Why Diversity, Equity, and Inclusion (DEI) and Environmental, Social and Governance (ESG) Matters for London Companies Recruiting in 2024

Why Diversity, Equity, and Inclusion (DEI) and Environmental, Social and Governance (ESG) Matters for London Companies Recruiting in 2024

Why Diversity, Equity, and Inclusion (DEI) and Environmental, Social and Governance (ESG) Matters for London Companies Recruiting in 2024

Diversity, equity, and inclusion (DE&I) is one of the main priorities for London companies recruiting in 2024. While DE&I might seem like vanity metrics, the stats back up the effectiveness of this strategy. It’s why 90% of Fortune 500 companies have launched DE&I groups in recent years.

Today’s executives are more likely to put their values first, choosing to work with companies that have Environmental, Social, and Governance (ESG) strategies that reflect their beliefs. ESG and DEI go hand-in-hand for London companies seeking up-and-coming talent and senior executives alike.

The stats speak for themselves. Companies that prioritise DEI are 35% more likely to outperform their competitors who do not prioritise equity in recruitment. Likewise, companies who develop a strong ESG strategy are more likely to attract potential investors, with almost 90% considering ESG issues as an integral factor influencing their investment approach.

Exec Capital is a boutique executive recruitment agency based in London that operates throughout the UK with a growing international presence with a serviced office in Dubai. We’re passionate about supporting London companies with their DEI and ESG strategies with our executive recruitment services. We offer specialist recruitment for senior executives across multiple industries and specialisms, including risk management, compliance, fundraising, and private equity.

This guide takes an in-depth look at why DEI and ESG should matter for London companies planning to recruit in 2024.

What is Diversity, Equity, and Inclusion (DEI)?

Diversity, equity, and inclusion (DEI) are three values that should guide a company in its recruitment and employee relations strategies.

Companies with a diverse workforce that focuses on equity and inclusion attract industry-leading talent and are capable of better responding to challenges, relating to a wider spectrum of customers.

DEI can be broken down into three sections:

  • Diversity can be split into four categories: age, ethnicity, gender, physical ability, and neurodiversity. Modern workplaces should strive to have employees of all genders across various generations and of different cultural backgrounds.
  • Equity covers the treatment of people, including the practices and policies implemented by a company during the recruitment process and as part of their company culture. Equity is not the same as equality as it considers an individual’s circumstances, which may require them to be treated differently to create an equal result, such as making reasonable adjustments to support a neurodiverse employee.
  • Inclusion relates to how employees are treated in the workplace and how they can contribute to the company culture. Companies should have initiatives in place that allow employees to feel that their voices are heard. Inclusion is not just a box-ticking exercise, it’s a crucial part of employee retention and unlocking the potential of a diverse workforce.

Why DEI Matters For Recruitment in 2024

Research from McKinsey shows that companies that prioritise DEI outperform their competitors and attract top talent, providing a clear correlation between performance and diverse workforces.

48% of Gen Z are racial or ethnic minorities, with companies needing to put systems in place to address issues like unconscious bias and curate a workforce that better reflects their customers. Prioritising DEI as part of a company’s recruitment strategy is a win-win, with 57% of employees wanting their company to be more proactive with diversity initiatives.

  1. Different Perspectives

Companies with a diverse workforce can take advantage of the different perspectives their employees bring to the table. These perspectives are also a reflection of the diversity of skills and experience employees can contribute to everyday operations and company strategies.

  1. Company Reputation

DEI incentives improve the brand image and reputation of London companies that are actively working to become more socially responsible. A diverse workforce makes your company more appealing to potential customers and top talent, allowing you to build a community, explore new markets, and attract potential investors.

  1. Improves Employee Retention

Companies with higher levels of diversity are more likely to have a workforce that feels valued, accepted, and appreciated. Promoting DEI initiatives within your company can reduce employee turnover, lowering recruitment costs and boosting efficiency. Implementing a DEI strategy will help future-proof your business and is an investment in your long-term development.

  1. Promotes Creativity and Innovation

Diversity in recruitment matters as it cultivates a culture of creativity and innovation. Companies with an inclusion strategy are almost 2 times more likely to be innovative leaders within their industry. They’re also 1.8 times more likely to be willing and able to adapt to market changes.

The Stats Behind the Success of DEI Programmes

DEI initiatives aren’t just window-dressing or box-ticking exercises. Extensive research shows a clear correlation between DEI and improved business performance.

Employees overwhelmingly support diversity initiatives, with 52% viewing them positively. The link between diversity and performance was confirmed in a 2019 report that found that companies with higher levels of gender diversity within their executive teams are 25% more likely to have above-average profitability compared to their competitors. This statistic has been steadily on the increase, jumping from 21% in 2017 and 15% in 2014. You can unlock your company’s potential by prioritising diversity in its recruitment strategy.

McKinsey’s research also found a direct correlation between higher levels of gender diversity and outperformance compared to market competitors. Companies where women make up more than 30% of their executive team outperform their competitors by between 10 to 30%. The most gender-diverse companies within organisations outperform their least gender-diverse competitors by 48%.

Comparable statistics can be found amongst businesses that prioritise ethnic and cultural diversity. Companies in the top quartile in 2019 for ethnic and cultural diversity outperformed those in the fourth quartile by 36% higher profitability.

