Skilled migration: A new paradigm for Government

Employees show the way to ESG-driven value

By Liza Maimone and Norah Seddon

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Even though ESG is now mainstream, many companies are at the start of their ESG journey, and leaders are unclear about how to catch up. Employees hold the key to helping leaders identify the issues that will create – or erode – value in the future.

Environment, social and governance – or ESG – was once considered a ‘side challenge’ for business. But ESG has shifted well and truly into the mainstream. Now investors, customers and employees are exerting significant pressure on organisations to meet changing societal expectations.

For business leaders, this shift presents a significant opportunity. ESG can help leaders understand and respond to the critical strategic issues that will impact their organisations over the long term. For example, ESG can provoke a pivot towards products or services that will capture future value, help attract and retain top talent, and protect against the risk of eroding organisational value.

But often, leaders are unclear about ESG. They’re confused by the various frameworks and ways of thinking about the issue. They’re bamboozled by the different terms used for ESG. And they’re not sure how to embed ESG into their business. But they know that they need to act and that the change needs to come from the top.

Employees are ESG stakeholders too

The first step in the ESG journey starts by understanding stakeholders. Who are they? What matters to them? And what does that mean for the business? For most organisations, the three key stakeholder groups are customers, investors and employees. 

While all stakeholders are important, the voices of employees are particularly critical. A company cannot be truly successful over the long term if its core purpose is not aligned with the values of the people that work for it.

For example, some people want to work for organisations that consider the impact of their products or services on society or the environment. Others are looking for diverse leadership or flexible work policies. Some care about climate change, gender equality, human rights, tax transparency, ethical supply chains or privacy. 

Across these issues, the organisation’s stance is becoming increasingly important for attracting and retaining top talent. People are voting with their heads and hearts, and ultimately, their feet. 

Organisations that align ESG performance with workforce sentiment will enjoy a significant competitive advantage. After all, having people engaged and working on the things that matter most to them is a value-driver in any business.

‘How’ you talk makes a difference

So, leaders need to ensure that employees are part of the ESG journey. But ‘how’ they go about that process is vitally important. The way leaders engage around ESG will actually drive culture.

For instance, if the company runs a global or local employee survey, include questions about ESG. This shows employees that the leadership considers ESG an essential aspect of employee engagement and wants to know more about the workforce’s values.

Companies could also run discussion groups or ‘jams’ where people can share their ideas with others. These sessions are particularly useful for passionate people to come together and not just talk but also get ideas off the ground. 

But one of the most powerful ways to signal that ESG matters is for the message to come from the top. When a CEO stands up and says, “Your views are very important to us, we want you to tell us, and we are listening”, then employees will respond positively. 

Leaders need to be mindful, however, of the consultation ‘trap’. Some organisations have been reporting on ESG and running stakeholder groups, including with staff, for many years yet have not really changed. ESG consultation is not an end in itself. It’s the extent to which these issues are incorporated into the organisation’s core strategy that counts.  It is vitally important that leaders share what they have heard and what they have changed as a result of what they have heard.  This demonstrates to people that they are both listened to and can make a difference especially on ESG topics that are close to their heart.  

Allow for differences of opinion

Employees will have all different ideas about ESG, and leaders need to be open and transparent about this. Differences of opinion need to be treated with respect. Employees should never feel unable to speak up because their view goes against the culture of the organisation.

That said, there may be times when leaders need to explain the organisation’s position on an ESG issue.  In providing this explanation, leaders need to show that they have considered divergent views and respectfully explain why a different approach is being taken.  This kind of approach signals that leaders are listening to employees, that they take ESG seriously and are not just ticking boxes. Employees want to be treated as intelligent people. Being heard and feeling that they’re being heard really does matter. If leaders are open, transparent and tolerant, then it will foster the kind of culture that allows people to be their best selves and do their best work.

Be strategic: set goals and targets, report and refine

ESG is not something you do that once. You have to set targets, report progress and refine your strategy continuously. When it comes to employees, leaders need to be always rechecking – Is this the issue that matters most to our people? Are we on track with our promises? Do we need to shift and change? And the only way to ensure progress is if ESG is ‘baked into’ the organisation’s strategy. 

While ESG can be incredibly complex, the art of getting it right is straightforward. Continue to identify the core issues that will drive the greatest value or erode value for the organisation over the long term. And make sure that employees are always at the heart of that journey.