The Importance of ‘S’ in ‘ESG’

As investors continue to find that companies with stronger environmental, social, and corporate governance (ESG) controls outperform their counterparts, one area of ESG that could demand further attention this year is diversity and inclusion, but why is that?

The pursuit of diversity is about more than just doing the right thing. Diversity in the workplace is all about creating an inclusive environment that accepts every individual’s differences, enabling all employees to reach their full potential and, as a result, help your organisation to reach its full potential. When you recognise each person’s differences, you allow each person to offer their unique experiences, which can have a massive impact on their work, other employees, motivation, productivity, and customer experience.

So, what is a diverse workforce?

A diverse workforce comprises people from various backgrounds and levels of expertise. These may include:

  • Age
  • Ethnicity
  • Religious & political beliefs
  • Gender
  • Physical abilities
  • Sexual orientation

Workplace diversity is not a passing fad; it is something that most businesses should strive for. While it will help your reputation, numerous other practical benefits will help your company’s bottom line. So, what are the primary advantages of workplace diversity?

  1. Better hiring: Diversity promotes your brand and positions your organisation as an attractive place to work. This allows you to attract excellent personnel from a variety of backgrounds.
  2. Become more progressive as a business: The workforce, in general, is evolving, with more women, ethnic minorities, and LGBTQ+ members contributing essential talents and expertise. People are becoming more forthcoming about their identities. Businesses that embrace this will prosper in the long run.
  3. Increased innovation: Those with a more diverse workforce frequently describe working as a “melting pot of fresh ideas,” thanks to the variety of perspectives provided by employees.
  4. Greater employee retention: Employee retention improves when you value and accept your personnel. Employees who feel welcome, included, and respected are less inclined to seek work elsewhere.
  5. Increased productivity: Diversity and productivity are strongly intertwined. A diverse team is more likely to understand your clients’ wants and devise solutions to meet them. Diversity in the workplace will boost employee morale and instil a desire to be more successful and efficient at work. This will significantly increase your company’s productivity.
  6. Reach a broader audience of customers: A varied workforce is required to target a broad spectrum of consumers. By hiring people from various backgrounds, languages, and so on, you may ensure that your company appeals to a wider target market. Your employees will be able to interact with customers from various walks of life since they come from diverse backgrounds.
  7. Increased Revenue: Increasing revenue is a top priority in any business. By realising the full benefits of a diverse workforce, you will get closer to your ultimate aim of growing revenue. According to recent studies, organisations with a diverse workforce and enhanced innovation achieve higher revenue than companies with lower diversity scores. The proof is in the numbers.
  8. Enhance your brand’s reputation: It is no longer sufficient to carry out your business role — if you want your company to succeed, you must develop a great employer brand. One with a diverse workforce will contribute to your brand by demonstrating that you are an inclusive and forward-thinking company. You’ll be perceived as a brand that people want to work with, which can help with staff recruitment and business growth.
  9. Investors want Diversity & Inclusion in their portfolios: Portfolio managers and analysts use a company’s diversity statistics and programmes to use diversity and inclusion to measure their effectiveness in growing and contributing positive returns to their portfolio. A good diversity and inclusion policy encourages diversity of thinking and helps investors incorporate this into their decision-making.
  10. The ‘S’ in ESG can help you take your company to the top: “Companies in the top-quartile for ethnic/cultural diversity on executive teams were 33 per cent more likely to have industry-leading profitability,” according to a McKinsey & Company analysis.

The fact that this association is so robust shows that the ‘Social’ aspect in ESG can be a crucial differentiator among growing companies.


Investors will consider significantly more than just profitability when valuing enterprises in the future. The diversity of your workforce, the inclusiveness of your culture, and your contribution to ESG issues in the world will all be equally vital in attracting money to your company to fuel growth.

Get in touch to learn more about how DataGardener and our new solution ESG system can help take your company to the next level.

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