80% of investors worldwide believe that ESG ratings are important, making it a crucial parameter for long-term business & ESG strategy.
The shift towards sustainability and growing consideration of ESG policies and practices are also affecting the retail industry.
Improving ESG ratings through effective workforce planning can provide a competitive advantage and enhance the financial performance of Retail companies.
Effective execution of ESG initiatives in Retail can reduce operational costs like raw-material expenses and the cost of carbon or water, which will improve operating revenues by up to 60%.
The Growing Importance of ESG in Retail
The retail sector is a key contributor to greenhouse gas emissions, with the average store generating about 4,000 metric tons of CO2 annually. With the world’s focus shifting to climate change and sustainability, retail companies must address their carbon footprint to remain competitive and responsible.
ESG management can also help improve a company’s reputation and brand image, attract customers who prioritize sustainability, and even reduce operational costs.
According to a study by Harvard Business School, companies with high ESG ratings outperform their peers in the stock market, with an average 4.8% higher return on equity.
Some of the reasons Retail companies need to focus on ESG goals are:
- Consumer demand: Environmental and socially conscious Millennials and Generation Zs are influencing consumers to seek out brands taking part in the sustainability movement.
- Investor interest: ESG criteria are increasingly used by investors and REITs to judge which companies to back. Corporate social responsibility is also an essential factor that investors highly prioritize.
- Regulation: New regulations and reporting standards demand more credible corporate disclosures increasing pressure on corporate boards and leaders to enhance their ESG skills.
Addressing the ESG Talent Gap in Retail Industries
Despite the increasing importance of ESG, there is a significant talent gap in the retail industry. Many companies struggle to find candidates with the necessary skills and knowledge to achieve their ESG goals.
According to a recent survey, 78% of executives believe the ESG talent gap affects their company’s ability to meet its sustainability goals.
Retailers can focus on developing ESG as a workforce strategy to address the talent gap in their industries. This involves incorporating Environmental, Social, and Governance issues into their brand identity, with talent attraction and retention being a benefit.
Another way to narrow the ESG talent gap is by harnessing employees’ willingness to upskill. Companies should look for employees with strong analytical skills, adaptability, a global perspective, and a passion for sustainability.
Reskill/Upskill Employees for ESG Roles to Achieve ESG Goals
ESG workforce planning requires a new way of thinking involving specific skills that can be learned.
Understanding critical job roles requirement based on specific ESG focus areas can help build efficient teams with defined workloads.
Since this talent pool did not exist 20 years ago, the ESG planning team must assess candidates based on what they could do rather than what they have done.
Reskilling/Upskilling for ESG roles in Retail includes courses on sustainability principles, industry-specific regulations and standards, and best practices for reducing greenhouse gas emissions, improving working conditions, and increasing transparency.
While training will provide an understanding of sustainability principles and how to apply them to the retail industry, it’s the soft skills that matter the most.
Candidates should have strong communication and leadership skills to effectively communicate the company’s ESG goals and strategies to stakeholders such as investors, customers, and employees. They should also be able to lead and motivate teams to achieve these goals.
ESG and Inclusivity
A diverse and inclusive workforce is more likely to know how environmental issues affect different areas and communities. This enables a business to introduce strategies that reflect local needs.
Inclusivity also boosts innovation and empathy and empowers employees from marginalized communities.
According to a recent study, companies with diverse leadership teams are more likely to prioritize sustainability and ESG considerations.
Shareholders and investors increasingly use ESG criteria as their benchmark for assessing future success, so a strong commitment to DE&I can boost a company’s value, appeal, and credibility with stakeholders.
Retail companies can encourage diversity by implementing inclusive hiring practices, providing equal opportunities for career advancement, and creating a culture of inclusion.
How to Implement an Effective ESG Workforce Strategy
Going green requires more than just making a statement. ESG initiatives must be effectively executed in order to deliver the results that stakeholders expect. The lack of a dedicated team and a defined structure of responsibilities are two of the most common roadblocks to a successful ESG program.
Draup for Talent can help in this endeavor by analyzing ESG team structure and job roles across the Retail industry. The AI-powered platform provides deep insights into workforce planning to build future ESG teams.