Research warns of hidden talent management costs of ESG U-turns

Organisations are being warned about the negative workforce impact of ESG U-turns, after a new study revealed that environmental, social and governance issues are more important to employees than ever. 

Recruitment firm Robert Half has warned that employers risk creating a disconnect with talent by rowing back on their ESG promises, according to the latest Jobs Confidence Index (JCI) produced by Robert Half in partnership with the Centre for Economics and Business Research (Cebr).

Employees expect more climate action than ever

Despite a rowing back on ESG commitments by some high-profile organisations in recent months, the Robert Half/Cebr study found that 47% of workers care more about their employer’s environmental impact than they did three years ago, with a further 60% stating that organisations need to do more on ESG. 

Two thirds of respondents said that businesses have a responsibility to reduce their environmental impact. However, the Robert Half statistics suggest this isn’t just an issue for Gen Z workers, who have historically placed a greater focus on choosing a company based on its commitment to ESG.

Indeed, 71% of workers in the 35-54 age group agreed that organisations have a responsibility to reduce their environmental impact, compared with 63% of 18-34 year olds questioned. 

Read also: Five ways to improve sustainability talent management for growth

Greenwashing concerns

Despite the importance of ESG to respondents, 56% believe that most employers only talk about ESG ‘for show’, signalling that potential recruits can be sensitive to greenwashing and the ESG U-turns some companies make. Matt Weston, Senior Managing Director UK & Ireland at Robert Half, said that although ESG has fallen down the corporate agenda for some companies, the data clearly demonstrates that employees still place significant value on businesses that can balance profit with purpose. 

“With workers already stating that they feel leaders are paying lip service to ESG and more firms reducing their efforts, there is a risk of a disconnect between workers and employers,” he said, adding that a weakened employer brand would make it more difficult for organisations to recruit and retain staff against the backdrop of a skills short job market.

“This is no longer an issue that matters more to the younger generations, which has historically been the case. The fact that all employees in the workforce are increasingly placing a level of importance on a firm’s ESG commitment demonstrates that employers really are at risk of damaging their ability to both attract and retain core staff,” Weston added. “This also underscores the need for businesses to honestly and transparently communicate their commitment to workplace culture, ethical leadership, and sustainability.”