Improvements to a company’s environmental practices and policies matter the least to employees in the Middle East when deciding if they should remain in a job. Rewards and pay increases help staff retention more than ESG priorities, according to a new survey.
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A report by professional services firm PricewaterhouseCoopers (PwC) on the preferences of executives in the Middle East workforce found that the growing environmental, social and governance (ESG) priorities of businesses in the region might not resonate with employees, with only 75 per cent of survey respondents saying they will stay in their job if environmental practices were enhanced, compared to 94 per cent indicating they were likely or very likely to stay with their current employers if fair and equitable salary increases were implemented.
Out of five considerations, ESG practices were valued the least. More employees value improvements to social policies more than governance and environmental practices.
These findings contrast sharply with employers’ aspirations. Another PwC sustainability survey of companies in the Middle East conducted this year, found that the number of companies in the region having committed to or working towards net zero goals has risen from 66 per cent in 2023 to 76 per cent this year.
80 per cent of the region’s businesses has a formal sustainability strategy, up from 63 per cent in 2023.
The latest workforce preferences survey, however, notes that working on ESG practices does help “shift the fence sitters” or employees still undecided if they should stay or leave a company, with 82 per cent of respondents saying they are more likely to stay in a copany when ESG policies are enhanced.
In the list of priorities ranked by employees PwC surveyed, salary and total reward concerns ranked the highest compared to sustainability or ESG issues. Image: PwC Middle East
Human resources practitioners highlighted the importance of companies integrating sustainability into their employees’ broad career development plans. Globally, ESG-linked compensation is on the rise, though many companies are still resistant to directly linking pay and incentives to sustainability goals.
Dubai-based Naresh Moolchandani, HR manager with international retailer Jacky’s Group of Companies, said ESG efforts do resonate strongly with employees when these are aligned with their personal values and contribute to a sense of purpose.
He suggested for companies to “authentically integrate” ESG into their culture and operations to create a more engaged and committed workforce. This would reinforce the “alignment between personal and organisational goals”, he said.
“Effective ESG practices enhance job satisfaction, attract and retain talent, and increase employee involvement.”
Beyond linking sustainability goals to career progression plans, Moolchandani also recommended for companies to better communicate the broader value of ESG principles to employees.
“Offer tangible benefits aligned with sustainability, involve employees in ESG initiatives and maintain regular feedback and recognition systems,” he added.
HR manager Manu Sharma at Dahbashi Engineering, another Dubai-based company, also prioritised clear communication on ESG initiatives. This can help make ESG “more relevant and meaningful for everyone,” he said.
“When employees see that ESG efforts improve their work environment and offer opportunities for personal development, they are more likely to care about these initiatives.”
“By involving employees in planning and carrying out these efforts and making sure ESG is part of the company’s everyday culture, businesses can make these goals feel more real and important,” Manu added.
Carbon-linked pay
The Middle East faces distinct ESG challenges, including water scarcity, political instability and social inequality. Companies in the region are beginning to move sustainability considerations higher up their agenda, motivated by shifting investor preferences and financial reasons.
Globally, shareholders and investors, especially institutional ones, are increasingly seeing ESG and sustainability issues as critical factors in longer-term value creation.
A collaborative study published last year on Stanford Business School, covering nearly 4,400 public companies in 21 countries, found linking ESG benchmarks to compensation also resulted in carbon dioxide emissions reductions, with no discernible negative impact on their bottom lines.
Similarly, a survey by Ernst and Young (EY) covering over 200 companies across 15 European countries found that 76 per cent of companies with stronger sustainability governance were more likely to expect better revenue than their less advanced counterparts.
