ESG now a priority for first time job seekers

26th January 2023

As the world combats the climate crisis, new research from KPMG has found that almost half of UK office workers now consider environmental, social and governance (ESG) factors when making employment decisions. "Climate resignation" - quitting because of weak ESG credits within a company - is becoming an emerging trend among millennials and younger workers.

As much as 20% of office workers in the UK, according to the report, would refuse to work for a company if they felt the ESG policies were inadequate. The study's findings show that nearly half of British office workers want to see concrete actions from their companies to combat climate change and social problems. For those entering the job market for the first time the numbers are even higher with seventy percent of workers between the ages of 18 and 24 say they would be less likely to accept a job offer from a company if they did not have robust ESG policies in place.

KPMG's study shows that employees in the UK are becoming more and more cognizant of the value of ethical business practises. With climate change becoming an increasingly pressing problem, consumers are looking for reassurance that brands are doing their part to lessen their impact on the planet. If these issues aren't addressed, it may become more difficult for businesses to attract and retain the best employees. With competition for jobs on the rise, it is more important than ever for companies to show they care about ESG challenges.

ESG factors have emerged as a prominent issue for job-seekers, especially millennials and Generation Z members over the last few years. With these generations more inclined to place a premium on social and environmental reasons and seeking employment with businesses that reflect their beliefs. Nearly half of millennials, according to an earlier survey by Deloitte, would accept a pay sacrifice to work for a company that shares their beliefs.

It is clear that there has been an increase in the dedication of many UK-based enterprises to ESG concerns and it is already evident in the actions they have taken. As an illustration, several corporations have committed to lofty goals for expanding their use of renewable energy and decreasing their carbon footprint. Some organisations have also instituted rules to foster an environment that values and celebrates its employees' many backgrounds and perspectives. UK enterprises have identified that they cannot just give ESG issues lip attention and expect results. If they want to successfully recruit elite people, they will need to have concrete plans and communicate those plans openly. This entails establishing goals that can be easily tracked and reported on a regular basis. Companies must be open to talking to their various constituencies — employees, consumers, and investors — to address their issues and incorporate their input into their ESG initiatives.

The UK enterprises that adopt ESG principles will have an advantage in the talent acquisition and retention markets with a strong dedication to ESG issues seen by investors as an indicator of a company's ability to manage risks and ensure its long-term viability. ESG considerations are becoming increasingly important to investors in assessing the long-term viability and risk management of businesses. Therefore, investors are increasingly considering a company's ESG performance. More and more pension funds and asset managers are feeling pushed to think about the broader social and environmental effects of their investments.

Poor ESG track records may make it difficult for companies to raise capital in the present. Investors are getting pickier, searching for businesses that are actively addressing ESG concerns. Those who aren't perceived as making enough effort can have trouble luring investors.

Companies are under growing pressure from investors as well as increased competition for top personnel from recent college and university graduates. Today's graduates are increasingly considering an employer's commitment to environmental, social, and governance (ESG) issues as an important factor in their job search. Nearly half of millennials, according to a survey by Deloitte, would accept a pay sacrifice to work for a company that shares their beliefs. Companies with poor ESG records may therefore have difficulty attracting the most talented recent graduates, which could have a chilling effect on their future expansion.

With UK authorities also beginning to recognise the significance of ESG concerns with UK government setting aggressive targets for decreasing the country's carbon emissions, and the UK Financial Conduct Authority (FCA) urging listed corporations to provide more information on their ESG performance. Businesses that don't prioritise ESG concerns may struggle to compete in terms of funding, employee retention, and compliance with government regulations. If these issues aren't addressed, it could get harder for businesses to hire and keep the best employees, threatening their long-term success.