Why does ESG matter to your employees?

What an employee expects from their employer goes far beyond just the financial compensation they receive for their work. It’s clear that the Millennial and Gen Z workforce undoubtedly cares about topics that fall under ESG (Environment, Social and Governance) scope, and it’s clear that this is not a recent post-pandemic trend. From as early as 2016 The Cone Communications Millennial Employee Study found that 83% of Millennials would be more loyal to a company that helps them contribute to social and environmental issues. Equally, according to an EY study on Gen Z, 63% feel it’s extremely important to work for an employer that shares their values.

With reportedly up to 70% of the Gen Z population globally involved in a social or political cause, it’s more important than ever to align on issues that matter to them, including climate change and social justice.

Now, let’s look further into the ESG pillars.

Environment

According to 2021 statistics collected by Statista, 88% of people believe that sustainability should be a standard business practice.

They also believe businesses have a responsibility to take care of the planet and its people. This is backed from an employee perspective, with almost 75% of employees saying their job is more fulfilling when they’re given the chance to make a positive impact on social and environmental issues.

Other research has shown that 96% of millennial employees are not only concerned about the environment but expect their employers to take necessary steps toward sustainability.

So, for employees to be fully engaged with their jobs, they need to feel that their work matters and that they are making a difference. They are looking for employers to help them fulfill these needs through supporting sustainable practices.

Social

Social covers a wide range of organisational policies and approaches that directly affect the workforce, and so it’s natural that this pillar, in particular, will matter to employees. It includes:

• Health and safety policies and practices – ensuring the workplace is a safe, accident-free environment for all.
• Development and training strategies – developing job-specific skills as well as softer skills such as awareness around diversity and inclusion or support with work-life balance and personal finances.
• Programmes designed to listen and ensure employees have a voice – such as employee opinion surveys and the resulting activity in response.
• Diversity, equality, inclusion and belonging policies and programmes.
• Employee engagement initiatives – including appreciation and recognition programmes.

Companies that excel in the social pillar are more likely to build better employee value propositions, and employer brands, and ultimately become a more attractive workplace.

Governance

With the volatility of the last few years, today’s workforce is looking to feel safe and to be able to trust the people around them – especially the people who run the company, and who make the decisions.

When companies get governance right, employees can feel supported and able to give their best in a fair environment. Where they get it wrong, the risks are huge – from shame to be associated to the business all the way through to risk of job loss after bankruptcy.

With Gen Z being reportedly more cynical than previous generations, they will place more importance on governance and holding companies to account than any other generation.

The relationship between ESG and your employer brand

We all know employee turnover drives up expenses, drives down productivity, and erodes culture and corporate memory. So, any opportunity to forge a strong bond with employees and reduce turnover will lead to higher returns for the business.

Employees responding to the direness of the global climate situation feel more and more driven to seek out companies to work for that have sustainable practices. Companies that want to survive must respond to these behavioural shifts in order to attract the next generation of talent.

In times of economic uncertainty, particularly in a labour market where there are skill shortages and high competition for talent, employer branding becomes more important than ever. With a spotlight on corporate responsibility, employers risk reputational damage if they don’t get their ESG strategies right, which could have a negative impact on future candidates’ perception of the organisation.

How to bring employees on your ESG journey

As our jobs play such a big part in our lives, it makes sense that we’d want to see alignment between our personal values and those of the organisations for which we work, so it is no surprise that environmental sustainability and social impact is now a core value that employees are looking to share with their employers.

Mounting evidence suggests employees are more likely to be engaged when working for environmentally-friendly organisations. Supporting a culture of sustainability at every level of the organisation can therefore provide a huge boost to employee engagement.

Offering awareness and education communications and training is a great way to bring your employees on your ESG journey, as it helps to improve understanding and encourages open conversation and culture, whilst showing employees you care about these issues.

Many companies also provide platforms for employees to support and each other. You may provide access to wellbeing classes, apps or activities, but the ones that are really powerful are those where real employees are central to the offering, such as:

• Having mental health ambassadors throughout the business.
• Sharing wellbeing stories and tips on intranets.
• Encouraging support groups like running clubs, virtual walks or safe spaces to talk.

Offering a mix of initiatives that are business led and peer-to-peer led provides employees with a well-rounded purpose-driven employee experience.

Overall, the key to bringing employees on your ESG journey comes down to communication and providing opportunities to be a part of making a difference. Employees really do want to be engaged in these issues in a very significant way – so listen, share progress and create programmes that employees can participate in and be proud of.

If you’re looking for support with taking your employees on your ESG journey, get in touch to see how we can help.