Sustainability in Payroll: Balancing People, Profit, and Planet

In an era of rising temperatures and income inequality, it is becoming increasingly important for companies to pursue sustainability in all business practices. Managers in all departments should consider the social and environmental impacts of their choices, and that includes payroll.

Sustainable payroll is an important piece of a larger overall corporate sustainability framework. While the immediate environmental impacts of running payroll may not be high, the indirect effects of payroll due to other factors are important.

Payroll can contribute to sustainable development if and only if it is done efficiently, and with modern tools. Today's state-of-the-art payroll systems give managers the ability to efficiently discover problematic payroll trends and give them the opportunity to address them quickly.

Environment, Economy, and Equity: The Three 'E's of Sustainability

Sustainability is sometimes defined as the intersection of environment, economy, and equity. These three points are the most important when deciding how best to pursue business practices that will benefit sustainability.

Environmental factors are often what people think of most when they think of sustainability. Because we live on a planet with finite resources, it is necessary to consider the potential environmental impacts of our actions when planning for sustainable development.

Economic influences are important for sustainability because the choices our society makes as a whole are largely dependent on them. Sustainable development requires that capital be used for the right investments and that workers receive wages that are adequate for making sustainable consumer purchases.

Equity is sometimes left out of sustainability discussions but is no less important than environmental or economic factors. Gallup defines equity as “the fair treatment, access, and advancement for each person in an organization”. Minority groups are frequently given fewer opportunities or power than other groups of people, and achieving equity in an organization means ensuring that that is not the case.

In the past, minorities such as people of color and low socio-economic status communities have disproportionately felt the burden of climate change and environmental problems. A truly sustainable future, however, would involve the meaningful participation of all groups of people, not just a privileged few.

Payroll and Environmental Influences

Payroll is largely an information-based field, so it may not seem like it has much of a direct impact on the environment. Compared with agriculture or the fossil fuel industry, payroll has fewer environmental consequences. That doesn't mean that it has no consequences, or that payroll's environmental impact cannot or should not be considered.

The biggest environmental consequence of handling payroll is often requiring workers to drive into the office every day. In our increasingly remote work-driven world, this is frequently unnecessary. Payroll managers should strive to make working remotely an option whenever possible, to reduce emissions caused by transportation. The best way to do this is to host data for payroll on a cloud-based service so that it can be accessed from anywhere.

By implementing a reliable, cloud-based global payroll management system, companies can minimize their carbon footprint due to payroll while more efficiently managing their payroll data.

Payroll and Economic Matters

Payroll directly impacts economic matters, since the field is concerned with payment. One of the key tasks of payroll is to analyze payroll data and produce reports on where and how money is being spent. This information is vital for those making decisions about wages and related issues.

Payroll teams are also tasked with ensuring that their company's payroll systems are meeting legal standards like tax withholding and minimum wage laws. In cases where regulations are set up by governments to help meet various sustainability goals, payroll helps ensure that those goals are met.

Payroll and Equity Factors

Pursuing and maintaining equitable pay is a major goal of sustainable payroll. Since payroll handles employees' wages and salaries, it is the place to find and identify disparities and work to correct them.

Payroll data can be difficult to analyze, especially when it is scattered and fragmented. Many multi-national companies have patchwork payroll systems, with different sets of data in each country of operation. In such cases, it may not be difficult or impossible to discover patterns of inequitable pay.

In order to quickly and efficiently analyze payroll information for equity factors, companies should pursue an integrated global payroll system that offers a single source of truth and real-time reporting. 

The Importance of Sustainability Reporting

Pursuing sustainable development is largely a coordination problem. The entire world needs to work together to preserve the finite resources we have. In order to carry out such massive coordination, organizations of all kinds need to take part in sustainability reporting of relevant information.

Some countries already have legal requirements for the reporting of sustainability-related information. In the EU, this is governed by the Corporate Sustainability Reporting Directive (CSRD).

The CSRD entered into force in 2023 and provides rules regarding sustainability reporting for all large and listed countries operating in the EU. The goal is for companies to disclose information about the risks and opportunities arising from social and environmental issues, and the impact of their activities on the environment and society.

Companies should aim to follow regulations, like the CSRD, both because of their legal weight and because of the ultimate benefits to society. The goals of sustainable payroll should ultimately align with those of sustainability regulations.

Sustainable Global Payroll with UKG One View

Companies with a patchwork arrangement of payroll systems operate suboptimally from a sustainability perspective. Managing their data can be a cumbersome, inefficient process that wastes a lot of resources. Failure to do so can lead to inaccurate reporting and problems with inequitable pay. Yet, many companies don't see an easy path toward a modern, integrated payroll solution.

UKG One View offers a solution that allows companies to keep their existing payroll systems while aggregating their information to be used more effectively. Our approach presents all payroll information in a single real-time view, allowing managers to access insights when they are needed.

Users of our system can rapidly create reports and analyze all payroll data for their company on a global level. This means they can more efficiently identify pay inequity and other problems with sustainability.

Looking for a better global payroll solution? Talk to us today.