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13 Jan 2022
by Tim Brook

Ways to ensure your reward strategy is keeping pace with employees’ feelings towards ESG credentials

Company Environmental, Social and Governance (ESG) credentials have a big, and growing, impact on how people feel about their employer, or the organisation they are considering joining.




According to a 2021 survey from office design company Morgan Lovell, more than six in 10 office workers want to see their employers demonstrating a commitment to ESG goals. Companies are responding to this by placing a greater emphasis on ESG within their reward strategies, as well as across other parts of the business.

Separate figures from KPMG’s Paying for sustainable growth (2021) report revealed that 61% of FTSE 100 companies incorporated ESG measures in their bonus and/or Long Term Incentive plans, an increase from 32% in 2020.

However, such policies can only prove successful if employees understand the organisation’s ESG credentials and objectives. And the signs are that there is a significant knowledge gap; the Morgan Lovell survey also revealed that the term ESG meant nothing to a fifth of the 1,000 employees who responded.

In our experience, it’s therefore sensible to take a three-step approach to ensuring your reward strategy keeps pace with employee attitudes to ESG.

1. Educate

Building your company ESG credentials into your reward strategy requires a certain level of employee awareness about both the organisation’s current ESG stance, and how it plans to improve its ESG credentials going forward. But that’s not the only reason to make sure your employees know where you stand on the ESG front.

From carbon emission reduction programmes to charitable initiatives, company efforts to improve ESG metrics often depend on employee engagement.

So clear and effective communication is vital to the success of your overall ESG strategy, as well as the process of weaving these values into other parts of the business.

2. Involve

One of the best ways to increase employee engagement with ESG goals is to help your workforce feel more involved in the process by seeking their input on how existing initiatives are working and what direction they would like the company to take.

Many companies are already doing this to some extent. Industry figures indicate that almost half of employers globally had already started asking employees for their views on ESG issues by the end of 2020.

But whether you have started or not, using multiple channels – from one-off forums to regular engagement surveys – will increase your chances of building a more accurate picture of employee attitudes across the organisation.

Gathering insights and data on your workforce is also key to keeping your ESG credentials and your reward strategy in sync. Tools such as EQ’s Amplify, which gives you a three-dimensional view of your employees by combining internal figures with data from more than 28 million households, can add valuable depth and precision to your findings.

3. Implement

Once you have both ensured your employees understand the company’s ESG credentials and gathered sufficient information about their opinions on the subject, you should be in a good position to use these insights to shape your reward strategy accordingly.

Measures you might want to consider at this stage include improving the options available to those interested in salary sacrifice charitable giving and offering – or highlighting existing – ethical investment options within the pension, ISA or LISA schemes.

Other popular initiatives with an ESG slant include Cycle to Work and Electric Vehicle salary sacrifice schemes, which are designed to help employees lower their own personal carbon footprints. While volunteer days during which employees get the chance to actively support the local community are also of value.

To encourage employees to go the extra mile, some companies are beginning to introduce recognition programmes that reward employees who make outstanding environmental or social contributions to the business.

The author is Tim Brook, head of engagement & platforms at EQ HR Solutions.

This article is provided by EQ HR Solutions.

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