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ESG Is a Workforce Engagement Strategy

Emily Lombardo - Jan 12 2023
Published in: Global Workforce
Sustainability measures can make hiring a global workforce easier.

Work life has changed dramatically since the start of 2020. A number of strategies have been adopted permanently since the start of the COVID-19 pandemic in 2020 and the subsequent Great Resignation and talent scarcity problem in 2021, including permanent work-from-home plans, flexible work offerings, commitments to diversity and inclusive work environments, and increased wellness-related benefits.

However, despite these changes, Gallup data shows that employee engagement is low. In the U.S., employee engagement saw its first drop in 10 years—dropping from 36% engaged employees in 2020 to 34% in 2021. The slump continued into 2022, with 32% of employees reporting that they are engaged. The number of actively disengaged workers increased from 16% in 2021 to 17% in 2022. One of the sharpest drops in data across all industries and employee-levels was about employee wellness. Only 24% of employees feel strongly that their employer cares about their well-being.

How Important Is Employee Engagement?

Employee engagement matters when it comes to not only retaining talent but attracting new talent. A Gallup poll taken in February 2022 shows that employees who strongly agree that their employer cares about their well-being are 69% less likely to actively search for a new job, three times more likely to be engaged at work, and five times more likely to strongly advocate for their company as a place to work for others.

Employee engagement may currently be low, but workers report that they believe their workplace can be a source of meaning in their lives, and they believe that employers can do more to create meaning and impact for their employees.

ESG Can Increase Employee Engagement and Impact

Bringing impact and meaning in the workplace through environmental, social, and governance (ESG) initiatives and commitments is becoming a new employee expectation. Research by Ernst and Young found that 84% of the 200 board members and C-suite executives surveyed said the pandemic increased expectations for companies to drive societal impact, environmental sustainability, and inclusive growth from employees, consumers, and the broader society in 2021. That is an increase of 27% since 2020. Approximately half of those surveyed by Ranstad’s 2022 Workmonitor said they would refuse to join an organization whose stand on environmental issues doesn’t match with their own values.

Adopting ESG strategies that align with employee values is a great way for talent to see that your organization is committed to corporate sustainability and give your employees meaning. In Ernst and Young’s 2022 Long Term Value and Governance Survey, 28% of business leaders said attracting and retaining environmentally and socially conscious talent and engaging employees are two of the main benefits of incorporating ESG into corporate strategy. Having a shared purpose in the workplace creates meaningful employee experiences. Seven out of 10 employees said they wanted their job to bring societal impact and called it a “deal-breaker” or a “strong expectation” when considering a new job. Taking initiative on ESG matters that your employees deem important also demonstrates that the organization is listening to them and takes their well-being seriously.  

ESG strategies also have benefits for organizations and their stakeholders. Seventy percent of CEOs acknowledge that ESG improves their organization’s financial performance in a recent KPMG study. A core component of ESG is risk mitigation, and avoiding implementing ESG initiatives could bring damage financially or to an organization’s reputation long term. Companies around the world have started pledging net-zero commitments in line with the Paris Agreement that was affirmed at this year’s COP27 meeting. An ESG strategy that works for your organization could have benefits in both the short and long term for all stakeholders and retain top talent regardless of industry.