'It's unfortunate that it takes a crisis for people to put sustainability front and centre'
Most organizations today talk about efforts to diversify the workforce, and offer great pledges around ESG (environmental, social and governance) initiatives.
And in 2023, buy-in from executives around the business case for sustainability jumped from 21% acceptance in 2022 to 63%.
Why? Executives are coming around to the idea that spending on ESG is not a business expense but rather an investment, according to a new survey done by Capgemini, a business transformation consultancy.
Today, only 22% of C-suite members view it as a cost, versus 53% a year ago.
The survey involved 2,151 executives employed at 718 organizations each with more than $1 billion in annual revenue across 13 countries: Australia, Canada, France, Germany, India, Italy, Japan, the Netherlands, Norway, Spain, Sweden, U.K., and U.S.) and in 11 industries, in August and September this year. It also heard from 6,500 consumers older than 18 across the same 13 countries.
ESG and the ‘threat to humanity’
With climate change costing $2.86 trillion globally, according to Capgemini, the impetus to take positive action is growing among organizations.
“Climate change really is the biggest threat to humanity; I think people are recognizing that,” says Eva Musso, head of sustainability and government relations at BASF Canada in Toronto.
“It’s making people rethink their choices and driving demand from consumers as well as legislators to be more sustainable. It’s unfortunate that it takes a crisis for people to put sustainability front and centre but more companies are adopting sustainability and consumers continue to become more aware.”
Sustainability and government regulations
Besides consumer demand, the survey also revealed that 64% of executives said a major factor for adopting sustainability was complying with government regulations, up from 51% in 2022.
With all the weather events, organizations are recognizing some transformations have to be done, according to Aruna Jayanthi, managing director, Latin America and Canada, at Capgemini in New York.
“Overall, globally, and more so in Canada, the perception that sustainability is an added cost to organizations and ‘It’s expensive to do and we have to do it because somebody is asking us to,’ that is disappearing everywhere, especially in Canada, and I think people now start seeing that this is a genuine business case.”
More than half of employers in Canada believe they are performing better than their peers when it comes to ESG initiatives, according to another study.
Canada does well with DEI
For Canada, when it comes to corporate attitudes around the social aspect of diversity and inclusion, the survey showed that it is much further ahead of world counterparts in these efforts.
“That was one of the points that stood out that Canada was at 80% of diversity hiring versus the global average of 63%,” says Jayanthi.
In addition, 70% of organizations train their workforce on diversity and inclusion while another 65% of those surveyed in Canada have diversified the executive makeup.
“Canada is very diverse. I was living the past few years in Toronto, and I see the level of not just my personal judgment but even the fact that our highly diverse society, nearly a quarter of your total population is immigrant-driven, and perhaps that reflects in the society.
“What I also found there was just a heightened consciousness that diversity brings a better labour pool, it brings more value to the teams,” says Jayanthi.
These numbers are also not surprising, says Musso.
“In general, multiculturalism is such a part of the Canadian identity and I think it’s fair to say Canada just does a good job of incorporating multiculturalism, a great job, actually. We have one of the highest immigration rates, and we really welcome different identities and try to adopt their cultures and perspectives. I think that’s quite a reflection of Canada at large.”
Improving DEI at work
There are a number of ways organizations can get even better at DEI, says Musso.
“We’re working on asking people to voluntarily self-identify, and I think that’s something that a lot of companies are working on, and it just allows better tracking of our workforce.”
As well, engaging with employee resource groups (ERGs) helps bridge any gaps between different employees, she says.
“For example, I’m the executive sponsor for Black, Indigenous and multiculturalism resource groups, so those are staff-lead, which is supported by executives, and they really foster a sense of community and help employees develop both personally and professionally but also create a network where they have coworkers with a similar background.”
Organizations should be mindful that they are not participating in “wellbeing washing” by providing inauthentic benefits, says two senior HR leaders.
Attitudes around greenwashing
When it came to perceptions about corporate greenwashing, Canada also displayed a “healthy skepticism” to what organizations are saying as 43% of consumers surveyed said they perceived this is happening. The worldwide number came in at 33%, found the survey.
“If you see the age profile, there’s a lot of young people in Canada, especially coming from immigrants so there is a higher degree of skepticism in the millennial and the Gen Z population. That also reflects Canada’s young society in many ways but it’s a healthy skepticism,” says Jayanthi.
Those numbers jumped when it came to younger cohorts as 57% of gen Z and 47% of millennials believed greenwashing was happening widely.
“It’s a good thing that consumers are suspicious — the more we understand as consumers the better and it’s important to ask the hard questions,” says Musso.
Role for HR in managing ESG
In order to combat this perception, there are some steps organizations can take, according to Musso.
“Transparency and accountability are important but also consumer education. It’s really difficult to navigate all the claims that are going on and, it’s one thing to publish your pledges but we also need to focus our plans and our progress reports that are getting us toward achieving those pledges, so that consumers can really see how companies are doing and what they’re doing.”
For HR professionals, the goal of driving ESG programs rests squarely within its purview, says Jayanthi.
“HR is at the forefront of taking these actions, recommending them, benchmarking them across the country and industries and then implementing them. It’s big for HR on the social side, on the environment side as well — there is a lot that HR can do in order to get engagement from the employees.”
But the department also needs help to fully accomplish all these goals, she says.
“It’s not just one or two people or a handful of people driving these initiatives across the organization — you get success when you are able to engage the entire organization like with a charity: you can give money and do something but it’s better for everybody to actually work on it and get your people engaged in voluntary work and environmental impact initiatives.”
HR has a big impact in building pride in the organization, says Jayanthi, “in getting employee loyalty up, in getting employee engagement up. ESG initiatives were a big part and I think HR really has to be at the forefront of that.”
