Successful ESG Strategy and the Employee Impact

The phrase ESG (environmental, social, governance) has become a notable buzz word in investment, business, and even political circles. More leaders are starting to prioritize ESG within their organizations, and employees are a driving force behind this trend. 

Employees care about ESG, and they want their employers to care about it too. In a 2021 PwC Consumer Intelligence Series survey on ESG, 81% of the 2,510 employees agreed with the statement that they are more likely to work for a company that stands up for environmental issues. In terms of social issues, 83% agreed; and with regard to governance, 86% agreed. 

Not only do employees care about ESG issues, but some research highlights exactly what business leaders will want to hear—when organizations perform well when it comes to ESG, their employees are more satisfied. According to the 2020 Marsh McLennan report, “ESG as a Workforce Strategy,” top employers based on employee satisfaction boast ESG scores that are 14 points higher than the average global employers’. These higher-scoring companies tend to be more diverse and have lower carbon emissions. 

Creating alignment between the demands of workers and organizational strategy will help make any ESG strategy more successful. Leaders should leverage the employees who are demanding that the organization realize ESG’s significance. These individuals don’t just want to see action; their buy-in is key to driving all three verticals. 

E: Environmental

According to Salesforce research, “over 8 in 10 global workers want to help their company operate sustainably, with 3 in 5 eager to incorporate sustainability into their current role.” The company also noted that businesses are having to reckon with a shortage of sustainability talent. Organizations that want to be sustainable have a great opportunity to do so, and by leveraging their existing workers, they can take a big step forward.  

The Fast Company Executive Board mentions several ways to engage with environmental sustainability, including to set measurable goals and give your employees eco-resources. Mark Bryan from M+A Architects notes, “Many younger generations in the workforce and as consumers are worried about what is happening in the world. They feel lost as to where to start and are unsure how they can help. Be the connection point so employees and consumers trust that you are actually helping versus just being performative.” 

S: Social

The S in ESG explores the relationship between an organization and its workers, the surrounding community, and society as a whole. It highlights how a company responds to political issues or policies it enacts regarding treatment and safety of its employees, among other things. 

Diversity, equity, and inclusion (DEI) fits into the social vertical of ESG. The 2020 murder of George Floyd is often pointed to as causing a notable shift in the DEI space. According to a 2021 CNBC/SurveyMonkey survey, about 80% of respondents said they wanted to work for a company that values diversity, equity, and inclusion. While 74% of business leaders said they believed their organizations made DEI information readily available, only 54% of employees agreed with that statement, showing a wide gap in perception and a massive opportunity for leaders to focus on improvements to boost employee satisfaction. 

The need to truly hear employee concerns goes well beyond DEI and extends into other societal, political, and workplace conversations. 

G: Governance 

Individuals care about working for an organization that is governed well. In 2019, Google almost immediately disbanded a newly-formed AI ethics board after employee backlash regarding one of the members, demonstrating that workers not only care about who is leading the organization but will be active and vocal to ensure they are represented well. In addition to business ethics and the board makeup, other elements that fall under the governance vertical include pay and tax transparency. 

When organizational leaders craft an ESG strategy, they must realize it can’t be created or implemented in a silo. It needs to be integrated into the company’s overall strategic roadmap and owned by multiple individuals. At 18 Coffees, we develop ESG strategies in four phases: discovery, assessment, planning & implementation, and reporting. This comprehensive process helps to identify the current state of an organization, the most pertinent issues it faces, existing goals and gaps, and how to put best practices into place and share them outwardly. 

Companies that want to have successful ESG strategies also need to establish organizational alignment, which requires buy-in from executives, as well as the enthusiasm and motivation of individuals throughout the organization. 

We see several ways that leaders can effectively and strategically engage their employees in ESG efforts. They can distribute surveys throughout the organization or host listening sessions on environmental topics related to workplace culture. They can launch DEI committees that allow members to spotlight different ethnicities and religious holidays. They can make intentional decisions on which societal issues they should speak about publicly, depending on if the subjects align with the core values of the company. These are often issues that employees not only care about but are also being impacted by, either directly or indirectly. 

If leaders start by listening to the concerns of employees, acting on them, and including those employees in the process, they will be more likely to gain widespread support and ensure success of their implemented ESG strategies.