committee tackles 11 goals that pose the most important social challenges for Hitachi, including quality education, gender equality, work and economic growth, health and well-being, and clean water and sanitation.⁵⁰ One initiative seeks to prevent long working hours and overwork with a system that senses hours worked by each individual and then sends alerts to supervisors with suggestions on how to help coach overworked workers, as well as nudges to workers that encourage behavioral changes.⁵¹

Putting the human in sustainability

Human sustainability is a long-term play: The strategies put in place today will help determine whether workers, organizations, and society endure and flourish both today and for future generations. It’s a path toward creating a better future for us all, underscoring the interconnection between everything we do and need as humans, including climate sustainability, equity, trust, purpose, well-being, and belonging. And it calls on leaders and organizations to reflect—and act—on the role they play as stewards of human thriving, making a commitment to prioritize, measure, and improve human outcomes within their spheres of influence.

This work won’t happen overnight. The task is complex and will evolve constantly as the world changes. Organizations will need to take the lead and should also consider working together as part of coalitions to define best practices, standardize metrics, and push for smart policies. It will require challenging fundamental assumptions about business and its relationship with individuals and society—for example, some are suggesting the revision of accounting rules that currently treat people primarily as a cost.⁵⁹ But it can be done: Our research indicates that the major challenge to progress on human sustainability efforts is internal constraints and that few respondents say they have sufficient resources.

A human sustainability perspective is grounded in a few simple principles: The people connected to your organization have the power to affect it in important ways. Your organization has the power to affect each of them. And by understanding and creating value for each other, your organization and its people can improve business, work, and life for everyone.