Introduction
Over the last few years, we have read and heard countless statements and disclosures made by companies regarding ESG integration into their business and in every decision-making process – though the level ‘integration’ is highly debatable. This is deemed important to portray their achievements to external stakeholders and potentially attracting more investors, securing new customers and building up the reputation as a sustainable company. However, companies often disregard the views of the benefits of ESG from the internal stakeholders i.e. the workforce.
There have been countless occasions where companies satirically highlighted
that ESG reporting or management is just an additional side project to comply
with the regulations and brings little value to the workforce. If this
mentality perpetuates, then companies would surely be unprepared for future
workforce demands. Here’s why.
Millennials Care About Companies’ ESG Performance
One of the
advantages of this digital age is that information could be accessed in
abundance and in a short amount of time. News on ESG topics such as drought,
bribery, foreign labour issues are flooding the internet regularly and can be
accessed at anytime and anywhere, either via own personal computers or mobile
phones – which is obviously synonym with the millennials. It is also widely
known that due to the growing interest and scrutiny of ESG issues by various
stakeholder groups such as investors and regulators, reporting on companies ESG
performance either via companies’ websites or Annual Reports and Sustainability
Reports has risen especially over the last decade.
Millennials are
occupying the increasing portion of the current workforce and by 2025, they
will make up to 75% of the workforce. It is also important to be reminded that
the Global Reporting Initiative (the GRI),
one of the world leaders in sustainability reporting standards, had conducted a
survey that indicate that sustainability reports are read by 40% of job hunters
as they seek information on not only the how companies communicates their ESG
efforts, but how can they also be part in the commitment to sustainability,
equality, climate change, peace and justice. Digital access and transparency as
well as the demands and interests by the millennials will definitely drive ESG
to be an important role in developing company strategies, polices and overall
ESG stance.
They view ESG
issues such as anti-corruption, human rights and climate change as important
and want to affiliate to companies that emphasis on good management on these
issues. Forbes reported that millennials recognised the importance on environmental impacts and place higher
worth on building communities benefitting from shared value rather than just
material things. All of these point that
companies that take the initiative to understand the employees’ point of views
– that include on companies ESG performance, are very much likely to retain and
attract skilled, motivated and diverse groups of young talent and leadership.
According to a report prepared by Marsh & McLennan, the firm studied the MSCI’s ESG data to connect companies’ ESG performance and management with the workforce sentiment that depict vital competitive advantage for companies. The report indicates that top ranked companies that scores substantially higher in ESG scores compared to its peers, measured higher employee satisfaction and attraction rates. This is crucial for companies as high employee satisfaction rates correlates to securing loyal workforce that are committed to achieve more for the organisation.
How Will the Current COVID-19 Issues Impact Future Workforce?
Based on the
findings of a study,
the younger generation including the millennials view COVID-19 as a bigger
threat than their elders do, in essence demonstrates that millennials are more
pessimistic about the ongoing impacts of the pandemic in all aspects of their
lives. Due to the current COVID-19 pandemic, it is also expected that latest
disclosures on how companies sustain business and on workforce management will
be highly anticipated by potential job seekers.
COVID-19 is
obviously the significant issue on the ‘S’ portion of the ‘ESG’ but the focus
will eventually shift (or include) to the ongoing concerns on other issues
typically climate change which is the ‘E’ portion of ‘ESG’. Companies will
inevitably would have to respond to their stakeholders and also their current
and future workforce on how they will be ready to mitigate this ‘E’ issue upon
learning from the COVID-19 crisis. How resilient would companies be when
climate change hits the business? How long can they last if another pandemic
arises from climate events? Can companies keep the majority of the workforce
unlike some business during the COVID-19 pandemic crisis? Companies will need
to be prepared because their future workforce will recognise these ‘S’ and ‘E’
issues’ correlations.
In this
increasingly challenging economy especially learning from the COVID-19 crisis,
companies are strategically focused to attract and retain the brightest talent
more than ever. Companies now have the pressure like never before to revamp and
improve their overall ESG integration into their business.
Apart from that, consistent engagement and interactive dialogues with the
employees are important to align the companies ESG ambition with the workforce.
Finally, companies are expected to communicate its ESG performance regularly
and in a more transparent manner. These will lead to the desired current and
future workforce performance, satisfaction, retention and efficiency, for
continuous business resilient and sustainable growth.
Conclusion
There are
obviously plenty of factors that determine the role of ESG to ensuring the
workforce are dynamic and engaged for maximum productivity and efficiency such
as embracing digitalisation, capacity training and attractive welfare to
elevate the full potential of the workforce, but that would require detailing
on the ESG management gaps of companies.
In a short
summary, what is expected is that ESG outperformers will definitely offer
distinguishable value compared to the peers, and would be the target for the
future dynamic workforce.
Do you think
that companies will have what it takes to embrace the demands of their
workforce and future leaders – the millennials?
All views and opinions expressed on this site are by the author
and do not represent any particular entity or organisation
