With the current season being prime for companies receiving and working on their improved Environmental, Social and Governance (ESG) ratings, perhaps it’s time to shine some light on why climate employee engagement has never been more important.
Climate employee engagement has a significant influence on an organization’s ESG ratings, which are used by investors, stakeholders and rating agencies to assess a company’s sustainability and ethical performance.
We see from our customers that to get the best possible ESG ratings it’s absolutely critical to cultivate a culture of climate-conscious employees - and this article aims to shine some light on why.
Environmental Impact (E)
Climate employee engagement can significantly influence your organization's environmental impact by fostering a culture of sustainability and responsible resource management. Engaged employees actively contribute to reducing their carbon footprint through energy conservation, waste reduction, and eco-friendly practices.
-
Reduced Carbon Footprint
Engaged employees who actively participate in sustainability initiatives are more likely to implement energy-saving practices, reduce waste, and support renewable energy adoption within the organization. These actions can lead to a decrease in greenhouse gas emissions and a lower carbon footprint, which positively impacts the environmental component of ESG ratings.
-
Innovative Sustainability Initiatives
Employee engagement often results in innovative ideas for reducing environmental impact. This innovation can manifest in the form of new products, services, or processes that are more sustainable and eco-friendly, ultimately contributing to a higher environmental score in ESG ratings.
How we at CO2HERO walked the talk:
We at CO2HERO found our little twinkle of innovation through competing with each other on who can save the most carbon through our climate-conscious actions. It helps us to track our progress through these leaderboards.
Competition and rewards were the key for us to get internal engagement going. Challenging your colleagues and competing for green gifts was at the center of our campaigns. We won bags made out of recycled materials, and some green skincare.
Social Responsibility (S):
Climate employee engagement has a profound social impact within your organization, positively affecting workplace satisfaction and community engagement. Engaged employees often experience higher job satisfaction as they align with the company's sustainability values, fostering a more harmonious and fulfilling work environment.
-
Workplace satisfaction
Engaged employees tend to be more satisfied with their work, as they’re aligned with the organization’s values, mission, and vision. A positive workplace environment driven by climate engagement can lead to improved employee morale and well-being, which positively impacts the social components of ESG ratings.
-
Community Engagement
Climate employee engagement can extend beyond the workplace to involve employees in community based environmental and social initiatives. This community engagement reflects positively on the organization’s social responsibility efforts, contributing to a higher score in this category.
The CO2HERO way:
Recently, we at CO2HERO participated in taking climate challenges to clean up our surroundings, like recycling correctly, reusing and eating vegetarian. These initiatives resulted that at the end of the month on a rainy Saturday, we collectively decided to clean up the streets around our office. 5 people participated, and collectively we collected over 9,3 kilos of CO2.
But these efforts have created a domino effect - inspiring more engagement and getting compliments from people at our office to strangers in the street.
Clean-up days are now a regular social event for us to participate in every month.
Corporate governance (G):
Climate employee engagement plays a pivotal role in shaping corporate governance practices within an organization. Engaged employees often stimulate greater transparency and accountability as they demand and participate in open discussions about sustainability goals, progress, and governance structures.
-
Transparency and accountability:
Organizations that involve employees in climate initiatives often demonstrate greater transparency and accountability in their governance practices. This can include sharing information about sustainability goals, progress and governance structures, which leads to a higher score in the governance component of ESG ratings. Bonus points if your data is third-party verified by an accounting firm or a consultancy.
-
Risk management:
Engaged employees are more attuned to climate-related risks and opportunities. Their involvement can lead to better risk assessment and mitigation opportunities. Plus, involving your employees leads to better mitigation strategies, which are factors that rating agencies consider when evaluating corporate governance.
A final word for your CFO:
A higher ESG rating can attract socially responsible investors, reduce financing costs, and enhance the organization's reputation among stakeholders, ultimately contributing to long-term sustainability and competitiveness.
Employee climate engagement isn't just an environmental initiative; it's a strategic imperative for our organization's financial health and sustainability. By fostering a culture where employees actively participate in climate-related initiatives, we can drive cost efficiencies, reduce risks, and enhance our reputation, all of which have direct financial implications.
About CO2HERO
Boost your team's efforts in tackling climate change with our user-friendly software. By involving everyone, you can make your company more environmentally friendly while also cutting costs. Our tool is designed to help your organization thrive in sustainable ways. Curious about how it works? Schedule a demo with us.
Together, we can pave the way for a greener and more responsible future. Act today and be part of the change!
Sources:
Clark, G. L., Feiner, A., & Viehs, M. (2015). From the Stockholder to the Stakeholder: How Sustainability Can Drive Financial Outperformance. Oxford University Press.
Dowell, G., Hart, S., & Yeung, B. (2000). Do corporate global environmental standards create or destroy market value? Management Science, 46(8), 1059-1074.
Kolk, A., & Perego, P. (2010). Determinants of the adoption of sustainability assurance statements: An international investigation. Business Strategy and the Environment, 19(3), 182-198.
Schaltegger, S., & Burritt, R. (2014). Measuring and managing sustainability performance of supply chains. Supply Chain Management: An International Journal, 19(3), 232-241.
Tschopp, D., & Nastanski, M. (2019). Linking sustainability and financial performance: A study of publicly traded companies. Journal of Sustainability Research, 1(2), e190011.
