Workplace ESG:
How Environmental, Social, and Governance Factors Impact Employee Experience

Rebecca Moulynox

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Rebecca Moulynox

Author

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The connection between purpose; environmental, social, and governance (ESG) factors; employee engagement; and business results.

It may sound almost too good to believe, but there’s a well-established path to enhance employee engagement, elevate financial performance, and contribute positively to our world, all at once.

The cornerstone of achieving these remarkable outcomes lies in directing your attention toward your workplace’s environmental, social, and governance (ESG) factors. ESG represents the environmental, social, and governance impacts stemming from your organisation’s activities. Embracing and optimising ESG practices is the key to realising these three interconnected objectives.

Understanding ESG: An environmental, social, and governance primer

 

Investors created the ESG framework as a way to consider factors other than financial return when evaluating potential investments.

Before the creation of ESG, investors had no way to account for externalities — the things that did not cost an organisation anything, but had a cost to others. For example, a company’s pollution might not negatively impact its bottom line, but would harm the local community.

Defining the 3 pillars of ESG

From those investing origins, three central factors emerged:

  • Environmental– How does an action or choice by an organisation use energy and other resources, and in what ways does it create waste?
  • Social– How does an action affect people in the broadest, most diverse sense?
  • Governance– How are decisions made? Are those decisions honest, ethical, and fair?

As ESG has grown in popularity, this framework has come to describe much of how society expects its companies, non-profit organisations, and governments to operate.

Why ESG matters in today’s business world

ESG is big business. The United Nations estimates that the annual global spending by governments and the private sector needed to deliver the world’s ESG-related goals is around $5 trillion a year, or more than 6% of world GDP.

ESG is also a consumer expectation. A study by the IBM Institute for Business Value (IBV) and the National Retail Federation found that purpose-driven consumers (those who choose products and brands based on their alignment to their values) represent the largest segment of consumers, at 44%.

And a Business of Sustainability study by PDI Technologies found that 78% of consumers want to buy from environmentally-friendly companies — but don’t know how to identify them.

ESG also impacts employee behaviour. Research by IBM also found that 67% of survey respondents were more willing to apply for jobs with environmentally sustainable companies, and among those who had changed jobs in the past year, roughly one in three had accepted a lower salary to work for a socially responsible or sustainable organisation.

ESG in the workplace: More than just compliance

At Great Place to Work®, the ethos of ESG transcends compliance; it’s embedded in the organisational fabric.

According to Tony Bond, chief diversity & innovation officer, “Our employees themselves, through employee resource groups (ERGs), are spontaneously responding to crises, like the Australian floods, without any directive from leadership. It’s a testament to the organic culture of community support and engagement with ESG values that exist within our workplace.”

This proactive engagement is a direct result of fostering a workplace where the mission and values are clear, and employees are deeply connected to them.

Building a Sustainable Workforce Strategy

A sustainable workforce strategy must go beyond mere compliance and should involve all stakeholders, as Tony advises. This means the entire spectrum of individuals who impact and are impacted by the business — from employees at every level to customers, suppliers, and the broader community.

“Listen and be curious,” Tony suggests. “Understand potential risks through a systematic and continuous way of hearing from people, such as employee surveys.”

Setting a vision and gaining commitment from all levels are critical steps to moving beyond greenwashing.

Greenwashing is a bit like putting a fresh coat of green paint on something that’s not so environmentally friendly at its core. Imagine a company that’s more interested in looking eco-friendly than actually being eco-friendly. They might launch big advertising campaigns highlighting their green initiatives, but behind the scenes, they’re not making significant changes to reduce their environmental impact.

Instead, there are ways to authentically implement workplace ESG, without greenwashing:

  • Set a vision. Be clear on what you’re trying to achieve. Vague statements or targets will be called out. It won’t be possible to do everything, so focus on factors you can control.
  • Get commitment. From all From the C-suite through to departments, ensure everyone knows what the mission is and how their role fits into it.
  • Measure and report regularly. Assess where you’re starting and measure along the way. Set measurable, science-based targets so that you can draw a line between your efforts and results.
  • Solicit feedback. Your employees will have opinions and ideas. As will the communities where you operate. Ensure your efforts are making a difference by checking in with those most impacted.

