The rise of ESG as a business imperative
Employers are currently confronting a crucial moment when it comes to focusing on environmental, social, and governance (ESG) issues, driven by the societal, geopolitical, and economic challenges of recent years. With workplace flexibility, equity and diversity, and the pressing climate crisis at the forefront, companies are under increasing pressure to take meaningful action. ESG has become not just a moral imperative but also a business necessity. While sustainability initiatives have dominated the ESG conversation, attention is now shifting towards the social aspect, encompassing the goals companies establish, monitor, and share.
In the year 2023 and beyond, there are three key social areas that companies should prioritize. The past couple of years have blurred the boundaries between personal and professional lives for many of the 160 million individuals in the U.S. workforce, leading to feelings of isolation and widespread burnout. Disturbingly, in 2022, 2 out of 5 workers reported that their mental health had been negatively affected by their work environment. High levels of stress among employees can result in increased absenteeism and reduced engagement, ultimately impacting a company’s bottom line.
Fortunately, by prioritizing mental health and personal development, employers can foster a positive cultural shift. Implementing initiatives like “mental health” or “no meeting” days, wellness breaks, and short-term disability coverage can significantly boost company morale. Particularly during uncertain times, building a culture of trust and flexibility has been proven to enhance employee engagement, productivity, talent retention, and overall satisfaction.
Equality, diversity, inclusion, and accessibility have long been essential targets for most companies’ social goals. It has become customary for companies to collect and disclose data on how they ensure equality across racial, cultural, generational, gender, and other dimensions, including intersectionality. Astonishingly, 76% of job seekers consider a diverse workforce when evaluating potential employers. Diverse companies experience 2.5 times higher cash flow per employee, and those that prioritize gender diversity are 15% more likely to surpass their industry’s median financial returns.
Mentorship and sponsorship are powerful tools to bolster employee morale and engagement. Recent research indicates that inclusive mentorship programs play a pivotal role in attracting and retaining diverse talent, with women and minority groups recognizing the value of mentorship and sponsorship in their career development. It comes as no surprise that companies aiming to “make a difference” will continue to play a significant role in 2023 and beyond. Employees and consumers expect the companies they support to stand for something, with 70% stating that their sense of purpose is derived from their work.
Companies must leverage employees’ sense of purpose to guide executive decisions and track the progress of their commitments. Employees need to see their leaders not only talk about these values but also act upon them. Initiatives that are easy to implement, such as volunteer days, fundraisers, donation-matching, and environmental pledges to combat the climate crisis, exemplify mutual aid and can greatly benefit a company’s workforce as well as the planet.
In many ways, the tumultuous early 2020s accelerated progress in addressing long-overdue issues. Employees, shareholders, and consumers have clearly expressed the values they prioritize, and companies must listen and respond accordingly. The companies that invest in, measure, and transparently communicate progress on their social programs will thrive. Will your company be among them?