ESG, Talent Attraction and Employee Retention

Despite a recent spate of redundancies in the tech sector, talent acquisition is still fiercely competitive in financial services and the wider IT industry.?

A combination of “The Great Resignation”, the concept that employees have and will continue to leave their work on-mass post pandemic and the “War on Talent”, a perceived lack of qualified talent on the market, has meant (in plain terms) that companies have been losing staff and finding it extremely difficult to replace them. ?

Inspired by the recent European Women in Payments Network (EWPN) event “Bringing the ESG to Payments in Ireland”, I thought I would take a look at how a firm can harness their Environment, Social and Governance (ESG) approach as a tool for talent attraction and employee retention. ?

Beyond it being ‘the right thing to do’, a strong ESG performance has been shown to have bottom line commercial value, not only in the form of stronger financial performance but it also has the capacity to reduce reputational risk and increase talent attraction and retention.?

As such, a company's ESG performance is being examined by a variety of stakeholders including investors, rating agencies and yes, potential candidates. ?

The Asset Manager Mercer conducted a study*1 looking at the relationship between ESG performance and workforce sentiment. ?

They found that companies with significantly Higher ESG scores compared to their peers:?

• Are more attractive to prospective candidates,?
• Have employees who are more satisfied with their work, stay longer, work harder and produce better results?

And this effect will only get more pronounced as we transition into a workforce dominated by Millennials and Gen Z. ?

By 2029, Millennials and Gen Z will make up 72% of the world's workforce and it has been shown that these generations place greater importance on environmental and social factors than those who have come before them.?

We are already seeing the impact of these generational differences:?

• 40% of Millennials have accepted one job offer over another because that company was perceived to be more environmentally sustainable?
• Companies most attractive to students and young professionals have ESG scores 25% higher than the global average. ?
• More than half of Gen Z (54%) would take a paycut to join a firm that reflected their ethos*2 ?
• 60 % of Gen Z’s would stay at a firm longer and be more likely to recommend it as a good place to work if that firm made stretching ESG commitments (compared to the national average of 52%)*2?

So great, a strong ESG performance has the potential to make a firm more attractive to new candidates, at a salary cost lower than their competitors, and improve the performance of employees who are staying with the business for a comparably longer period of time. ?

But where do you start? ?

This question was posed to the panel, including Ann Shiels (founder of Sustainable Finance Consultancy FinLexSus), Eoin Leonard, (Founder and CEO of i3PT), Louise Hogan, (Associate - Financial Services at A&L Goodbody), and Aedan O’Leary, (Investment and ESG consultant and co-founder of the Green Team Network), at EWPNs event.?

Here are their top tips: ?

1. Either start with the E, S and G, or look at the UNs 17 sustainable development goals *3 and use them as a list of options,?
2. Look at the priorities of the stakeholders across the business and then use these discussions as a reference point to see where you can have the most material impact, i.e. on your bottom line?
3. Start tackling ESG improvement by having a strategy, rather than tackling it operationally and tactically right from the start,?
4. This ESG strategy has to fits your business strategy, something that fits your business and what you do,?
5. Have a clear vision and direction of travel and then measure yourself against that.?

Ultimately, there are 100’s of ESG initiatives that you can sign up to but don’t do it because your neighbour [your competitors] did it. Do it because it fits your organisation. ?

If you would like to listen to the discussion in full, the recorded podcast of the event can be found by following this link: https://fscomwebinars.podbean.com/e/ewpn-ireland-esg-event-podcast/. ?

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*1 ESG as a Workforce Strategy https://www.mercer.com/our-thinking/esg-as-a-workforce-strategy.html ?

*2 Research carried out by Opinium Research among 2,000 UK adults, weighted to be nationally representative, November 2021?

*3 https://sdgs.un.org/goals?