Environmental, social and governance (ESG) issues have risen to the top of the agenda for businesses across the world. With investors, governments and citizens demanding strong performance in this area, it is becoming an increasingly important factor in talent acquisition too.
There is now a consistent increase in corporate ESG activity across businesses of all scales and sectors. According to a recent KPMG survey, the share of the top 100 companies reporting on ESG in Ireland has jumped from 78 per cent in 2017 to 95 per cent in 2022.
“We are increasingly seeing organisations setting carbon-reduction targets in order to align with global net-zero ambitions and implementing carbon-reduction strategies to ensure these targets are not missed,” says Russell Smyth, head of sustainable futures at KPMG.
The firm’s 2022 survey of sustainability reporting found 87 per cent of the top 100 companies’ sustainability reports included carbon-reduction targets, while climate risk assessments are also becoming increasingly important, with two-thirds of top 100 Irish companies surveyed now undertaking them. That’s in both the public and private sectors.
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Such activity is becoming increasingly important to talent acquisition and retention strategies too.
“As the potential candidate pool evolves to favour a more climate-conscious society, so too must businesses in order to maintain a competitive edge and attract and retain talent,” says Smyth.
He points to the 2021 EPA report Climate Change in the Irish Mind by way of example, with 45 per cent of respondents saying they had punished companies that were opposing steps to reduce climate change, by not buying their products.
“ESG has gone from a nice-to-have to integral to long-term financial success and CEOs increasingly understand that embracing ESG is key to securing talent, strengthening their employee value proposition, attracting loyal customers and raising capital,” he explains.
He has seen it first hand. Within KPMG Ireland’s own graduate recruitment campaigns, ESG and sustainability “is now one of the most asked about questions from candidates”, he says.
As ESG activities move mainstream however, such activity becomes less of a competitive advantage in relation to attracting talent. Get it wrong, however, and your business will suffer.
“When it comes to ESG and sustainability, credibility is key,” explains Smyth. “Greenwashing has most recently been popping up as stakeholders question the authenticity of corporates’ sustainability and ESG approaches. When it comes to talent acquisition consistency, transparency and authenticity are key to remaining competitive.”
Some cynical employers may be hoping that if the labour market softens, in the event of a downturn next year perhaps, candidates will care less about their green credentials, enabling them to make less effort. Not so, says Smyth.
“When Covid hit, commentators expected climate change, sustainability and ESG to lose out as attention was diverted to public health,” he says.
“In reality, exactly the opposite happened, with a significant increase in corporate ESG activities during the pandemic years as corporations saw the value of resilience and the importance of strengthening their social licence to operate. We are seeing similar responses in the current economic environment, with corporates recognising that adopting renewable energy or energy-efficiency measures is both green and economically rational.”
Finally, as ESG is becoming codified in law, through European Union regulations adopted in Ireland, corporates have no option but to keep ESG on the agenda to comply with laws and to keep their competitiveness. As such, “this is no longer an optional nice-to-have”.
Smyth believes 2023 will be the year corporates make the transition from targets to action.
“It remains to be seen how smoothly this transition will work, with many businesses still struggling to source and understand their emissions data, evaluate their decarbonisation pathways and find the right economic solution to adopt.”
An upshot is that career prospects in the ESG space have never looked so good.
“ESG professionals are in high demand and we expect that to continue over the coming years. Robert Walters, a global recruiter, estimated that in 2021 alone there were 1,600 new jobs in ESG and sustainability in Ireland,” says Smyth.
“As well as demand from the professional services industry, as corporates embed ESG into their operations they will need dedicated resources which bring subject matter expertise to both guide ESG adoption, as well as to upskill their teams. ESG was a prominent topic at the Compliance Institute’s annual conference, with panellists declaring that ‘all organisations will be sustainability organisations’ in the future.”