The role of ESG in employee experience and engagement

The correlation between ESG and employee experience is undeniable. “Employees engaged with ESG initiatives feel a sense of purpose that transcends their day-to-day tasks,” Tony observes.

Giving employees a clear connection to something important — a purpose that is bigger than an individual role — is an important factor in an organisation’s success. In fact, our research shows that when employees say their work has “special meaning,” rather than being “just a job,” they are 56% more likely to experience innovation opportunities.

Emerging trends: How ESG is shaping the future of work

ESG isn’t just about attracting sustainability-savvy consumers — it’s also about securing an employee base that is passionate about the work. ESG is a competitive advantage for both attracting and engaging employees.

The rising significance of social impact

ESG performance is a driver of employee satisfaction and an important piece of what makes a company a great place to work.

Marsh McLennan study found that employers that have high employee satisfaction and are attractive employment destinations for university graduates tend to have lower carbon emissions, have more diversity, and make a greater effort to understand employee feelings.

Our own research has reported similar results. For example, we’ve found that people who feel their employers make a positive impact on the world are 11 times more likely to say they plan to stay with their organisations for the long haul and 14 times more likely to say they look forward to coming to work.

Assessing environmental, social, and governance (ESG) performance in the workplace

Measuring ESG performance within the workplace involves evaluating how a company manages and addresses various workplace-related factors. Here are key ways companies can measure ESG in the workplace:

Diversity and inclusion metrics:

  • Demographic diversity: Track workforce composition, including gender, race, ethnicity, age, and other pertinent factors
  • Pay equity: Examine gender and racial pay gaps to ensure equitable compensation
  • Leadership diversity: Gauge the representation of diverse groups in leadership roles and on the board of directors
  • Employee resource groups: Monitor the presence and engagement of employee resource groups supporting underrepresented employees

Employee engagement:

  • Conduct periodic employee engagement surveys to measure job satisfaction, morale, and a sense of belonging
  • Analyse turnover rates and reasons for departures to identify areas for improvement

Health and Well-being:

  • Evaluate and track the 5 dimensions of employee well-being with data and benchmarks such as Great Place To Work Certification™
  • Assess employee access to health and wellness programs, including mental health support
  • Monitor absenteeism rates and employee health outcomes

Training and development:

  • Track investments in employee training and development programs
  • Measure the effectiveness of diversity and inclusion training and other educational initiatives

Workplace flexibility:

Workplace ethics and conduct:

  • Monitor the volume and resolution of ethics-related complaints and concerns
  • Assess the effectiveness of whistleblowing mechanisms and their usage

Supply chain labour practices:

  • Evaluate labour conditions in the company’s supply chain, including suppliers and subcontractors
  • Ensure that suppliers adhere to fair labour practices and ethical treatment of workers

Health and safety compliance:

  • Ensure compliance with workplace safety regulations and standards
  • Implement safety training and reporting systems to prevent accidents and incidents

Employee benefits and perks:

  • Evaluate the comprehensiveness and equity of employee benefit packages, including healthcare, retirement plans, and other perks

Workplace sustainability:

  • Measure and reduce the company’s environmental impact within the workplace, such as energy consumption, waste generation, and water use
  • Promote sustainable commuting options and eco-friendly office practices

Community engagement:

  • Track the company’s involvement in local communities and charitable initiatives
  • Measure the positive social impact generated by workplace-related community programs

Employee rights and labor relations:

  • Assess the strength of employee rights protections, union relations, and collective bargaining agreements where applicable

This comprehensive approach allows organisations to measure their ESG performance holistically within the workplace.

Spotlight on ESG: How leading companies are paving the way

Looking for some ESG inspiration? These three companies are taking steps to ensure their actions match their words, by setting measurable ESG targets and implementing ESG-focused procedures and policies.

