LOS ANGELES, CALIFORNIA – APRIL 23: Volunteers plant a fern near the Fern Dell stream bed in … [+] Griffith Park during an Earth Day fern planting event (Photo by Mario Tama/Getty Images)
Getty ImagesIt has, arguably, never been more important for business leaders and companies to be clear about what they stand for and represent. Your values, ESG credentials and philanthropic endeavors are key when it comes to building a purpose-driven culture and attracting the best talent.
It is no longer just about the money. Showing that you have a robust ESG (environmental, social and governance) purpose, whether that’s through gaining B Corp status or through your diversity and inclusion policies, is now essential when it comes to talent attraction and retention.
Almost six in 10 (58%) U.S. workers cite respect, health benefits and work-life balance as the most important motivators for them, yet salary was only prioritized by 42%, in the 2022 Argyle-Leger Confidence Report [https://www.globenewswire.com/en/news-release/2022/05/26/2451306/0/en/IT-S-ABOUT-RESPECT-NOT-MONEY-U-S-WORKERS-TELL-EMPLOYERS-IN-ARGYLE-LEGER-SURVEY.html].
The monthly pay packet may even become a thing of the past if some reports are to be believed. The Future of Work study [https://news.virginmediao2.co.uk/futureofwork/]with Virgin Media O2 Business, recently predicted the end of the salary and a rise in micropayments: small but frequent online transactions.
HOW ESG CAME TO BE A CENTRAL TOPIC IN THE BOARDROOM
The term ESG may only really have gained momentum in the last 20 years or so but it has, as The Economist recently reported [https://www.economist.com/the-economist-explains/2023/06/21/how-esg-became-part-of-americas-culture-wars], become part of America’s culture. Research by data firm AlphaSense, published in the Wall Street Journal, shows that American executives mentioned ESG or similar topics, including sustainability and DEI, 170 times during earnings calls in the first quarter of 2018. By the first quarter of 2022, that figure was up to 942.
With eight out of 10 employees [https://www.bluebeyondconsulting.com/closing-the-employee-expectations-gap-the-undeniable-and-promising-new-mandate-for-business/]in the U.S. and Canada saying it is important for company values to align with their own and three quarters (75%) expecting their employer to be a force for good in society, the onus is on employers to clearly communicate their ESG principles.
These principles should infiltrate every part of the business, from recruitment to HR strategies including hybrid working, tech and benefits. Some companies, including Microsoft [https://pulse.microsoft.com/nl-nl/work-productivity-nl-nl/na/fa2-microsoft-appoints-shanna-bosmans-as-first-chief-hybrid-officer/]MSFT [https://www.forbes.com/companies/microsoft], Facebook and productivity app creator Doist, have recruited chief hybrid officers and/or chief remote officers as part of their ESG strategies. Your values should be clear to stakeholders, employees, potential talent and the next generation coming up through the ranks.
SUSTAINABILITY MATTERS
Sustainability matters and drives consumer decision making and employee loyalty in the U.S. and Western Europe but also, increasingly, in places such as India, China and Saudi Arabia.
Businesses and brands have to show that social issues matter to them if they want to compete in a global market. This was evident in Kantar’s global BrandZ report [https://www.kantar.com/campaigns/brandz/global?utm_source=financial-times-three&utm_medium=press&utm_campaign=brandz-global-2022?sp=true], which combined investment research firm MSCI’sMSCI [https://www.forbes.com/companies/msci](ESG) ratings with Kantar’s consumer perception score, based on four key areas: employees, environment, society and supply chain. Yet only 13 [https://www.ft.com/partnercontent/kantar/why-esg-credentials-must-have-visibility-if-they-are-to-add-value.html] of the world’s most well-known brands were awarded four and five-star ratings, with IBMIBM [https://www.forbes.com/companies/ibm], Zara and Microsoft leading the pack on their pro-environmental values.
BEWARE OF GREENWASHING
Employees are becoming increasingly savvy about how businesses try and talk the talk when it comes to social issues.
But with Wall Street’s top regulator, the Securities and Exchange Commission (SEC) pledging to [https://www.reuters.com/sustainability/us-sec-poised-ban-deceptive-esg-growth-fund-labels-2023-09-20/] crack down on “greenwashing” and other deceptive or misleading marketing practices by U.S. investment funds, talking about it is not enough.
The SEC has, since 2021, also focused on prosecuting [https://www.reuters.com/business/sustainable-business/regulators-start-crack-down-greenwashing-2022-06-01/] ESG-related misconduct and “greenwashing”, bringing enforcement actions [https://www.reuters.com/sustainability/sustainable-finance-reporting/us-sec-readies-penalty-dws-greenwashing-probe-by-end-september-sources-2023-07-25/] and levying fines [https://www.reuters.com/markets/us/us-sec-charges-bny-mellon-investment-adviser-misstatements-over-esg-policies-2022-05-23/].
And while becoming B Corp certified goes some way in helping to cement your credibility as an organization and is an undoubtedly rigorous and thorough process for any business to go through, you still have to look at what you are doing to support your talent. Giving to charitable causes is all well and good, but how are you looking after the people in your organization and what are you offering to those who want to come and work for you?
Everyone from CEOs to CFOs [https://www.raconteur.net/sustainability/sustainability-esg-finance-cfo/], to chief sustainability officers (CSOs) and chief people officers (CPOs) should be involved in promoting and investing in the organization’s ESG credentials. It should be part of your EVP and central not only to attracting top talent but to everyone who works for your business.
