Over recent months, even sustainability superstar Unilever – renowned for purpose-led brands – has blotted its climate copybook, attracting criticism for scaling back some of its environmental and social pledges.

Similar retreats by other high-profile companies – including Amazon and BP – alongside  an attempt to weaken its own standards around emissions reductions by the influential Science Based Targets Initiative, hints at winds of change.

In April, Forbes talked of “the rise and fall of ESG” in an article which suggests interest in environment social and governance may have peaked in 2023; particularly in the US. To some, ESG has become a polarising – and increasingly “weaponised’ – term.

However, its authors remind us that sustainability is no fad: “The climate crisis is real and capitalism is in danger due to public backlash to rising income inequalities and declining living standards,” they write. “The fundamental questions about the social purpose of the firm are even more important today than ever before.”

In fact, Natalie Runyon, director of ESG content and advisory services at the Thomson Reuters Institute, predicts that 2024 will be the one “in which companies will begin to take ESG activities seriously, proving once and for all that ESG is here to stay”.

The ESG carrots and sticks

An expectation of corporate sustainability can be seen among younger generations; Deloitte’s global 2024 Gen Z and Millennial Survey concludes that environmental sustainability drives career decisions and consumer behaviours.

Two in 10 Gen Zs and millennials have already changed jobs or industries to better align their work with their environmental values, with another quarter of both cohorts planning to do so in future.

In the UK, research by employee benefits tech provider Zest found that half of workers want to see their company invest more in sustainability; this rose to 61% of younger workers aged 18-34.

A focus on ESG is clearly vital for talent retention and attraction in a highly competitive skills market. But there are other important motivators (not least a proven link between sustainable business practices and a healthy bottom line).

Risk management is one key driver – with stakeholders scrutinising corporate ESG performance to assess a firm’s risk exposure and likely future financial performance. There is also the growing threat of ESG litigation, and of reputational damage where inauthenticity is perceived.

Runyon’s comments

“Greenwashing is expected to be more clearly defined legally and carry weightier repercussions,” warns Runyon at Thompson Reuters, pointing to the EU’s progress towards eradicating greenwashing via new rules to limit false advertising.

Earlier this year, a Dutch court found against the airline KLM in a sustainability advertising case brought by local environmental NGOs.

Regulation is spiralling – from the EU’s Corporate Sustainability Reporting Directive (CRSD), requiring companies to report on the impact of corporate activities on the environment and society, and audit reported information – to the UK’s TPT Disclosure Framework. Published in October 2023, the latter is predicted to form the basis of legal and regulatory requirements.

“2024 is when CSRD begins to bite,” asserts multinational law firm Clifford Chance. “We expect to see businesses within and outside the EU grapple with the implementation challenges brought by the CSRD through this year and beyond.”

A strategic imperative

Today, then, ESG is a thread that runs through every aspect of business operations – from corporate governance and finance to recruitment and talent management. To navigate its challenges and benefits, companies must instil principles of sustainability into their culture and hire proactively for sustainable skills and mindsets.

This means moving beyond simply ‘filling positions’ to building a workforce that reflects an organisation’s long-term commitment to ethical practices – by embedding ESG principles into every aspect of its talent strategy. Recruitment processes must be transparent, ethical and accountable, with clear policies on anti-discrimination, fair pay and acceptable behaviour. We should value diversity and champion inclusion.

Increasingly, we will be seeking candidates with specific expertise in areas such as renewable energy, environmental management and sustainable finance. A number of companies are creating ESG controller positions to manage the integration of ESG issues into an organisation’s operations and financial reporting protocols.

But for all roles, we will be looking for individuals who have a strong alignment with our culture and vision – and a willingness to enhance these.

What will the focus be on?

The focus will be on bringing in skilled people who are keen to embrace environmental issues (such as reducing their own carbon footprint), committed to creating positive social impact (including helping to improve workforce culture), and motivated by sustainability benefits and goals.

Zest’s research found that more than four in 10 businesses report an increase in the number of employees asking for sustainable benefits, such as leasing electric or low-emission cars via a salary sacrifice scheme. And many high-profile businesses  – such as Tesco and The Lego Group – are now tying executive bonuses to sustainability measures.

As Deloitte points out in its Green Skills for the Economy report: “Embedding a green culture will need strategies to break established habits. Through incentives and role modelling, an organisation can send clear signals on how it intends to operate and which behaviours it values.”

What’s next for sustainable hiring?

While the UK is making strides in sustainable hiring practices, leaders include Germany, which has a strong regulatory framework around sustainability (and companies such as Siemens at the forefront of sustainable innovation). The Netherlands actively promotes progressive environmental policies, while Sweden consistently ranks high in sustainability indices.

But there is evidence of momentum across Europe; a focus on acquiring green skills and mindsets. As regulation ramps up, trends include more roles focused on ESG data analysis and reporting, an emphasis on cross-functional ESG roles, and the linking of executive bonuses to meaningful sustainability goals.

This supports Runyon’s view that 2024 will prove pivotal to progress. “ESG issues will transition from being optional extras to integral elements of corporate strategy, essential for generating sustained value,” she forecasts.