Many millennials would take pay cut for employer with ESG strategy

But execs less convinced about importance of environmental, social and governance metrics

Many millennials would take pay cut for employer with ESG strategy

Just how important are environmental, social, and governance (ESG) goals to workers? 

Over two in five (41 per cent) workers say these initiatives are very important.

Of the three components of ESG, workers have much more concern about the environment (54 per cent) over the social (24 per cent) and governance (11 per cent) aspects, finds a survey by the Society for Human Resource Management (SHRM).

“Reducing waste and pollution was the environmental initiative they most favored, U.S. workers said, followed by reducing climate change and improving energy efficiency,” says Kathy Gurchiek, editor for Students and Emerging Professionals, at SHRM.

Among social ESG initiatives, the three most important issues were improving employee health and safety; improving employee working conditions; and helping local communities, she said, such as contributing to food drives, community cleanups and local donations.

Meanwhile, the three governance ESG initiatives that workers favour overall are: reducing corruption and bribery within organizations, increasing the transparency of donations and political lobbying and fair compensation at all levels of the organization.

Executives less excited about ESG

In comparison, 51 per cent of executive say ESG is important, finds the survey.

However, they prefer the social aspect of it (49 per cent) over the environmental and governance side (both 23 per cent), finds SHRM’s survey of 1,009 U.S. workers and 284 executives in September and October 2022.

Employee recruitment and retention

Employers may even be able to save some cash but still attract talent by focusing on ESG. This is because ESG is important enough for workers to make some personal sacrifices, especially the young ones, finds SHRM.

“ESG goals also can impact retention — 86 percent of workers who work for organizations with ESG-related goals said their employer's ESG goals make them proud to work there, make their jobs more meaningful and make them want to stay with their organization,” says Gurchiek.

When it comes to the biggest challenges right now for staffing, recruitment comes out on top (54 per cent) for Canadian employers. But pay increase requests (46 per cent) and employee retention (37 per cent) are also top of mind, finds a separate survey.

Employers have so much to gain from investing in ESG, according to Mercer.

“Top employers by employee satisfaction and attractiveness to talent have significantly higher ESG scores than their peers,” it said in a previous report. “This finding suggests that ESG performance can help companies both improve employee satisfaction and attract prospective employees.

“This is significant because prior research shows that satisfied employees work harder, stay longer with their employers, and seek to produce better results for the organization. Equally important, enthusiastic prospective employees strengthen a company’s talent pipeline and ensure the availability of crucial human capital.”

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