Deloitte: Setting the bar for social impact and sustainability

In the Asia Pacific (APAC) region, with employees spanning Australia, Papua New Guinea, and Timor-Leste, Deloitte demonstrates a multi-faceted approach to ESG. The firm commits to sustainability within its policies and tracking its ESG targets, notably with 91% of its energy consumption sourced from renewables in 2022. Deloitte’s operational reviews extend to its supply chains, focusing on sustainable procurement and reducing carbon output.

Deloitte’s collaboration with Indigenous communities in the APAC region fosters nature-based climate solutions and addresses environmental challenges unique to these populations. Employee engagement in ESG initiatives is significant, with a 50% participation rate in volunteering and 41% in regular payroll giving. Moreover, Deloitte’s efficient program administration, decreased by 60%, and impactful fundraising, with $40,000 raised for Afghanistan in just one week, reflect a deep-seated culture of giving and a commitment to impactful action in the region.

Carsales.com: Championing social impact and environmental sustainability

Carsales.com with 700 team members across Australia and New Zealand emphasised its ESG commitments through robust employee engagement and community initiatives. The company fosters a culture of giving by matching employee donations to charity partners via Catalyser and enabling staff to nominate charities, reflecting its dedication to societal contribution and enhancing employee satisfaction.

Carsales.com’s efforts in ethical sourcing and combating modern slavery within its operations underscore its commitment to responsible business practices. Additionally, the company’s focus on sustainability, including achieving carbon neutrality in its Australian operations and promoting diversity and inclusion, aligns with its broader ESG strategy.

These actions not only advance Carsales.com’s social and environmental objectives but also reinforce its position as an employer of choice, fostering a sense of belonging and shared purpose among its workforce.

Jaybro: Embracing a Comprehensive 360° Strategy for ESG

In the APAC region, Jaybro concentrates on ESG principles with a keen focus on reducing its environmental footprint. By creating a ‘green team’, they encourage eco-friendly choices in all business facets. They invest in advanced technology like automation and AI to improve efficiency and customer satisfaction.

With a zero-waste mindset, the team regularly re-evaluates processes for resource conservation. Long-term recycling partnerships ensure meticulous material recovery. Ethical sourcing is enforced through strict supplier vetting, and with diverse supply chains across Australia, India, China, Malaysia and Vietnam, and more, Jaybro guarantees supply continuity.

A robust company culture is maintained by 270 dedicated team members in Australia and New Zealand. Committed to combating modern slavery, Jaybro is transparent about its efforts and partnerships, including its membership with Supply Nation, supporting Indigenous businesses. On the waste management front, Jaybro prioritises reduction and recycling, including innovative on-site initiatives for material reuse, embodying a forward-thinking ethos towards environmental stewardship.

Leveraging technology to achieve ESG goals

Leveraging technology to achieve ESG goals is an ascending trend among companies who are increasingly using digital platforms to both measure and amplify their social and environmental impact. These tools offer a powerful means to report on ESG metrics transparently and drive broader participation in corporate social responsibility initiatives.

Catalyser is at the forefront of this movement in the APAC region, providing innovative solutions that enable organisations like Deloitte and Carsales to engage their workforces in meaningful community programs and embed social impact into workplace culture.

Catalyser does this by providing software platforms including workplace giving, volunteering program management, charity donation cards, as well as consulting services like social impact assessments, strategic support to develop programs and volunteering sourcing services.

Through Catalyser, these companies have joined over 50 other workplaces in harnessing technology to engage over 100,000 employees, culminating in more than $20 million in impactful contributions to charities.

ESG trends

ESG has become a growing focus for companies, as business has become more globalised, consumers demand more from where they purchase goods, and employers demand more from who they work for.

