ESG alignment won’t just impact a company’s brand and investor interest. Data increasingly suggests that emerging professional talent gravitates towards businesses that are run ethically and sustainably. In other words, an employer’s commitment to ESG issues can make or break their employee retention.
Naturally, you want to attract the best and brightest talent to your organization. So when you’re developing your recruitment strategies, it’s vital to keep in mind that today’s and tomorrow’s job seekers aren’t just weighing salaries and benefits when deciding whether to accept an offer.
But what else matters besides compensation and benefits for a healthy work-life balance? In today’s world, plenty. Potential and current employees have much higher expectations of their companies. They expect their employers to consciously — and deliberately — own the management of their carbon emissions and environmental impact, the ethical supply of raw materials, commitment to social justice issues, data usage and protection, and more.
In the context of the great resignation, if companies want to attract top talent, they must position themselves as ethical, reliable impact stewards. One overlooked recruitment tool perfect for this purpose? ESG.
Attract Talent Tomorrow. Engage Employees Today.
A recent study found that a majority of MBA students would accept a lower salary to work for an environmentally responsible company. Nearly half of the employees polled in another recent survey would willingly reduce their pay in exchange for their company engaging in better data privacy practices.
For the past decade or so, we’ve seen businesses shift their priorities to embrace environmental, social and governance (ESG) issues. More and more organizations are using ESG to benchmark their progress as they come under increased scrutiny based on how they drive and shape policy to promote positive work environments.
While ESG may not seem like the most exciting job perk, job seekers cite its effective implementation as one of the company attributes enticing them to accept a position. But job applicants want to work for companies that have more accountability. They want to work for employers who are conscious of the impact their businesses have on their customers, employees and communities.
By 2025, millennials may comprise 75% of the world’s workforce, and their influence is already being felt across businesses. In the 2021 Deloitte Millennial and Gen Z Survey, workers cited their beliefs that while businesses should consider stakeholder interests and profits, employers tend to prioritize the bottom line above all else, including personnel, society and the environment. This approach doesn’t increase loyalty among employees. The survey of 10,500 respondents also found that only 47 percent believe that businesses are having a positive impact on society, a 19 percent decline from 2017.
As younger generations enter the workforce, they’ll bring with them a strong commitment to social contracts. Already, they see environmental and societal risks as more impactful than many business leaders.
A New Baseline
Today’s younger job-seekers are educated, principled, opinionated — and outspoken. They’ll voice concerns about their company’s activities, forcing leadership into an uncomfortable and unavoidable conundrum: the possibility of losing the best talent if they don’t take ESG seriously.
For example, the Securities and Exchange Commission (SEC) introduced a mandate about human capital disclosure requirements for all U.S. public companies in August 2020. Growing requests from investors to investigate organizations’ ESG practices prompted the SEC’s decision.
Because the order emphasizes talent acquisition, which lives in ESG’s ‘S’ and ‘G’ components, we can expect the impact to reverberate across every part of an employee’s experience, including:
- Recruiting and talent management;
- Benefits, compensation and pay; and
- Workforce management.
A strong ESG performance helps improve employee satisfaction. A MarshMcLennan study recently found employers rating the highest among surveyed employees and prospective talent earned the highest ESG scores. These companies showed a strong performance with the “environmental” element and trended well across social and governance issues, too.
Need another reason to champion ESG in your company? Additional research suggests that contented employees will work harder and stay longer with their organization. Prospective employees will also be enthusiastic about their potential employer’s pipeline of qualified candidates, ensuring a steady flow of highly-qualified, committed colleagues.
Matt Kunkel is Co-Founder and CEO of 
