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Sustainability matters in the battle for talent

New data shows that sustainability is an increasingly important factor in attracting and managing talent.

By Jenny Davis-Peccoud

First published on Μαΐου 20, 2013
min read


This article originally appeared on HBR.org. Employees at semiconductor-chip-maker Intel recently devised a new chemistry process that reduced chemical waste by 900,000 gallons, saving $45 million annually. Another team developed a plan to reuse and optimize networking systems in offices, which cut energy costs by $22 million. The projects produced financial and environmental benefits, of course. But just as valuable is the company's ability to energize and empower front-line employees. New data shows that sustainability is an increasingly important factor in attracting and managing talent. Bain & Company recently surveyed about 750 employees across industries in Brazil, China, India, Germany, the UK, and the U.S. Roughly two-thirds of respondents said they care more about sustainability now than three years ago, with almost that many saying sustainable business is extremely important to them. Interest peaks among employees age 36 to 40 — a young group but not the youngest. Employees expect employers to step up and nurture this growing interest. When asked which group should take the lead on sustainability, more respondents cited employers than they did consumers, employees, governments, or all equally. In the developed world, a small but growing segment of what we call "sustainability enthusiasts" view sustainability as a major factor in job choices and are willing to accept lower compensation to work for an employer that meshes with their beliefs. They also want to be involved in developing sustainability strategy. Half of younger employees, about one-fifth of older employees and three-quarters of enthusiasts expect to play a role in how their firms approach the topic. And in a departure from attitudes five or 10 years ago, most employees care more about ensuring that the business operations themselves are sustainable than they do about philanthropic activities. Yet many companies are missing the opportunity to fully engage their employees on this issue. Only one-third of survey respondents characterized their own employer as a clear leader that has fully incorporated sustainable practices, with one-fifth saying their companies have few or no efforts. Leaders in this area, by contrast, do a few things differently. They push employees to put sustainability at the heart of the business. Instead of encouraging people to do their jobs in traditional fashion and perhaps volunteer for philanthropic activities on the side, leading companies make sustainability a core part of the work. UK-based Marks & Spencer launched "Plan A" in 2007, aiming to make the company the most sustainable retailer in the world by 2015 and incorporate sustainability attributes, such as sustainable cotton or wood, into every product it sells by 2020 (currently one-third of its products have Plan A attributes). Ideas for improvements or for entirely new initiatives bubble up from all corners of the organization. For instance, in 2008 Simon Colbeck, head of technology for clothing, was concerned about the huge volume of garments that end up in landfills every year. He suggested teaming up with the nonprofit Oxfam's stores across the UK to resell used clothing. Colbeck's idea got approval from the board and has led to 4 million pieces of clothing being recycled each year, raising £2 million for Oxfam. As a direct result of the plan, called "shwopping", Marks & Spencer has seen a rise in customer traffic and thus further stickiness to its brand, while also helping the firm to recycle more of its products. They hold their employees accountable. Some have even begun to selectively tie compensation to sustainability metrics. Intel links a portion of every employee's variable compensation to attaining environmental sustainability metrics. Higher-level employees, who have a broader job scope and greater ability to affect Intel's performance, receive a higher percentage of their overall compensation at risk through bonus programs. They equip employees with the right tools and training. Statoil, a Scandinavian energy company, launched a climate and energy program in 2011 that nominates 10 senior executives to take part in a year-long program. Upon completion, these participants are expected to identify and respond to future climate uncertainties within their respective areas of responsibility. With top talent in short supply throughout many industries, employee attitudes about sustainable business practices are compelling more companies to take this issue seriously, yielding better business results for those that take action. Articulating a "nobler mission" for a company is a big motivator for employees and a powerful weapon in the war for talent. Jenny Davis-Peccoud leads Bain & Company’s Global Social Impact Practice, including the firm’s externship program. She is also a senior director of the Global Organization practice.

This article originally appeared on HBR.org.

Employees at semiconductor-chip-maker Intel recently devised a new chemistry process that reduced chemical waste by 900,000 gallons, saving $45 million annually. Another team developed a plan to reuse and optimize networking systems in offices, which cut energy costs by $22 million.

The projects produced financial and environmental benefits, of course. But just as valuable is the company's ability to energize and empower front-line employees. New data shows that sustainability is an increasingly important factor in attracting and managing talent.

Bain & Company recently surveyed about 750 employees across industries in Brazil, China, India, Germany, the UK, and the U.S. Roughly two-thirds of respondents said they care more about sustainability now than three years ago, with almost that many saying sustainable business is extremely important to them. Interest peaks among employees age 36 to 40 — a young group but not the youngest.

Employees expect employers to step up and nurture this growing interest. When asked which group should take the lead on sustainability, more respondents cited employers than they did consumers, employees, governments, or all equally. In the developed world, a small but growing segment of what we call "sustainability enthusiasts" view sustainability as a major factor in job choices and are willing to accept lower compensation to work for an employer that meshes with their beliefs.

They also want to be involved in developing sustainability strategy. Half of younger employees, about one-fifth of older employees and three-quarters of enthusiasts expect to play a role in how their firms approach the topic. And in a departure from attitudes five or 10 years ago, most employees care more about ensuring that the business operations themselves are sustainable than they do about philanthropic activities.

Yet many companies are missing the opportunity to fully engage their employees on this issue. Only one-third of survey respondents characterized their own employer as a clear leader that has fully incorporated sustainable practices, with one-fifth saying their companies have few or no efforts.

Leaders in this area, by contrast, do a few things differently.

They push employees to put sustainability at the heart of the business. Instead of encouraging people to do their jobs in traditional fashion and perhaps volunteer for philanthropic activities on the side, leading companies make sustainability a core part of the work.

UK-based Marks & Spencer launched "Plan A" in 2007, aiming to make the company the most sustainable retailer in the world by 2015 and incorporate sustainability attributes, such as sustainable cotton or wood, into every product it sells by 2020 (currently one-third of its products have Plan A attributes).

Ideas for improvements or for entirely new initiatives bubble up from all corners of the organization. For instance, in 2008 Simon Colbeck, head of technology for clothing, was concerned about the huge volume of garments that end up in landfills every year. He suggested teaming up with the nonprofit Oxfam's stores across the UK to resell used clothing. Colbeck's idea got approval from the board and has led to 4 million pieces of clothing being recycled each year, raising £2 million for Oxfam. As a direct result of the plan, called "shwopping", Marks & Spencer has seen a rise in customer traffic and thus further stickiness to its brand, while also helping the firm to recycle more of its products.

They hold their employees accountable. Some have even begun to selectively tie compensation to sustainability metrics. Intel links a portion of every employee's variable compensation to attaining environmental sustainability metrics. Higher-level employees, who have a broader job scope and greater ability to affect Intel's performance, receive a higher percentage of their overall compensation at risk through bonus programs.

They equip employees with the right tools and training. Statoil, a Scandinavian energy company, launched a climate and energy program in 2011 that nominates 10 senior executives to take part in a year-long program. Upon completion, these participants are expected to identify and respond to future climate uncertainties within their respective areas of responsibility.

With top talent in short supply throughout many industries, employee attitudes about sustainable business practices are compelling more companies to take this issue seriously, yielding better business results for those that take action. Articulating a "nobler mission" for a company is a big motivator for employees and a powerful weapon in the war for talent.

Jenny Davis-Peccoud leads Bain & Company’s Global Social Impact Practice, including the firm’s externship program. She is also a senior director of the Global Organization practice.