Our research into workplace ESG initiatives has revealed six common themes:

  • Carbon footprint: Climate change will continue to be a priority focus. Companies are examining their renewable energy usage and supply chain impact and setting net-zero emissions goals.
  • DEIB initiatives: Diversity, equity, inclusion & belonging (DEIB) efforts are being embedded into companies’ talent strategies, from hiring through to promotion paths.
  • Interconnected approach: Rather than a top-down approach, companies are seeking ESG engagement and input from employees and stakeholders.
  • Community investment: From farming families within the supply chain to Indigenous peoples impacted by development, companies say they are investing back into local communities.
  • Infrastructure focus: Companies are examining where they operate and whether their facilities and materials meet sustainability standards.
  • Measurement: To avoid greenwashing, companies are putting more focus on tangible tracking and reporting and seeking sustainability certifications.

The impact of ESG on employee satisfaction and retention

When it comes to employee satisfaction and retention, two elements of company culture stand out most: purpose and pride. In fact, Great Place To Work research has found that when employees feel proud to work at a company, they are:

  • 6 times more likely to endorse their workplace to others
  • 2 times more likely to want to stay with the company for a long time
  • 1 time more likely to say it’s a great place to work

And when employees feel like they have a sense of purpose at work, or that their work is more than “just a job,” they are two to six times more likely to stay with their company long-term.

Overall, our 2023 Drivers of Retention survey found that finding “meaning” in your work is the biggest predictor of retention, across generations — more than promotions, recognition, or even wages.

How Do You Involve Employees in ESG?

  1. Foster a culture of trust: Start by building a solid foundation of trust within the organisation. When employees feel trusted, they are more likely to take ownership of their roles and the company’s goals. Trust is the catalyst that transforms compliance into commitment.
  2. Empower grassroots movements: Encourage and support the formation of Employee Resource Groups (ERGs) and committees that are passionate about various ESG aspects. These groups often become the driving force for change, as seen in the proactive response to the Maui fires.
  3. Communicate and educate: Regularly communicate the importance of ESG goals and how they align with the company’s mission. Provide education and resources to help employees understand ESG principles and their impact on the business and society.
  4. Enable autonomy and leadership: Give employees the autonomy to lead initiatives and make decisions relevant to ESG. When employees feel their actions can lead to real change, engagement increases significantly.
  5. Recognise and reward: Acknowledge and reward the efforts of employees and teams who contribute to ESG initiatives. This recognition can take many forms, from company-wide shout-outs to financial incentives.
  6. Provide meaningful opportunities: Create opportunities for employees to participate in ESG activities that have a tangible impact, whether it’s community service, environmental projects, or diversity and inclusion programs.
  7. Lead by example: Leadership should exemplify ESG values in decision-making and everyday business operations. When employees see their leaders committed to ESG, they are more likely to follow suit.
  8. Measure and share success: Regularly measure the impact of ESG initiatives on employee experience, such as Great Place To Work Certification data, and share these successes with the team. Use stories and data to show how their contributions are making a difference.

By integrating these practices, companies can engage employees in ESG in a meaningful way, leading to a more motivated workforce and a stronger, more sustainable organisation.

Challenges and opportunities: The road ahead for ESG in the workplace

By focusing on ESG in the workplace, organisations can do their part for the planet while also delivering improvements to employee engagement, innovation and productivity, and driving business success. But it’s not easy, and you’ll need to make sure everyone is up to the challenge.

Overcoming common obstacles in ESG implementation

Here are just some of the common obstacles that companies encounter when striving to integrate ESG practices — and that your own business will likely need to address along the way:

  • Lack of clear ESG strategy: Without a clear plan, it’s challenging to set meaningful goals and track progress.
  • Data and metrics challenges: You may face difficulties in sourcing, measuring, and reporting ESG metrics, which are essential for transparency and accountability.
  • Integration into business operations: You may encounter resistance to change or difficulty aligning ESG goals with existing processes.
  • Regulatory and reporting complexity: Navigating the evolving landscape of ESG regulations and reporting standards is a significant challenge.
  • Resource constraints: Implementing ESG initiatives often requires significant investments of time and resources. Smaller companies, in particular, may find it challenging to allocate the necessary funds and personnel for ESG efforts.
  • Stakeholder engagement: Engagement with investors, customers, employees, and communities is crucial for ESG success. You may need to address varying stakeholder expectations and concerns.

