In an era where corporate responsibility increasingly intersects with every aspect of business, understanding employee perspectives on Environmental, Social, and Governance (ESG) practices has never been more crucial. KPMG Malta's recent report Walk the Talk, on employee expectations and experiences on ESG provides valuable insights into this evolving landscape, providing a deep dive into the workforce's views, awareness, expectations, and experiences concerning ESG initiatives. The sentiment within Malta echoes a global trend where ESG is not just a nice-to-have, but a fundamental aspect of modern business practice that employees and job seekers prioritise highly.

The rising demand for ESG engagement in business

A striking 96% of survey respondents underscore the importance of businesses actively addressing ESG issues, as they are of the opinion that it is ‘moderately important’ to ‘extremely important’ for businesses to play a role in actively addressing ESG issues. These findings are reflective of a wider demand for businesses to be held accountable for their impact on society and its people, as well as the planet.

Employee reflections on ESG in the workplace

Despite this high level of concern, 26% of employees report a relatively low awareness of their organisation's ESG initiatives, revealing a significant communication gap. Furthermore, the choice to work for a company that aligns with their ESG values is so critical that 21% of employees have considered leaving their current positions for organisations with better ESG performance.

Claudine Borg Azzopardi, Partner, People and Change Advisory Services, KPMG Malta.

The ESG gap: Workplace expectations versus experiences

The survey highlights that 93% of employees and job seekers consider it moderately to extremely important for their workplace to perform well on ‘Social’ issues; ‘Governance’ (92%) and ‘Environment’ (88%) follow closely. However, only 58% of employees rate their current workplace’s performance on ‘Social’ as ‘good’ or ‘very good’; the situation is marginally better for ‘Governance’ (61%), while worse (42%) for ‘Environment’. This points to a gap between the expectations and experiences of employees, suggesting a need for businesses to align their ESG practices more closely with employee expectations.

ESG in talent attraction

When it comes to attracting talent, ESG’s influence is undeniable. The survey highlights that 58% of job seekers, including employees who are ‘passively open to opportunities’ and ‘active job seekers’, research a company’s ESG values and performance when considering prospective employment. Moreover, 81% of respondents believe that a prospective employment organisation’s ESG values and performance have a moderate to extreme influence on their decision to apply for a position.

The survey findings provide interesting insight regarding how employees and job seekers weigh the importance of an organisation's ESG performance against financial compensation when considering employment opportunities. In fact, a willingness to accept lower compensation for better ESG performance was noted, which may signal a shift in workforce priorities. For a significant portion of the job market, the quality and impact of the work environment, along with the ethical standing of the employer, are crucial factors in job selection. This shift might encourage companies to communicate their ESG initiatives and achievements more openly to attract like-minded job seekers. 

This report underscores recommendations from both employees and job seekers on enhancing organisations' ESG performance, emphasising the alignment of values with behaviour, a concentrated focus on what matters, robust employee engagement, enhanced education and awareness, alongside the necessity for stricter regulations and enforcement.

Rachel Decelis, Associate Director, Environmental, Social & Governance, KPMG Malta.

Additionally, the report defines four critical action points for leaders aiming to address workforce expectations and improve ESG performance, namely: (1) discerning what ESG topics matter most to an organisation and its stakeholders, (2) rigorously measuring these aspects, (3) implementing strategies for improvement, and (4) actively communicating and engaging with employees and other stakeholders to foster a cohesive and transparent ESG culture. These recommendations not only aim to elevate the ESG performance of organisations but also seek to embed these values deeply into their day-to-day operations. In doing so, organisations can not only improve their ESG performance, but also position themselves as the employer of choice.

Should you wish to discuss further, contact Claudine Borg Azzopardi at cborgazzopardi@kpmg.com.mt and Rachel Decelis at racheldecelis@kpmg.com.mt.