The alignment of ESG values at an organizational level is one of the biggest areas of concern among knowledge workers. Highly-skilled professionals look up to the organizations that have a very high ESG quotient in the market. In a competitive job market, organizations are expected to match the values and aspirations of their employees. According to Atlassian, the maker of Jira, Confluence and Bitbucket, employees will quit in big numbers if their employers are unable to tackle the pressing challenges related to well-being, social and environmental issues. The research, undertaken by PwC Australia with support from PwC India, could shake the beliefs of many business leaders who lack the initiative and drive to push action for ESG compliance.
Let’s analyze the outcomes of the latest report published by Atlassian.
ESG Leadership Should Align with the Employee’s Values
People, strategy and technology are the pillars of any organization that seeks to develop ESG values for a brighter future. According to research, smart businesses rely on their ESG initiatives to establish their position as an environment-friendly organization. With easily online access to ESG initiatives that are carried about an organization, they are more closely scrutinized for their actions than ever before.
Now, people, including the employees and customers, want more action from their organization when it comes to embedding ESG values into business practices. If done right, it inspires employees, investors and stakeholders to believe in the company’s mission, goals and objectives as a business entity.
Employees, who are mostly knowledge workers, are intuitive in their approach to career development with an ESG-friendly organization. An overwhelming majority (97%) of knowledge workers expect action from businesses on various trending issues that influence the existence and growth of any organization. Knowledge workers consider top issues related to the environment, health & well-being, the economy, technology, human rights and equality as major forces before building an idea about their employer’s ESG action plan.
For 82% of employees, social impact of their organization is just as important for them as the current financial performance. In fact, employees could leave if the organization falls short of making a social impact with their business operations.
What Happens when Employer’s ESG Actions Do Not Align with Employees?
It’s a big red flat if an employer’s actions don’t align with the ESG values held by their employees. Why?
Business landscapes change dramatically due to a numerous reasons. Knowledge workers analyze an organization’s ESG roadmap before taking a decision to join or continue there. Which means, these workers are likely to be more critical and analytical in establishing a relationship between regulatory threats and their employer’s sustainability goals. A strong ESG values system automatically fortifies an organization in an ever-evolving world impacted by risks and opportunities.
What happens when ESG values do not align with what an employee feels?
They quit due to value misalignment!
According to Atlassian’s The Return of Action report, 50% of knowledge workers start looking for employment elsewhere — hoping they would thrive in a place where ESG goals are strong and achievable.
Millennials (51%) and women professionals (53%) feel the most pressure at a workplace where an employer enforces initiatives that do no match with their values. This results in them quitting from the job.
According to WhatFix, organizations should double down on their ESG investments by building a transparent and more authentic people-driven action plan for 2023.
Does Misalignment in the ESG Values result in Other Problems?
Yes, a misalignment in ESG values can have a negative impact on workplace culture, corporate reputation and hiring outcomes. Today, the candidates and employees have huge expectations from the organizations. However, these expectations vary among workers from different age-groups and genders based on their own personal values and experiences
According to Atlassian, disgruntled employees that are unhappy with the way they are treated at the workplace are likely to vent out their feelings to colleagues (49%) and acquaintances outside of the workplace (34%). Moreover, 4 out of 10 employees would show their frustration by becoming disengaged from their active work activities before finally quitting.
Men and women workers react differently to workplace culture that don’ align with their values. For instance, male workers would take a conversational route with their managers and HR to discuss the reasons behind discontent at workplace. On the other hand, female workers prefer to quit from their positions, taking up alternative jobs with a lesser pay and employee benefits.
Employer’s could lose more than just their top talent if the ESG values do not align with employees values. ESG misalignment could impair workplace culture, employee performance and overall organizational reputation, as per Atlassian.
Overall, having a well-oiled ESG strategy could benefit an organization in more ways than previously understood.
What should the Organizations Do to Reap Rewards from ESG Initiatives?
Consultation is key (and reaps rewards)
Jessica Hyman, Head of Sustainability, Atlassian explained the importance of Atlassian’s Return on Action research in India. It sends a clear message to all businesses taking a stance on governance, social and environmental issues is “non-negotiable.” Jessica said, “It’s no longer a decision on whether to act, it’s a matter of how.”
She added, “But before making that leap, the research highlights the crucial need for businesses to consult with their employees from the outset, with over three-quarters (83%) of knowledge workers wanting to have a say in the societal issues their employer acts on. From here, businesses must determine its approach in a way that aligns with both employee values and its business strategy.”
The latest research found a direct strong correlation between employee’s overall job satisfaction when the employer’s actions align with ESG values. Therefore, ESG values alignment is definitely crucial for employee retention and attracting skilled talent in an increasingly competitive market.
Top Areas where Organizations Need to Focus More
Technology
A responsible adoption of new technologies is key to growing ESG initiatives in the right direction. As organizations adopt technologies like AI, Machine Learning and cloud, there is a huge opportunity to prove they are adopting these technologies responsibly.
What research said about responsible adoption of AI and Machine Learning technologies?
New technologies such as AI and cloud computing could challenge IT preparedness of most organizations. These complex challenges could mostly arise in the areas of data privacy, governance, compliance and trustworthiness.
According to the research, 31% of respondents agree that businesses have the primary responsibility for addressing issues related to technology pertaining to digital privacy, responsible use of technology and data and digital infrastructure. Digital privacy, responsible data usage and digital infrastructure management emerged as the top concerns among employees where these technologies have been adopted to digitally transform the business operations.
Environmental pollution and its prevention were prominently highlighted in the new report. 89% of employees feel that organizations could do so much more in addressing issues related to waste management and pollution prevention, even as 87% of respondents feel their organizations should take more responsibility in making a strong environmental impact through adoption of renewable energy and zero waste policies.
Similarly, more than half of respondents have a strong outlook toward the economic scenarios which result in rise in unemployment, corruption and poverty levels. Businesses, as part of their ESG program, are expected to address these issues and play a bigger role in building a positive economic environment for everyone.
Employee wellness and empowerment
Employee well-being is the key to any modern-day corporate ESG program. Employees and external stakeholders hold employer’s accountable for creating a transparent and value-infused ESG strategy. According to research, organizational leadership have become more vocal and accountable in promoting employee well-being initiatives, especially since the onset of the COVID-19 pandemic. With a clear ESG strategy in place, it becomes all the more transparent and easier for employees to report an organization’s position toward internal DEI as well as wellness programs. Employees can talk through corporate governance and sustainability channels to highlight the employer’s stance and overall organizational policies toward employee wellness and empowerment.
Jessica added, “There are many ways a business can demonstrate to employees its commitment to an issue, from setting public facing goals, reporting out progress against them, investing in external partnerships and advocating for critical policy…”
“But above all, knowledge workers expressed a desire to be empowered to take action themselves, such as through education programs or opportunities for fundraising or volunteering. This is a powerful way for businesses to work alongside their employees creating the time, space and support for them to lead the change they want to see, rather than dictating the path ahead.”
In 2023, having a transparent and accountable ESG plan is a solid catalyst for tapping top talent from the industry, whilst meeting all the corporate goals related to DEI, climate control and financial confidence. People love organizations that do more than what they have truly promised in their ESG charter.