Menzies LLP - A leading chartered accountancy firm. Listen to our ESG podcast at the bottom of this article. ESG at a glance ESG – a term heard almost everywhere nowadays, but what is it? ESG stands for […]...
Menzies LLP - A leading chartered accountancy firm.
Listen to our ESG podcast at the bottom of this article.
ESG at a glance
ESG – a term heard almost everywhere nowadays, but what is it? ESG stands for Environmental, Social and Governance. Environmental being a businesses impact on nature and the planet. Social being a businesses impact on people within and outside the business and the final piece is Ethics and Corporate Governance.
Are companies currently doing enough in respect of ESG?
Quite simply, no and they are failing to prepare themselves well enough for future regulations that are likely to come down the road. A lot of companies are relying on the basics to get them through, whether it be for tendering new work or attracting new staff. However, there are so many quick wins, and a lot of companies are missing out on the benefits.
Many organisations are unclear about where to start when it comes to ESG or indeed developing their social purpose, therefore employers must think hard about what it means to their company and align it to what they do as a business. Some employers are worried about getting it wrong or making mistakes, but they can no longer afford to not take action in today’s world.
What are the challenges?
Every business is different, but the barriers are likely to fall into one list. Attitude and cashflow can be the main ones but resistance will come. The first challenge to overcome will be that you can’t manage what you can’t measure, that tends to be the starting point. Most of the other challenges come once the process has started. There is also quite a lot of cynicism amongst employees and applicants as to whether any attempts to implement ESG policies are genuine or just gimmicks.
Ensuring employers don’t treat ESG as a tick box, where they then run the risk of being accused of green-washing, and instead have tangible actions in place to demonstrate their commitment and goals for the future. Employers need to establish clear guidelines and ambitions, and that these are not just principles on paper, and a way to measure and articulate what success looks like when it comes to ESG is key.
How important is ESG to the next generation and current employees?
ESG matters a great deal to the next generation. Over the last few years there has been a huge change in the way ESG issues are thought about The younger generation has grown up in a world where there is a lot more awareness and a willingness to challenge the way things are done.
Attitudes towards ESG have definitely shifted. Recent Hays research shows, an organisation’s commitment to sustainability is an important consideration for 78% of employees when searching for a new role. Talent attraction and retention is likely to be significantly higher for companies who have a defined purpose and are dedicated to building a more sustainable and inclusive future for all.
Companies don’t seem to realise what they are missing with regards to attraction and retention. The simplest thing that companies need to start doing is communicate. It can be easy to overthink elements such as greenwashing, but open and honest communication, conducted with integrity, will help current and future employees understand and feel more invested in the business.
What can businesses do to attract people from an ESG perspective?
Communicate, communicate, communicate. It is very important that a clear commitment to ESG or a social purpose, is made accessible to both prospective candidates and current employees.
Set out clear and achievable strategies to show a genuine desire to improve your credentials, as opposed to a surface level acknowledgement of the importance of ESG. Organisations should of course be involving and sharing feedback from the ESG policies with employees, and demonstrating how they plan to act on this to move forward towards their goals, to ensure that they retain great people, as well as in their candidate attraction plans.
We can all do our bit to improve ESG. Start small and focus on manageable changes which your business can afford. If you try something and it doesn’t work, don’t be put off – try something else. Look at what others are doing and learn from them. Employees and applicants who care about these issues will appreciate the effort.
Businesses should ensure that their ESG policies are integrated into their overall corporate strategy and are aligned with their values and mission. They should also provide regular updates on their ESG performance and engage with stakeholders to gather feedback and improve their ESG practices.
Key Takeaway Points
1) Think about who you are as a business and develop a strategy and tactics for social and environmental purpose that aligns with who you are and what you do. Authenticity is key and means you can demonstrate a clear purpose, with passion. For example, focus on lifting and improving the employability of those who need a helping hand in the job market.
2) Once you have this purpose clear, you can make a start on your tactics. Take it a step at a time and then you won’t be as worried about making a mistake. It is better than never daring to start at all as you simply can’t afford not to! There is more risk now to doing nothing than to learning along your ESG journey.
3) Every company is different, the markets they are in, challenges they are facing, but the underlying trend is still the same. Companies, consumers and employees don’t want to deal with businesses that aren’t doing the right thing.
4) A strong ESG strategy relies on challenging the status quo and attempting to break that ‘we’ve always done it this way mentality’. Successful companies are usually those that can adapt and evolve quickly.
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The post Podcast: Why is ESG so important for attracting and retaining future talent? was written by Menzies Demi Fossitt and appeared first on Menzies LLP.