While the statistics are similar, outperformance levels are higher when the focus is on ethnicity over gender.

Why Every London Company Should Prioritise DEI Initiatives

There are five reasons why DEI matters for companies recruiting in London in 2024. Prioritising diversity, equity, and inclusion positively impact every aspect of a company, from its public image to its culture and profitability.

  1. Diversity leads to better decision-making by bringing different perspectives to the table. These employees can bring a new approach with their problem-solving skills and experience.
  2. Research shows that companies who are committed to DEI initiatives are 75% more likely to have a positive working culture with higher employee motivation and satisfaction.
  3. Prioritising DEI leads to better company cultures where employees feel appreciated and valued, improving employee retention, and providing a path for career development.
  4. Workplaces with higher levels of diversity can better understand and respond to customer expectations to stay competitive in rapidly changing industries. Diverse teams have greater customer insights and are more innovative.
  5. Diverse teams positively impact a company’s image and reputation. They are more likely to attract talent and build a loyal customer base.
What is Environmental, Social and Governance (ESG)?

Environmental, social and governance (ESG) is a framework for organisations to follow to take a holistic approach to sustainability and prioritise social issues. You’ll usually find the term ESG used in an investing context, but it also applies to employees, suppliers, and customers.

All these stakeholders and individuals are interested in the environmental, social and governance decisions of a company. ESG is an evolution of other policy areas, such as philanthropy and health and safety. The focus on ESG amongst consumers is why it is now a major deciding factor in capital allocation decisions by asset managers and financial institutions.

ESG stands for environmental, social, and governance. These are three separate but interlinked parts of your company’s strategy.

  1. Environmental

The company should consider its environmental impact, carbon footprint, and risk management strategy. Potential employees, investors, and consumers will judge a company by its direct or indirect contribution to greenhouse gas emissions and its use of natural resources. The environmental aspect of ESG also includes a company’s resilience to potential climate emergencies, such as flooding.

  1. Social

The social aspect of ESG consists of a company’s relationship with its stakeholders, including its employees. A company’s social performance can be measured with metrics such as human capital management, which includes fair wages and employee engagement.

Other factors include the impact a company has on the local community, either negatively or positively. The social aspect of ESG is no longer confined to the company itself or its supply chain. Companies that operate within developing economies will have particular focus paid to their labour and environmental standards, including how they support other organisations in the region.

  1. Governance

Corporate governance focuses on how companies are led and managed by their leadership teams. These leadership incentives should align with the expectations of stakeholders and shareholders. Governance includes transparency and the internal controls implemented to ensure accountability amongst senior leadership.

How ESG Impacts Recruitment in 2024

ESG is influencing how companies develop their recruitment and employee retention strategies. These decisions impact not only existing stakeholders but also prospective customers, suppliers, employees, and the wider community.

There are two ways ESG is impacting how London companies are recruiting in 2024:

  1. How Employers Brand Themselves

The executives of tomorrow are looking to start and develop their careers with companies that align with their values. Gen Z and Millennials are increasingly putting values before salary, searching for employers committed to being environmentally and socially responsible.

Employers should incorporate their ESG strategy into their marketing, displaying this across their website, social media, and recruitment advertising.

  1. Recruitment and Employee Retention Strategies

A company’s ESG and DEI decisions will impact how it can attract talent and retain employees. London-based companies are increasingly reviewing their recruitment and retention practices to become more inclusive and put their ESG strategy at the forefront. The recruitment team should be able to answer any questions from candidates about the company’s ESG strategy, as failing to do so could make top talent lose interest.

Potential Employees Put Values Above Salaries

A recent survey by Bupa found that Gen Z prioritise a potential employer’s commitment to sustainability over their prospective salary. 54% said they would even accept a pay cut to work for a company that reflects their values and ethics. Over 30% said they would reject a job offer from a company whose ESG credentials do not meet their standards.

This survey is supported by additional research that shows that 33% of candidates consider climate change when searching for job opportunities. Additionally, 68% of people in the same survey said they would like to work with a company taking proactive steps to protect the planet.

London companies should react to these findings by updating their website, social media, and corporate values to incorporate ESG goals. Candidates should be able to find this information during the application process.

Companies can no longer just use competitive salaries to attract the best talent. Research by Global Tolerance found that 44% of prospective employees prioritise the idea of ‘meaningful work’ over a higher salary, with 36% also working harder at companies where they believe their work has a meaningful impact on society.

London companies should develop an ethics and social impact policy to engage with customers and potential employees.

Attract Top Talent with Exec Capital

Exec Capital is a specialist recruitment agency based in London with an international presence, working with organisations to develop their DEI and ESG recruitment strategies to attract top talent. We recruit on a part-time, full-time, and interim basis for companies, including remote and hybrid working opportunities.

Our leadership team consists of entrepreneurs and executives who understand both sides of the recruitment process with unique insights to benefit both clients and candidates. We work with companies at every stage of their development to recruit for executive roles, including CEO, CMO, and CFO.

Start your executive recruitment process today by contacting our team at 020 3287 2365 for a no-obligation consultation. We’ll help you decide between our executive search and headhunting services to find the candidate to unlock your company’s potential with a strategy that highlights your company’s DEI and ESG priorities.