Cultivating Talent Retention Through Ethical Governance: How Greenwashing Harm’s Businesses

In response to the International Ethics Standards Board for Accountants (IESBA)'s¹ recent proposal aimed at curbing greenwashing through an updated ethics code, European businesses are poised to reassess their commitment to sustainability and ethical conduct. This paradigm shift extends beyond financial practices, resonating deeply with talent acquisition, onboarding, and retention strategies, thereby reshaping organisational culture and values. Let’s find out how “greenwashing” can hinder recruitment and onboarding.

Addressing Greenwashing's Influence on Talent Retention

What is “greenwashing?” Well, Greenwashing is a deceitful practice that misleads investors - and also jeopardises a company's appeal to potential employees by hurting their own employer branding. A recent academic literature review found that candidates are increasingly prioritising ethical and sustainable practices over monetary reward, and as such firms tainted by greenwashing are facing challenges in attracting and retaining top talent. The proposed ethics code offers an opportunity for organisations to align their values with candidate expectations, bolstering their employer brand and attracting talent committed to ethical conduct.

Elevating Onboarding Practices for Improved Outcomes

Effective onboarding plays a pivotal role in integrating new hires into an organisation's ethos. By incorporating discussions on sustainability and ethical conduct during onboarding, companies can communicate their dedication to responsible business practices from day one. According to Sustainable Review², this cultivates a sense of purpose and alignment among employees, empowering them to champion the company's sustainability initiatives and enact positive change.

Investing in Talent Development with an eye on Sustainability Reporting Skills

As regulatory demands for transparency escalate, the need for talent proficient in sustainability reporting and auditing intensifies. Investing in the development of such skills not only ensures compliance but also strengthens the organisation's ability to identify and address greenwashing. Providing avenues for continuous learning and professional development in this realm enhances employees' value and fosters a culture of ethical leadership.

Promoting Transparency and Accountability

A culture of transparency and accountability is paramount to the success of sustainability initiatives. Establishing clear channels for reporting unethical behaviour, including greenwashing, is essential. By fostering an environment where ethical conduct is valued and rewarded, organisations build trust among employees, mitigating the risk of reputational harm and turnover stemming from ethical lapses. AECOM³ reports that only 22% of candidates have the right reporting skills and this creates further talent shortage pressures.

Implementing Ethical Governance

The proposed ethics code serves as a guiding framework for organisations to embed ethical governance practices into their operations. By adhering to globally accepted standards of ethical behaviour, companies can enhance their credibility and reputation among employees and stakeholders. This not only facilitates talent retention but also strengthens the organisation's resilience in the face of evolving regulatory and societal expectations. Forbes⁴ reported a three-fold increase in positive brand recognition based on companies that publicly report on their UN’s Sustainable Goal targets.

Conclusion:

As European enterprises navigate the evolving landscape of sustainability and ethical governance, the proposed ethics code serves as a catalyst for bolstering talent retention strategies. Prioritising transparency, accountability, and ethical conduct not only safeguards against greenwashing but also attracts and retains talent aligned with the company's values. With the consultation on the proposed standards ongoing, organisations have a unique opportunity to synchronise their talent practices with sustainability objectives, laying the groundwork for a more ethical and resilient future.