Managing Director & Partner
In our recent conversations with Board Members, CEOs and Senior Executives, we’ve consistently heard that employees expect the organisations they work for to bring the organisation’s purpose to life by investing more in their Environmental, Social and Governance (ESG) activities. This was confirmed in a large study conducted by BCG and The Network, with more than 200,000 people in 190 countries.1 Notes: 1 Decoding Global Ways of Working Almost 70% of respondents said that the issue of climate (one of the aspects of the ‘E’ in ESG) and diversity & inclusion (one of the aspects of the ‘S’ in ESG) had become more important issues in the last year.
The message was similar when we surveyed more than 10,000 people around the world about their views on climate change. Around 1000 people in Australia took part in this survey and told us they feel that large companies are responsible for climate change but aren’t doing enough to address it. This inspired us to conduct an additional survey of 1,000 Australians to understand how ESG factors — including climate — influence the employment opportunities they choose to pursue. This article summarises the results of this additional survey.
While many organisations conduct their own staff surveys to gain insight into what is important for their people, we wanted to understand how ESG concerns play out across different industries and cohorts of people. This is particularly relevant considering the ongoing ‘war for talent’; two-thirds of respondents told us they are open to a new role and more than one third are actively looking.
70% of respondents said it is important or very important for Australian organisations to focus on ESG activities. The primary reasons are because it is the right thing to do (59%), to meet customer expectations (59%), and to meet employee expectations (50%). In terms of ESG activities within their own organisation, they see regulatory compliance (55%) as a critical driver.
Australian organisations also seem to be living up to employee expectations. More than 60% of respondents say their organisation focuses “the right amount” on ESG and does well to communicate ESG performance internally and externally.
Overall, people working in smaller organisations are more likely to be happy with the level of focus on ESG than those working in larger organisations. Employees working in agriculture (89%), scientific/technical services (75%), and education (75%) are most likely to say their organisation has the right level of focus. Employees working in real estate (41%), transport/warehousing services (41%) and wholesale trade (38%) are the least likely.
The positive view of the ESG efforts that Australian organisations are making is surprising, given only:
While our global survey showed that Australians overwhelmingly expect large companies and governments in general to do more on climate, employees do not necessarily believe their own employers need to do more.2 Notes: 2 We're Ready to Tackle Climate Change, But Companies and Governments Must Lead the Charge
ESG contributes to workplace pride, but is not a major influence on employment decisions
When it comes to joining or staying at an organisation, traditional considerations like salary, location and flexibility of working conditions remain the most important factors by far. Only around 15% of respondents listed ESG commitments as one of the top 5 reasons when deciding to join or stay with an organisation. These people tended to be more senior, have an advanced graduate degree, and were more likely to work in the public sector.
Despite the relatively low importance people place on ESG when deciding whether to join or stay at an organisation, one quarter of survey respondents think their organisation is a better ‘corporate citizen’ than other organisations, and one third say that ESG performance is a reason to recommend their organisation as an employer.
The survey suggests that the ‘S’ in ESG is a particularly important driver of employee pride. ‘Social’ factors such as employee welfare and local community contribution are considered sources of pride in the workplace. For at least one third of respondents who are open to a new role, social performance is one of the top 5 reasons to stay with their current employer. This rises to half of senior executives who are open to a new role.
ESG is also creating some anxiety about job security
More than one third of survey respondents (35%) said they have ESG-related performance targets (KPIs). 78% of these targets are linked to environmental performance. For senior executives, the figure is 50%. ESG-related KPIs are also more prevalent in public sector and mid-sized organisations. Perhaps unsurprisingly, people with ESG-related KPIs are more likely to be aware of, and proud of, their organisation’s ESG performance.
More surprisingly, one-third of respondents think their job is at risk as a result of initiatives to reduce the environmental impact of their industry or organisation. This was higher for respondents working in telecommunications, media and technology (64%), agriculture (47%), and mining (46%). The proportion of people expressing this concern was relatively consistent across job roles, from operational and technical roles, to technology, finance, marketing and strategy roles.
The ESG opportunity for Australian employers
Australians care about social and environmental issues and expect their employers to take these issues seriously. But Australians also want interesting, well-paid jobs, which will only be delivered if employers are financially successful. This highlights the need for Australian organisations to find ways to drive true competitive advantage through ESG, to underpin their employee value proposition.3 Notes: 3 Six Steps to a Sustainability Transformation, The Secrets of Sustainability Front-Runners
In doing so, organisations need to proactively consider the risks arising from ESG – particularly in relation to environmental issues. The economic disruption that will be created through the shift to a decarbonised, more sustainable and climate-resilient economy will provide opportunities for many organisations but cause significant disruption for others. This is likely a contributor to the fear around job losses arising from climate and environmental issues. Attracting and retaining talent into the most disrupted industries will require organisations to go beyond communicating their ESG efforts. These organisations need to have a clear transition roadmap for both the organisation and its individual employees.
Our survey also suggests that social contribution is a strong source of pride for employees. Organisations should consider this as they define their ESG agendas and employee value propositions in a post-COVID-19 world. There is also an opportunity for Australian organisations to use their ESG agenda to differentiate themselves from competitors. When our survey respondents were asked to name local and global ESG leaders, less than half could do so. Organisations that are able to truly integrate their ESG agenda with their strategy and market positioning will be the ones who can create sustained competitive advantage.