Workplace ESG: The Intersection of Sustainability and Engagement

Improving employee engagement and the employee experience are top priorities for many companies as we head into 2024 — with unemployment rates still so low, employers know they need to focus on keeping existing employees around and satisfied with their roles.

But many companies are overlooking a proven way to increase engagement, improve financial results, and do some good in the world too: ESG in the workplace.

What is ESG?

ESG stands for environmental, social and governance impacts of your organization’s activities, from how your office(s) are set up to your supply chain for products to your company’s investment decisions.

You might already be familiar with ESG from an investing standpoint, where you choose to invest your money into funds that meet certain environmental and human rights standards. These could leave out fossil fuel companies, businesses that engage in deforestation, or companies that exploit low-wage workers to make their products.

The idea of these funds is to create a larger social impact by choosing not to invest in companies with business practices that contribute to climate change or damage human rights. ESG encourages greater corporate social responsibility by choosing sustainable practices over short-term profits.

ESG in the Workplace

But the concept of ESG has expanded in recent years — it also now can be applied to the workplace. Workplace ESG ensures that the buildings your employees work in are healthy, with low emissions and energy use and good airflow. It means making sure that your employees work in a mentally supportive and healthy environment so their well-being is high. And it means that diversity, equity, inclusivity, and belonging (DEIB) are at the forefront of everything you do.

Essentially, ESG in the workplace means weighing the needs of all of your stakeholders — not just investors and executives, but also employees at every level, plus your immediate community and the health of the world as well. While this might seem like a huge undertaking (and it is a big commitment), the benefits of more equitable and sustainable business practices are significant enough to make the investment worth it.

And the intersection of ESG and the workplace should come as no surprise: people now are much more aware of, and concerned about, the way the companies they buy from and work for impact the health of the world we all live in.

How Workplace ESG Drives Employee Engagement

Workplace ESG is a great business strategy to implement for its environmental and social benefits, of course. But it’s also a terrific driver of employee engagement, for several reasons.

Commitment to a Greater Purpose

One of the biggest drivers of employee engagement is feeling part of a larger mission at work, whether it’s helping customers live better lives, contributing to a community, or even changing the world. It makes sense — it’s a basic human need to feel we’re contributing to a purpose bigger than ourselves. And that greater purpose helps us get through the days where the small tasks and big projects just keep piling up.

Workplace ESG can provide that sense of purpose and mission to employees. Instead of feeling like they work for a faceless corporation that only cares about profits, employees at a company committed to ESG know they are part of something making the world a better place — and that’s a satisfying feeling.

The data supports this as well. 75% of US executives say that ESG initiatives have a positive impact on employee engagement, according to SHRM.

Increased Connection to Leaders

Thoughtful, transparent corporate governance and leadership are needed to successfully implement ESG in the workplace because it’s such a big undertaking. And those same changes — to advance social good over short-term profits, to think about employees and communities just as much as investors — make employees trust their leaders more.

In fact, believing that your company has strong and responsible governance is good for employee motivation. People are more likely to work hard when they know their leaders are trying to do the right thing for everyone.

Easier to Attract and Retain Talent

Most people spend the majority of their waking hours at work, and so it’s no surprise that they’d prefer to spend all that time at a workplace that prioritizes sustainability and ethics just like they do. In fact, PwC research found that 86% of employees prefer to work for or support companies that care about the same issues they do.

So committing to an ESG approach means it’s easier for your company to attract new employees who are drawn in by your ethical and sustainable governance, and it’s also easier to retain your existing employees. In the SHRM study cited above, 60% of US executives said that ESG initiatives have a positive impact on employee retention, and 64% said they positively impact recruiting as well.

Connects to Core Values

Nearly 80% of respondents to the Cooleaf 2023 State of Culture report agree that core values positively impact the employee experience. Core values like corporate sustainability and limiting environmental impact and carbon emissions can be a great addition to your business strategy, and they’ll help you do well financially while doing good.

And if one of your core values is a great employee experience, weaving sustainability efforts into your business strategy is essential here. Green workplaces tend to be healthier not just for the planet but for employees as well, as they have better air circulation, more natural light, and are just more pleasant to spend time in.

How to Build a Successful Workplace ESG Strategy

With these substantial benefits in mind, how can you begin creating your own ESG strategy for your workplace? Here are a few top tips to keep in mind.

1. Be Transparent

Transparency is critical for good corporate governance, and especially in an ESG workplace. Be clear and open with employees about the goals of your ESG commitment, the steps you’ll take to get there, and how it may affect them.

As the transition commences, share metrics and sustainability reporting with them regularly and tie them to business outcomes where possible to keep them updated on your progress. This will help them feel included and invested in the transition, which will make it go more smoothly.

2. Avoid Greenwashing

It’s tempting to burnish your benchmarking on sustainability and equity a little to make your progress look like it’s going fast — because this transition can be slow going. But your employees are smart and savvy, and they can probably spot greenwashing (making your sustainability efforts look better than they are) quite quickly. That kind of duplicity hurts their trust in your company and your decision-making.

Also, be sure that your executives are as accountable for results as employees. Asking employees to stop using paper napkins in the name of sustainability while your executives regularly hop on the corporate jet is not going to increase employee engagement — more likely the opposite.

3. Get Business Leaders on Board

Finally, be sure all your leaders are on board with the transition. They’ll have to outline the case for change, plan the strategy, and hold the company and themselves accountable for the outcome. That’s a big ask — so be sure your leaders are up to the task and fully committed to your ESG strategy.

And with those tips, you’re well on your way to becoming a more sustainable, equitable, and engaged organization! Looking for more ways to boost employee engagement and motivation? Cooleaf can help!