Leveraging ESG for Competitive Advantage

In spite of the challenges it presents, embracing an ESG-centric approach to business can bestow a lasting competitive edge. As previously mentioned, today’s consumers increasingly insist that the products and services they engage with adhere to rigorous sustainability standards. Enterprises failing to meet this rising demand will inevitably lag behind.

However, differentiation lies in transparency, reliance on science-backed metrics, and an authentic, vulnerable approach to ESG initiatives. By doing so, your company will distinguish itself from the multitude of organisations resorting to greenwashing in their pursuit of outperforming competitors.

Your brand and business will gain more credibility by admitting, “We may not have all the solutions, but here’s what we intend to explore,” rather than presenting convoluted data and making dubious commitments.

ESG – A necessity in the evolving work landscape

ESG principles aren’t just buzzwords, they are a necessity. ESG efforts go beyond corporate responsibility — they’re a potent tool for boosting employee engagement, attracting top talent, and winning over consumers. And when ESG initiatives align with business goals, it’s a win-win scenario that ensures long-term relevance and resilience.

Unlock the power of ESG in the workplace with Great Place To Work Certification

Great Place To Work® Certification™ isn’t just a badge; it’s a testament to your commitment to ESG (environmental, social, governance) values in the workplace. It’s a proven way for employers to measure how employees feel about corporate social responsibility (CSR) initiatives.

By earning Great Place To Work Certified status, you demonstrate to stakeholders — be they investors, job seekers, or employees — that your organisation places the well-being of its people at the forefront. This prestigious Certification is grounded in confidential survey feedback from your employees and follows the Great Place To Work Model — trusted by the Fortune 100 Best Companies to Work For® for over 30 years.

Stakeholders can place their trust in your company’s dedication to ESG values, making it an appealing choice for investment. Discover how to achieve workplace Certification today and showcase your commitment to a sustainable and inclusive workplace.

Rebecca Moulynox

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Great Place To Work® Best Workplaces™ in Australia 2024 Evaluation Methodology

Great Place To Work determines the list using our proprietary For All methodology. To determine the Best Workplaces in Technology list, Great Place To Work analyses the survey responses of tens of thousands of employees from Great Place To Work Certified™ companies in the technology industry.

Our survey enables employees to share confidential quantitative and qualitative feedback about their organization’s culture by responding to 60 statements on a 5-point scale and answering two open-ended questions. Collectively, these statements describe a great employee experience, defined by high levels of trust, respect, credibility, fairness, pride, and camaraderie. In addition, companies provide organizational data like size, location, industry, demographics, roles, and levels. Great Place To Work measures the differences in survey responses across demographic groups and roles within each organization to assess both the quality and consistency of the employee experience.

Statements are weighted according to their relevance in describing the most important aspects of an equitable workplace. Survey data analysis and company-provided datapoints are then factored into a combined score to compare and rank the companies that create the most consistently positive experience for all employees in this industry.

To be considered for the list, companies must be Great Place To Work Certified™ and nominate as a company in the technology industry.

We require statistically significant survey results, review anomalies in responses, news, and financial performance, and investigate any employee reports of company incompliance with strict surveying rules to validate the integrity of the results and findings. 

Categories

These organisations’ assessment is based 100% on employee responses to the Trust Index survey.

  • Micro 10-29 Employees
  • Small 30-99 Employees
  • Medium 100-999 Employees
  • Large 1000+ Employees

Great Place To Work® Best Workplaces™ in Australia 2023 Evaluation Methodology

Great Place To Work determines the list using our proprietary For All methodology. To determine the Best Workplaces in Technology list, Great Place To Work analyses the survey responses of tens of thousands of employees from Great Place To Work Certified™ companies in the technology industry.

