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Human Resources
Are you ready for employees to scrutinize your sustainability strategy?
With a growing number of employees holding their organizations to account over sustainability commitments, the onus is on HR departments to explain a firm’s purpose and impact if they are to attract and retain talent.
In September, Shell CEO Wael Sawan faced a backlash from employees when he announced plans to scale back investments in renewables and low-carbon businesses as part of a strategy to boost profits.
Disgruntled staff issued a rare open letter, expressing their concern about the shift away from green energy and urging Sawan not to reduce investments in renewable energy. “For a long time, it has been Shell’s ambition to be a leader in the energy transition. It is the reason we work here,” said the letter, addressed to Sawan and Shell’s executive committee. The letter was viewed more than 80,000 times on Shell’s internal website, received 1,000 ‘likes’ and prompted a string of responses from other employees.
Shell is not alone. Jeff Bezos, the former CEO of Amazon, was urged in 2019 by thousands of employees to adopt a more ambitious climate plan to reach zero carbon emissions. Staff pointed out the online retailer’s continued use of fossil fuels, its donations to climate-denying politicians, its contracts with oil and gas companies, and its lack of transparency on its environmental impact.
Employee protests have not remained limited to climate targets. Lapses in terms of organizations’ commitment to diversity, equity, and inclusion (DE&I) have recently come under scrutiny. Staff at Netflix staged a walkout in protest of American comedian Dave Chappelle’s comedy special, which was criticized for its content related to the LGBTQ+ community. Disney employees also pressured the company’s CEO to speak up about a law in Florida that restricts classroom discussions of LGBTQ+ related topics.
These incidents underscore the challenge organizations face in managing the gap between employee expectations and corporate realities as they navigate the trade-offs between short-term profits and long-term impact.
A growing number of people are looking for ways to make a positive difference through their work as the world faces unprecedented environmental and social challenges from climate change and biodiversity loss to inequality. They also increasingly expect their employers to align with their personal values and contribute to the greater good of society.
“This has prompted a bit of a flip in how HR has traditionally been viewed. While previously these departments’ roles were to assess talent and decide if they are a good fit for the company, now talent is assessing the company to see if it’s the right fit for them – and their values,” a report by Egon Zender says.
In response, the pressure is on HR departments to communicate the firm’s purpose and values, manage employee demands and expectations around investment in sustainability, and support employees who may experience climate anxiety.
Rising employee activism
Gen Zs and millennials are particularly concerned about sustainability and want employers to help them prepare for the transition to a low-carbon economy. According to a survey by Deloitte, 42% of Gen Zs and 41% of millennials would switch jobs if their employer did not take action on climate change.
Employee activism aimed at holding firms accountable for commitments to sustainable business and diversity and inclusion is also on the rise, facilitated by their ability to amplify their views on social media. It can be risky for firms to ignore these calls for action, says Markus Graf, talent leader of a Switzerland-based multinational.
“Companies that want to be seen as the best employers for talent discuss these topics,” he said. “On social media, these topics generate the highest engagement with likes and comments. We will likely witness increased employee engagement, especially in countries where employees feel there is no fear of retaliation for expressing their views.”
This growing activism and spotlight on an organization’s social and environmental impact has also created a need for HR departments to add new capabilities to facilitate the creation of an integrated sustainability program in collaboration with other business functions.
“Sustainability is the future of work,” Graf said. “HR leaders have a critical role to play in driving change. The ability to work across the company to articulate an enterprise-wide stance on ESG and sustainability will be tremendously important.”
So what can HR departments do to manage employee expectations and get them engaged in shaping and supporting the organization’s sustainability strategy?
Be involved in defining the sustainability strategy
If HR is going to lead efforts to make sure an organization stays true to its sustainability commitments, they must also play a role in shaping strategy. The CHRO must work closely with the CEO to help set a clear purpose and strategic vision to drive change from the top. This prevents the firm from making lofty promises that are not held in the eyes of the employee. It also lends HR more credibility in any discussions they have with employees and management.
“In today’s world, sustainability is no longer a luxury; it’s a necessity, and it’s everyone’s responsibility, not just that of the Chief Sustainability Officer. Leaders at all levels need to be committed to sustainability, and the HR team can play a critical role in driving this change,” said Graf. “There is an expectation from employees for a clear strategy that demonstrates progress.”
One company that has successfully woven sustainability into the heart of its strategy is Finland’s Neste, which transformed itself over two decades from an oil refiner to a leading producer of renewable fuels. Their purpose, “creating a healthier planet for our children”, is a central part of their Employee Value Proposition (EVP). Similarly, Stora Enso, a Finnish provider of renewables products, packaging, and biomaterials, has crafted “Do good for people and the planet” as its purpose statement, while Swedish multinational industrial company Atlas Copco has launched ambitious targets to cut carbon emissions that are validated and approved by the Science Based Targets Initiative.
What links these three companies is that they are based in the Nordics, where there is a strong tradition of allowing and encouraging employees to speak their mind without the risk of facing sanctions.
Solicit employees’ input on sustainability practices
This brings us onto our next point. It’s important to recognize that activists are engaged and passionate employees, not disloyal ones. Understanding their concerns is key to hiring and retaining a new generation of talent, so why not involve them in the decision-making process by soliciting their input and suggestions on sustainability practices? Asking employees why they joined your organization, what makes them excited to come to work, and why they would leave can also help firms understand how they are perceived and allow them to refine their EVP if necessary to attract the right people with the relevant capabilities.
Start by creating channels and platforms for employees to share their ideas, concerns, and feedback. This can be done through employee engagement surveys, employee interest groups, and through reverse mentoring to introduce executives to diverse employee perspectives. Onboarding and exit views are also useful to understand employee values.
Communicate clearly and transparently
As well as helping to craft a clear vision and sustainability strategy, the HR department should communicate these goals clearly and transparently to all employees. It helps if the strategy is translated into a simple document with initiatives that can be tracked and measured. HR teams should provide regular updates on progress, supported by data, and linked to key milestones and dates.
One way to bring an organization’s purpose and values to life is to run workshops. This is something consumer goods giant Unilever has done to help staff better connect the group’s purpose, “to make sustainable living commonplace” to their own personal purpose.
Encourage employee-led initiative groups that promote sustainability
Lastly, sustainability efforts don’t have to just come from the top. Encourage employee-led groups to raise and promote sustainability practices across the organization. Provide them with resources and recognition for their efforts, as well as incentives. For example, some organizations are starting to link employee incentive programs with sustainability targets. This is one way to ensure there isn’t a disconnect between senior executives’ commitments to societal impact and the way they evaluate and reward middle managers.
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