How Improving ESG Performance Contributes to Employee Satisfaction

Instead of being a nice-to-have, ESG analysis and reporting is becoming a must-have for all businesses today. The urge to do good in this world is slowly prioritising the hunger for profit and self-actualization. Furthermore, business owners realize they don’t have to sacrifice profit to be socially responsible. On the contrary, transparency in voluntary ESG reporting can bring about higher returns and lower risks, attract investors, etc. Improving ESG performance can also contribute to employee satisfaction.

However, investors and customers are not the only stakeholders that business owners should be concerned about. Employees are the pillars of the success of any organization, and nothing would be possible without their hard work. Therefore, business owners also have the responsibility to improve upon their ESG practices, ultimately contributing to the satisfaction of their workforce.

This article will examine how ESG performance can impact workplace sentiment, but first — what is ESG? What does this acronym really mean?

What Is ESG?

The acronym ESG stands for Environmental, Social, and Governance factors. These also happen to be the most important criteria in its reporting.

The Environmental factor deals with how businesses use resources, and it considers what they do to manage and prevent their negative impact on the environment. It’s now more important than ever to take action to preserve and protect our planet.

The Social criterion evaluates how a business treats the people within the organization (employees) and how it affects those on the outside (community). Unfortunately, racism, discrimination, and intolerance are still prevalent to this day. It’s up to every business owner to eradicate it in their own workplace.

Finally, the factor of Governance examines how a business regulates its processes, manages its stakeholders, and deals with violations. If we want to end issues like bribery, corruption, and lobbying once and for all, businesses have to be more transparent.

How ESG Can Benefit Employees

As we mentioned, the S in ESG stands for Social — as in pressing social matters such as inequality and discrimination. When it comes to employees, one of the most important stakeholders of any business, ESG stands to protect them and impose labour standards that will do so.

By improving ESG practices, business owners will also improve upon the satisfaction of their employees and thus their productivity. In turn, the business will achieve good results and expand. Here are some potential advantages to consider:

Employee Engagement

Your employees may be satisfied with their jobs, but are they really committed to your business? Are they ready to go the extra mile for it? While employee satisfaction is mandatory, employee engagement will help your business thrive, making it stand out from its competitors.

You want employees to feel like they are a crucial part of your business and genuinely care about its success. In psychology, we call this intrinsic motivation. Unlike extrinsic motivation, which is fueled by compensation or pressure, intrinsic motivation is deep. It’s driven by the sheer enjoyment of the work, curiosity, or commitment to its goals.

If a company invests in its ESG performance, that usually means it’s attempting to make the world a better place. Naturally, people are much more likely to be passionate about working for such companies.

Salary Satisfaction

When employees feel they are inadequately compensated for their work, they likely will have a hard time finding the motivation to put in the effort, let alone perform at their best. On the other hand, if you pay them fairly and occasionally reward them, they will feel appreciated and motivated to give their 100%.

Atmosphere of Trust

All businesses and people involved with them must be tolerant of others, no matter where they come from or what they look like. Business owners should be open to hiring anyone willing to work and meets the requirements. They must promote professionalism and the atmosphere of tolerance, equality, acceptance, security, and trust.

When you create such an environment, you will surround yourself with the utmost professionals and individuals who share your values — those you can trust.

Reducing Turnover

When employees are satisfied, motivated, and properly paid, they don’t need to change their workplace. In turn, you don’t have to find, select, and train new employees for the various positions, which can be a huge budget and time setback. Moreover, you don’t run the risk of losing your most prized employees.

Attracting New Talent

As a business owner, the message you convey will impact how your employees feel on the job. By choosing to face important social and environmental issues, you’re showing that you care about the future. Naturally, that would make your company a desirable place to work.

The new, more socially aware and conscious generations are slowly taking over the workforce. Thus, high ESG performance has now become imperative for all businesses.

Final Thoughts

There are more than a few reasons you should be working on the ESG performance of your company, one of the most important being employee satisfaction. And when you’re mindful of how your business decisions impact the world, that comes as a given.