Our survey enables employees to share confidential quantitative and qualitative feedback about their organization’s culture by responding to 60 statements on a 5-point scale and answering two open-ended questions. Collectively, these statements describe a great employee experience, defined by high levels of trust, respect, credibility, fairness, pride, and camaraderie. In addition, companies provide organizational data like size, location, industry, demographics, roles, and levels. Great Place To Work measures the differences in survey responses across demographic groups and roles within each organization to assess both the quality and consistency of the employee experience.

Statements are weighted according to their relevance in describing the most important aspects of an equitable workplace. Survey data analysis and company-provided datapoints are then factored into a combined score to compare and rank the companies that create the most consistently positive experience for all employees in this industry.

To be considered for the list, companies must be Great Place To Work Certified™ and nominate as a company in the technology industry.

We require statistically significant survey results, review anomalies in responses, news, and financial performance, and investigate any employee reports of company incompliance with strict surveying rules to validate the integrity of the results and findings. 

Great Place To Work® Best Workplaces for Women™ List Methodology

The Best Workplaces for Women™list is determined using Great Place To Work’sFor All™methodology to evaluate hundreds of Certified™Great Place To Work®organisations across Australia.   

Data is based on over 40,000 employee survey responses from women in Great Place To Work® Certified™ organisations across Australia. 

The survey 

The survey enables employees to share confidential quantitative and qualitative feedback about their organisation’s culture by responding to 60 statements on a 5-point scale and answering two open-ended questions. 

Collectively, these statements describe a great employee experience, defined by high levels of trust, respect, credibility, fairness, pride, and camaraderie. In addition, companies provide organisational data like size, location, industry, and the number of women in the workforce and management positions. 

Considerations 

Great Place To Work analysed the gender balance of each workplace, how it compares to each company’s industry, and patterns in representation as women rise from front-line positions to executive/C-suite roles. 
Survey data analysis and women’s representation figures are then factored into a combined score to compare and rank the companies that create the most consistently positive experience and opportunities for all women, regardless of their role or demographic background.   

Eligibility   

To be considered for the list, companies must be Great Place To Work Certified™. Companies must also employ at least 50 women. We require statistically significant survey results, review anomalies in responses, and investigate any employee reports of company in compliance with strict surveying rules to validate the integrity of the results and findings. 

Please note this list is NOT ranked. 

Great Place To Work® Best Workplaces™ in Australia 2023 Evaluation Methodology

Great Place To Work, the global authority on workplace culture, determined the Best Workplaces™ Australia 2023 List by conducting annual workforce studies through our Trust Index Survey™ and Culture Management platform Emprising®, representing the voices of almost 50,000 employees across Australia.

Employees responded to over 60 survey questions describing the extent to which their organisation creates a great place to work For All™, meaning that the company empowers all individuals to reach their full human potential. Eighty-five percent of the evaluation is based on what employees report about their experiences of trust and reaching their full human potential as part of their organisation, no matter who they are or what they do. We analyse these experiences relative to each organisation’s size, workforce make up, and what’s typical in their industry and region. The remainder of the evaluation is an assessment of all employees’ daily experiences of the company’s values, people’s ability to contribute new ideas, and the effectiveness of their leaders to ensure they’re consistently experienced.

To ensure surveys truly represent all employees, we require enough people in each organisation to respond that results are accurate to a 95% confidence level and 5% margin of error or better. We review any anomalies in survey responses, news and financial performance to ensure there aren’t any extraordinary reasons to believe we couldn’t trust a company’s survey results.

 

Categories

These organisations’ assessment is based 100% on employee responses to the Trust Index survey.

For larger organisations with more than 100 employees, we also use our Culture Audit™ tool, asking organisations to share with us their practices, policies and programs to creating a great workplace For All™ and evaluating the approach they take.

Why do you say in one place your national list scoring is based on 85%/15% and in another place that it is 75%/25%?

We are explaining two different things:

1.  The criteria we evaluate

2.  Where the data comes from