Google searches for ESG have skyrocketed. The world is facing a global recession, and in such uncertain times, sustainability and social responsibility are more important than ever. That’s where ESG comes in.
The recent growth of ESG has prompted businesses to up the ante. It’s no longer acceptable to leave ESG performances undisclosed – businesses need to address, measure and communicate their ESG achievements if they stand a chance of competing for top talent. Investors, employees and potential candidates want to know how companies are considering their impact on the planet.
In this blog, we’ll explore the significance of ESG and why it is more important than ever for Talent Acquisition teams in 2023 if they want to attract top talent.
So, What Exactly Is ESG?
Put simply, ESG, or Environmental, Social, Governance, is a set of standards for how a company operates in regard to the planet and its people. If we’re getting down to the nitty gritty, ESG could be described as ‘pillars’ a company must consider to prove their commitment and desire for sustainability. Here’s the best explanation we’ve come across: the environmental pillar concerns a company’s impact on the planet and its use of natural resources. The social pillar concerns a company’s impact on society, including human rights and labor practices. The governance pillar involves a company’s leadership and internal controls.
As of April 6, 2022, over 1,300 of the largest companies and financial institutions registered in the UK were required to publicly disclose information related to their climate impact. So, it’s a big deal.
ESG In A Recession?
A global recession looming over businesses’ heads will undoubtedly cause business leaders to reconsider their strategy and question their priorities. So, lets address the elephant in the room … should businesses be focusing on ESG in a recession?
Let’s face it, in uncertain times companies may be more likely to consider ESG a ‘nice-to-have’ than a business essential, but the truth is, customers, potential candidates, employees, investors, all want to see it make the shortlist in terms of priority.
According to Investor’s Business Daily (2021), companies that prioritise ESG factors during economic downturns are more likely to maintain profitability and strengthen their competitive advantage.
ESG is so much more than ‘doing the right thing’.
According to slalom.com, ESG:
- Drives risk resilience, cost optimisation, and compliance.
- Drives growth.
- Drives talent retention.
Let’s revisit that last bullet point …
#ProPlanet … Is ESG Really A Motivator For Candidates?
In a word, yes! ESG is a key factor in retaining the employees of today and the talent of tomorrow. They care that you care. Employees want to work for companies whose values align with their own beliefs and purpose, with a clear ESG policy being described as “the baseline” for hiring young talent.
Almost three quarters of employees focus on an employer’s sustainability record when searching for a new role. So why do candidates, particularly Generation Z and Millennials, care if an employer is pro-planet?
The ‘Great Resignation’ of 2021 showed many employees were becoming disenchanted and exhausted with their current work environments. Burnout and mental health struggles have become the new hindrances to productivity. Employee wellbeing is the cornerstone of their performance, involvement, and longevity in the workplace.
Burnout is among the top three reasons why Generation Z and Millennial employees switched companies in the past two years. One of the significant causes of burnout is cynicism, or depersonalisation, meaning the employee has developed a negative, detached response to their work – it’s basically losing the emotional and cognitive involvement with one’s job.
One of the best ways to avoid this is to provide meaning and personal value to the person’s work. If this can’t be done directly for their role, the next best thing is to ensure the overall company values reflect and contribute to employee values. Essentially, ESG may help avoid burnout by providing meaning to an employees’ work life.
What Does This Mean For Talent Acquisition Teams?
We’re likely to see Talent Acquisition teams clamouring to satisfy the demand for good green credentials by incorporating planet-friendly initiatives in their recruitment strategy. But how can they do this?
One of the first things candidates will want to know is what a company is doing from a sustainability perspective. The data speaks for itself.
71% of employees focus on an employer’s sustainability record when searching for a new role. Generation Z and Millennials, who currently make up the largest portion of the workforce, place a high value on working for environmentally conscious companies. YouGov’s large sample survey “Doing well by doing good” (2022) found 75% of Millennials are willing to accept a lower salary if it means working for an environmentally conscious company, and 64% wouldn’t work for a company without strong corporate social responsibility values. 42% of those aged 18 to 24 would avoid companies with poor green credentials.
To attract and keep top talent, business leaders need to act promptly to design work structures that cater to their employees’ expectations. ESG initiatives need to go from the ‘Any Other Business’ part of the agenda to the starting point. Emphasising work-life balance, personal growth opportunities, and well-being is crucial, as is having a defined purpose and enabling employees to tackle societal concerns through their work.
An Opportunity To Create Value
Let’s journey back to May 2022 to a blog entitled Why An Effective Employer Brand Strategy Is A Long-Term Relationship, Not A Fling. In this blog, we addressed the importance of businesses promoting themselves as an attractive employer. A strong external employer branding strategy focuses its energy on creating a positive image to the general public as an employer, with the ultimate goal of attracting the best candidates. Consider your business a product that you are selling to a customer. You want to stand out from the competition, right? ESG is your opportunity to stand out. It really is about #planetpeople – it’s a candidate market out there.
Employer Brand Insights July 2023
This white paper delves into the current themes within the employer branding world. It provides HR and Talent Acquisition professionals with valuable insights and statistics to help them understand the talent pool's needs and build effective attraction strategies for...
