Sustainability is the strongest talent magnet -but beware of greenwashing.

More and more corporate clients "confess" to me that a key driver for their sustainability policies is their need to attract and retain the best young talent. As a committed, mission-driven consultant promoting circular and regenerative practices, I am happy to work with, rather than against, this rationale.

However, one wonders how good young professionals are at sniffing greenwashing. In my experience, not so good. As as result, I have become convinced that instilling critical thinking among young professionals, and giving them the tools to spot greenwashing is of paramount importance if we are to capitalize on the full potential of this trend to have real impact.

It is no secret that in the competitive landscape of talent acquisition and retention, companies are increasingly recognizing the importance of aligning their values with those of prospective employees. In recent years the growing interest of top talent in organizations that prioritize sustainability has emerged as a growing trend. A robust commitment to environmental and social responsibility is not only ethically commendable, but has become a strategic imperative for attracting and retaining the best talent in the business world.

1. Attracting Top Talent Through Sustainability Values:

A study conducted by LinkedIn in 2022 found that 62% of professionals consider a company's stance on sustainability crucial when evaluating job offers (1). This reflects a significant shift in the priorities of the modern workforce. Millennials and Generation Z, now comprising a considerable portion of the workforce, are particularly drawn to employers who demonstrate a commitment to environmental and social responsibility.

Companies that choose to embed sustainability into their core values send an attarctive message to potential hires: that they are forward-thinking, socially conscious, and committed to making a positive impact beyond financial gains. This message, whether backed by reality or not, resonates strongly with the values of many job seekers, especially those who seek purpose and meaning in their work.

Furthermore, a survey by Cone Communications found that 75% of millennials are willing to take a pay cut to work for a socially responsible company (2) . This suggests that for a significant portion of the workforce, purpose-driven work and a commitment to sustainability are valued more than purely financial compensation.

One may wonder, however, how likely recruits are to check whether sustainability claims are matched by real actions.

2. The Role of Sustainability in Talent Retention:

Retention of top talent is equally crucial, and it contributes significantly to employee satisfaction and loyalty. According to a Deloitte survey, 73% of employees who say they work at a purpose-driven company are engaged, compared to just 23% at companies without a clear sense of purpose (3). This highlights the positive impact that a commitment to sustainability can have on employee engagement and overall job satisfaction.

A report by Harvard Business Review indicates that companies with strong sustainability practices experience lower turnover rates and higher levels of employee morale (4). When employees feel a sense of purpose in their work and believe that their organization is contributing to a greater good, they are more likely to stay committed to their roles and the company.

There is less research, however, on how disappointment with the company's actual environmental performance plays out in terms of pushing talent to migrate away.

3. Corporate Social Responsibility (CSR) and Talent Magnetism:

Studies shows that corporate Social Responsibility (CSR) initiatives, particularly those related to sustainability, have a direct impact on a company's attractiveness to potential employees. The Reputation Institute's Global RepTrak study found that 73% of global consumers would recommend a company with a good reputation for corporate social responsibility (5). This positive sentiment extends to potential employees who are more likely to be attracted to companies with a strong CSR presence.

An effective CSR strategy, including sustainable business practices, often elevates a company's brand image, making it more appealing to both customers and potential employees. In a survey conducted by Nielsen, 73% of global consumers stated that they would change their consumption habits to reduce their environmental impact (6). This consumer sentiment directly influences job seekers, who are more likely to choose employers aligned with their own values.

Again, there is less information regarding how a substandard or greenwashy CSR policy may lead to employee dissatisfaction. Anecdotal evidence and common sense suggest that it might be a leading factor.

4. Environmental, Social, and Governance (ESG) Investing:

The rise of ESG investing is another factor that underscores the growing importance of sustainability in the corporate world. According to the Global Sustainable Investment Alliance, global sustainable investment assets reached $35.3 trillion in 2020, a 15% increase from 2018. Investors are increasingly considering a company's ESG performance as a key factor in their decision-making processes. A closer scrutiny reveals that the ESG investing category is somewhat nebulous and way too broad, including companies and practices that are certain to raise the eyebrows of most environmentalists.

At any rate, for companies aiming to attract top talent, having strong ESG credentials is not just about appealing to environmentally conscious employees but also to investors who recognize the long-term viability of socially responsible and sustainable business practices.

The flip side is that environmental performance and environmental risk (for instance companies that rely on highly packaged goods) is starting to be viewed by investors as a risk, too.

Be careful: greenwashing may turn you from hero to villain.

The relationship between a company's commitment to sustainability and its ability to attract and retain top talent is evident and compelling. As the workforce continues to evolve, with younger generations expressing a strong preference for purpose-driven work, organizations must adapt their strategies to remain competitive in the talent market.

Investing in sustainability is not just about meeting ethical standards; it is a strategic imperative for any forward-thinking company that aspires to attract, engage, and retain the best talent. By aligning corporate values with the increasing importance employees place on sustainability, companies can create a workplace culture that fosters innovation, employee satisfaction, and long-term success.

But that's not nearly enough. Increasingly, people's attitudes towards corporate greenwashing are characterized by a growing skepticism fueled by a lack of trust and a desire for authentic commitment to sustainability. Companies must recognize the importance of transparent communication, tangible actions, and third-party verification and certifications to build and maintain credibility in the eyes of environmentally conscious professionals.

A 2021 study by GlobeScan revealed a growing skepticism regarding corporate sustainability claims (8). According to the study, 53% of respondents believed that most companies were only making sustainability claims for marketing purposes. Younger generations, particularly Millennials and Gen Z, are more likely to scrutinize and hold companies accountable for their environmental claims. According to a Cone Communications study, 75% of Millennials and Gen Z would do research to verify a company's environmental claims (9).

In a world where talent is a key driver of organizational success, embracing sustainability isn't just a choice; it's a necessity for companies striving to build a workforce that will lead them into a sustainable and prosperous future. Beware, however, of greenwashing: it may quickly turn you from hero to villain -sometimes with just one tweet.

References

1. LinkedIn Global Talent Trends 2022
2. Cone Communications CSR Study
3. Deloitte Global Human Capital Trends 2016
4. Harvard Business Review - The Link Between Competitive Advantage and Corporate Social Responsibility
5. Reputation Institute - Global RepTrak
6. Nielsen Global Corporate Sustainability Report
7. Global Sustainable Investment Alliance - Global Sustainable Investment Review 2020
8. GlobeScan - 2021 Radar Report
9. Cone Communications CSR Study