Employee Benefits and ESG: How Benefits Can Help Your Company Meet ESG Goals

ESG is having a significant impact on the way employee benefits are designed and offered. But what exactly is ESG, and how can it impact your employee benefits strategy? Read on to learn more.

Benefits 101
HR Tech

Mar 14, 2024 ⋅ 5 min read

In today's world, businesses are increasingly being judged not just by their bottom line, but also by their environmental, social, and governance (ESG) practices.  But what exactly is ESG, and how can it impact your employee benefits strategy? This article will explore the growing importance of ESG, why it matters for attracting and retaining talent, and how you can leverage employee benefits to achieve your company's ESG goals.

What is ESG?

ESG, also known as Environmental, Social, and Governance, is a way to measure a company's commitment to creating a sustainable future. Companies are evaluated not only on their financial performance, but also on their impact on environmental issues such as climate change, social issues like diversity, equity and inclusion, and governance policies related to anti-corruption.

In the workplace context, ESG translates into an organisation's commitment to practices such as reducing pollution, maintaining a diverse workforce, and having strong ethical leadership. 

They fall under these three major pillars: 


This addresses the impact on the physical environment and the risk to a company and its suppliers/partners from climate events. In the environmental category, the following factors are common examples:

  • Waste management
  • Biodiversity and ecosystems
  • Eco efficiencies
  • Climate change and greenhouse emissions (GHG)
  • Air pollution (non-GHG).


Social factors involve a company's treatment of its employees, supply chain workers, customers, community members, and other groups of people. These factors include fair pay and living wages, diversity, equity and inclusion initiatives, workplace health and safety policies, fair treatment of customers, and supplies. It measures the social impact in the community where a company operates.


These factors involve internal management practices, policies and controls, regulatory compliance, and risk management. 

Why should employers focus on ESG?

According to the Social for Human Resource Management (SHRM), ESG initiatives are crucial for attracting and retaining workers, particularly the younger generations. As Millennials and Gen Z grow in numbers in the workforce, committing to ESG goals will become more important in retaining talent as it aligns with their priorities.

Further research has shown that these generations do not tend to like working, investing or shopping in companies they consider to be out of line with their values — this also relates to companies who employ ESG strategies in the workplace. 

The SHRM research puts this in numbers as approximately 41% of US workers believe ESG strategies are important, with 46% of Gen Z and 55% of Millennials emphasising its significance. 

A strong ESG commitment, reflected in employee benefits, can enhance a company's brand reputation and attract more customers who value sustainability and social responsibility. 

Additionally, for investors who are socially and environmentally conscious, ESG enables them to screen potential and actual investments. Such investors are said to be guided by relevant ESG criteria and the sense of responsible investing (RI). Organisations can attract investors who are looking to improve their ESG goals. This supports the growth and profitability of a company. 

Employee benefits that help meet ESG goals

Aligning employee benefits with Environmental, Social, and Governance (ESG) goals creates a mutually beneficial situation for both the organisation and its employees. For companies who care about a social and responsible workplace, here are examples of employee benefits that can fast track this process. 

Environmental benefits

These are benefits that encourage eco-friendly behaviour. They include environmental schemes, subsidies from public transport like electric vehicles or cycling. 

Cycle to work schemes: A cycle to work scheme helps your organisation to meet their goals by reducing carbon footprint. 

EV Schemes: An EV salary scheme helps employees save thousands of pounds on their car costs, making an electric car a possibility for many that can't afford to buy one. EVs are environmentally friendly vehicles that help reduce emissions and support clean energy initiatives. 

Social benefits

These benefits focus on an employee's well-being. Having a comprehensive benefits package that includes programs promoting health and wellness can have a positive social impact. Examples of these benefits include:

Assisted reproduction: Assisted reproduction benefits, also known as fertility programs, help employees navigate their fertility journey alongside their work. These benefits can assist employees with fertility drugs, egg freezing, counselling, and more.

Gender reassignment: Gender reassignment includes providing support and extended paid leaves for transgender employees who wish to undergo gender reassignment surgery. This workplace benefit serves as a way for a company to support employees undergoing gender transition. This treatment can include counselling, hormone therapy, egg and sperm storage, gender reassignment surgery or whatever medication that empowers each team member to be their true selves. 

Other forms of social benefits include workplace pension and financial wellness programs.  

Governance benefits

Governance benefits typically refer to employee benefits and programs that promote strong corporate governance practices within an organisation. These benefits aim to ensure transparency, accountability, and ethical conduct in decision-making processes, as well as fostering a culture of integrity and compliance. This includes diversity and mentorship programs which help to create a more equitable and respectful workplace environment.

How is ESG changing the world of employee benefits

Employee benefits are being reshaped by the growing focus on ESG factors in the workplace.

For example, many companies are now offering retirement plans and investment options that align with ESG criteria. This empowers employees to invest their retirement savings in companies and funds that prioritise environmental sustainability, social responsibility, and good governance.

ESG principles are also influencing the design of health and wellness programs. Employers are integrating initiatives that promote physical and mental well-being, such as gym memberships, mindfulness training, and access to healthy food options, while also emphasising sustainability and community engagement.

Additionally, companies who embrace ESG are more likely to offer inclusive benefits packages that address the diverse needs of their employees. This may include parental leave, childcare support, eldercare assistance, access to fertility treatments and gender reassignment surgery and healthcare coverage for alternative medicine or mental health services.

Overall, ESG is reshaping the landscape of employee benefits by emphasising sustainability, social impact, and ethical business practices.

Final thoughts 

ESG is having a significant impact on the way employee benefits are designed and offered. Companies are increasingly offering benefits that promote sustainability, social responsibility, and ethical business practices. This is a positive trend that is likely to continue in the years to come. By aligning their employee benefits with their ESG goals, companies can create a more attractive workplace for employees and improve their brand reputation.

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