ESG U-Turn: Be warned, it could damage your employer brand Environmental, social and governance (ESG) initiatives have continued to attract considerableattention in recent months.

In some quarters, there has been a noticeable re-evaluation of earlier commitments, with a number of organisations quietly adjusting their approach. While the underlying reasons vary, evidence suggests that financial constraints and shifting budgetary priorities are often central to the recalibration.

What is perhaps less frequently acknowledged is the potential longer-term impact that a retreat from ESG commitments may have on workforce engagement. There is growing evidence that employees are placing increased importance on the environmental and societal conduct of theiremployers - an outlook that extends well beyond younger demographics. Across age groups and professional backgrounds, individuals are demonstrating greater awareness of corporate values and ethics. At a time when rising employment costs are constraining employers' ability to offer purely financial incentives, a company's ESG credentials are likely to carry greater weight in both attracting and retaining talent, not only in the near term but over the longer horizon. So, what impact will an ESG reversal have on a company, its existing staff, and future workforce? A disconnect with the workforce

The ESG agenda is already driving a wedge between employers and their staff. While a growing number of firms are reigning in their investment, the people who work for them are expecting businesses to do more. In fact, in a recent study of employees across the UK, Robert Half found that the majority (60%) of workers believe organisations need to do more to support environmental, social and governance changes. A further 61% said that those firms that are turning a profit should be investing more in ESG. In essence, this means that businesses are going in the opposite direction to the expectations of the UK workforce, exacerbating the disconnect between employers and employees that has already been growing in what has been a tough economic climate for all. Those that believe they can take an on-the-fence approach and hide from the subject will also soon face as much scrutiny as those reversing their investment and commitment. Indeed, more than two-thirds (68%) of the UK workforce believe that companies need to be transparent about their approach to, and activity for, ESG. A potential talent exodus

These statistics should be enough to demonstrate the critical importance of environment, social and governance strategies, but for those companies wondering 'so-what' here's exactly why it should be a high priority. No matter the sector or size of a business, its people are its biggest asset. Yes, employment costs are
increasing, but losing high-performing talent isn't ideal for any company. Yet, our research suggests
it could well be on the cards for some.

When we asked workers what action they would take if their current employer wasn't doing enough on ESG, more than a third (39%) said they would find a new job. This sentiment was noted broadly across all ages, though it was more prominent in the younger generation, with more than half (56%) of those between the ages of 18 and 34 likely to look for a new employer if their current company wasn't doing enough to move the dial on ESG.

This sentiment is growing across the workforce, though. Almost half (48%) of people surveyed said that they care more about their employers' environmental impact now than they did three years ago. While this is more widely felt in those aged 18-34 (61%) it was also cited by 43% of 35–54-year- olds, which does suggest that this is becoming a much broader issue beyond the younger generation. Damage to future hiring plans
Aside from the risk of losing existing talent, our data shows that employers will increasingly struggle to recruit if they don't demonstrate and stick to their commitment to environmental, social and governance activity. In fact, 47% of those we surveyed revealed that they would look at the ESG activity of an organisation before they consider working there. A further 61% of people would consider the values of a business if they were offered two jobs with a similar salary.

People clearly want more than just a pay check. If we look at the data, almost half (48%) of workers revealed that they would never work for an employer they thought was unethical, regardless of the pay on offer. This increases to 55% for 18–34-year-olds and 51% of females. More than half (53%) of people in the UK also stated that they could never work for an organisation where they disagreed with their core values. More than a nice to have An environmental, social and governance strategy – underpinned by demonstrable action – is no longer merely a desirable addition, but an essential component of any credible approach to attracting and retaining talent. While much has been made of the broader commercial advantages of ESG – particularly its capacity to strengthen market positioning and appeal to stakeholders with shared priorities – its role in shaping the employer proposition is becoming increasingly difficult to ignore.

As more firms look at reversing their commitments, full consideration is required to the longer-term impact this will have on every aspect of a business, including its people. Listening to the wants and needs of the workforce is a small but significantly valuable tactic. Doing so gives companies the advantage when it comes to building a strong and highly skilled workforce. The fact that so many firms are making a U-turn on ESG suggests that many aren't hearing what their people are saying, and it is very likely they will soon feel the impact.