​ESG Outlook: Employees vs. Executives

As society pays increasing attention to the impact organizations have on environmental, social and governance issues, organizations have responded by investing in initiatives and programs that benefit society. These corporate financial interests are referred to as ESGs, and their role is to ensure accountability and systems to manage a corporation's impact. SHRM Research surveyed 1,009 U.S. workers and 284 executives in September and October 2022 to understand the incidence, importance and influence of ESGs in organizations. Here are the results:

RESEARCHER INSIGHTS: 

ESG Initiatives Can Help Organizations Reach Their Recruitment Goals

By Ragan Decker, Evan Pearson, Daroon Jalil

It is well established that environmental, social and governance (ESG) initiatives can mutually benefit an organization's performance while also bettering society. However, the impact of ESG efforts on other important organizational goals, such as recruitment and retention, is not well known—until now.

According to a new study by SHRM Research, one in three U.S. workers say their organization's ESG strategy was a factor in their decision to apply to the organization. Given the rising importance of ESG initiatives, it would be wise for leaders to consider how they may adopt or optimize their ESG initiatives to boost their employer brand and stand out in a tight labor market.

Based on SHRM's new research, here are three insights for organizations to consider when leveraging ESG initiatives to attract candidates:

1. Ensure your ESG initiatives are authentic

Executives and employees have different impressions of their organization's ESG initiatives. Nearly two-thirds of employees believe their organization's ESG initiatives are simply performative (i.e., supporting a cause to garner attention or financial benefit, rather than actually caring about the cause). Very few executives (only 15 percent) believe their organization's ESG are performative.

This disparity suggests organizations are not effectively communicating why and how they are committed to their ESG initiatives. Leaders can achieve more authenticity by:

• Being transparent with employees about progress on initiatives
• Taking accountability for unmet goals
• Remaining committed to ESG initiatives during times of economic prosperity and difficulty, and
• Improving their self-awareness by seeking feedback from all levels of the organization.

2. Align your ESG initiatives with organizational and employee values

SHRM Research found that 29 percent of U.S. workers would be willing to take a job with lower pay if the organization's ESG strategies aligned with their values and beliefs. Yet executives and employees are not aligned on the ESG initiatives they value most.

For executives, social initiatives such as improving employee diversity and improving employee health and safety are most important. Employees, however, said environmental initiatives such as reducing waste and pollution, solving climate change and improving energy efficiency should be an organization's top ESG priorities.

While it is important for organizations to align ESG initiatives with employees' values, ESG efforts should first and foremost be rooted in the organization's culture and key values. This approach will give organizations a guiding light to follow so they avoid taking on ESG initiatives that are perceived by others to be performative.

3. Promote your ESG-focused initiatives to potential applicants and employees

Nearly three-quarters (74 percent) of executives say their ESG strategy is central to their employer brand. Yet 36 percent of U.S. workers were not aware of their organization's ESG strategy when they applied for their job.

Organizations with an ESG strategy should take steps to boost applicant awareness by building their ESG goals into their brand, mission statements and marketing efforts. This could include adding a page to the company website that highlights related achievements and goals or issuing press releases that describe new ESG initiatives or progress of current initiatives.

The bottom line: In this ultra-competitive talent landscape, leaders should recognize that ESG initiatives can boost their employer brand and attract candidates. To optimize ESG initiatives for this purpose, leaders need to engage in transparent communication about ESG initiatives both internally and externally. They must identify the ESG factors that are most important to both current and future employees. Finally, to counteract employees' skepticism about the authenticity of ESG initiatives, organizations must ensure that these initiatives directly align with organizational values.

Ragan Decker, PhD; Evan Pearson; and Daroon Jalil are researchers at SHRM Research.