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SSE, Barclays and Aviva have all experienced vocal activist investors forcing shifts in company policies and strategy in the past few years.
More recently debates over ED&I, ESG, or other areas mean that HR need to develop the skills to communicate and engage meaningfully with investors to promote, launch and protect key policies and practices.
Profitability or Sustainability? BP’s Strategy Switch
BP’s recent strategic pivot highlights the clash between investors and employees. With investors unhappy about the firm’s financial performance, BP has confirmed it will increase investment in oil and gas by about 20% to £7.9 billion a year while decreasing renewables funding by more than £3.9 billion. This decision comes just weeks after the energy company announced plans to cut roughly 5% of its global workforce – around 4,700 employees.
For shareholders focused on profitability and catching up with competitors like Shell and Exxon, these changes are welcome, if not overdue. However, for employees, the cuts to jobs and investment in renewables are unlikely to be popular. Recent years have seen a significant shift in employee and candidate expectations regarding their (prospective) employer’s commitment to sustainability and ESG goals, driven in part by the attitudes of younger generations entering the workplace.
The Impact on Employer Brand
According to 2024 YuLife and YouGov research, 61% of surveyed millennials and Gen Z workers feel their companies could “do more” on ESG. According to Edelman, 62% of employees would think better of their company if it invested more in environmental initiatives.
The study also finds that employers who fail to meet sustainability performance expectations could struggle to attract and retain talent.
42% of respondents said they were more likely to work for a business that shows a commitment to sustainable causes, while 37% would avoid companies with a poor track record in green initiatives.
HR Headaches over ESG Clashes
BP can expect pushback from employees across the board. This year has shown how willing workers are to publicly rally against their employer. For example, some of Meta’s UK staff wrote to the social media giant after it scrapped fact-checking initiatives and its ED&I department, stating they felt “incredibly let down.” The employees expressed concern over Meta’s future direction and the potential impact of policy changes on employees and the company’s reputation, including its ability to attract and retain talent.
According to a December 2024 study by Grid, nearly 9 in 10 HR decision-makers in the UK (86%) said they are prioritizing ESG-aligned benefits, up 34% from 12 months prior. These cases exemplify the tug-of-war facing HR departments, which see the risks posed to employer brands by strategic pivots away from sustainability.
Long-term Applications
While BP’s move to cut renewables may appease some shareholders, HR professionals understand the potentially long-lasting scar it may leave on the firm’s employer brand, damaging its ability to attract, engage, and retain employees. The strategic pivot may relieve some short-term pressure on the business but at the expense of a clear marker for future generations of skilled workers who will opt to work at competitors that have not reversed their sustainability goals.
If you’re not convinced, remember that KPMG found in 2023 that one in three 18-to-24-year-olds said they had already rejected a job offer based on the company’s ESG record.
While graduates may join companies that don’t reflect their values in the current tough recruitment market, they’ll likely be off to a more values-aligned employer as soon as things picks up.
