Improving Employee Retention and Happiness Through ESG


ESG initiatives are a staple in the modern business world. Both employees and investors look at a company’s ESG to determine whether or not these initiatives align with their interests.

It’s possible that companies investing in ESG initiatives have happier employees, thus improving retention rates and reducing employee turnover. How does ESG impact employee retention and happiness in the workplace?

What is ESG?

ESG is an acronym that stands for environmental, social and governance. The term is used to describe a set of criteria to measure a company’s behavior, which are reviewed by investors to determine if a company is worth investing in.

For example, environmental standards would highlight what a company is doing to protect the environment, such as implementing renewable energy sources or participating in a recycling program.

Social responsibility is another important aspect of ESG. Social aspects of ESG will look at a company’s interactions with internal and external stakeholders. Does the company donate to relevant nonprofit organizations, or hold high standards for workplace conditions? Do companies pay their employees livable wages?

Governance involves a few key elements, such as companies’ accountability to stakeholders, if they’re complying with applicable rules and regulations in the industry and ensuring companies are using accurate and transparent accounting methods.

ESG Can Improve Employee Satisfaction and Retention

It’s well-known that today’s existing and potential employees care about the companies they work for, including what they do for the environment, if they offer good compensation and benefits and if they’re a company with integrity.

All of these factors are related to a company’s ESG. Companies lacking in the ESG department might not find the best, most qualified candidates, while companies with a good ESG track record — like Microsoft, Alphabet, Paypal and Nvidia — are more likely to.

How Companies Can Improve Employee Happiness and Retention Through ESG

Companies can influence their employees’ job satisfaction and the company’s retention rate by taking on various ESG initiatives. Below are some examples of ESG initiatives organizations can leverage to keep top talent and bolster employee satisfaction.

Create Healthy Workplace Conditions

A healthy workplace is a happy workplace. If companies want to improve employee satisfaction, they should ensure that employees are working in a comfortable work environment, whether remote or in the office. For example, ensuring that employees are not working in an office with poor indoor air quality (IAQ) is a good place to start.

Studies show that air in the average American home is even more polluted than outdoor air. Since offices are basically an employee’s second home, it makes sense for companies to improve IAQ, in addition to other workplace conditions like comfortability, efficiency and accessibility.

Install Renewable Energy Sources

Another environmental initiative companies can undertake is investing in renewable energy sources. Research suggests that big business is responsible for adding 6.3 billion tons of carbon emissions every single year, which is causing global warming and thus, climate change.

Organizations can reduce their carbon footprint by installing energy-efficient appliances, HVAC systems and lights to ensure they’re saving energy. This can also reduce costs for the company.

Offer Ongoing Learning Opportunities and Well-Being Programs

Employees want to know their employer is investing in their professional development. Therefore, companies should offer ongoing training and learning opportunities for their team members, as it can help them upskill and play a more valuable role in their organization.

It’s also crucial for companies looking to bolster ESG to look into well-being and health-related programs. Employees who care for their physical and mental health are more likely to be happy in their positions and enjoy working for their companies.

Give Back to the Local Community

Lastly, it’s wise for companies to consider connecting with their local communities and finding opportunities to donate to a good cause. Many employees want to know if their companies are doing right by their communities, and donating to nonprofits in need is a great ESG initiative to take on.

Companies and their employees benefit from charitable giving because it can increase their customer base, foster customer loyalty and even create new marketing opportunities. According to Deloitte, young employees feel enthusiastic about corporate donations, and even donate more year-over-year (YoY) than other age demographics. If companies donate to charity, they can retain young employees and increase their job satisfaction.

Fostering Employee Satisfaction and Retention With ESG Initiatives

Ultimately, ESG initiatives can play a major role in a company’s success. Consumers and investors are paying more attention to a company’s philanthropic choices and other ESG factors to determine whether or not they want to buy their products or services or invest in the company. Employee satisfaction can lead to better retention rates, allowing companies to thrive in a competitive marketplace.


Leave a Reply