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Why Your ESG Needs DEI


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Diversity, equity, and inclusion (DEI) is more than a passing trend; it is an essential part of organizational success. A diverse, equitable, and inclusive workplace is a critical part of a healthy, happy workforce and a growing business.

While DEI programs are typically included in HR initiatives, more and more companies have started incorporating DEI into their Environmental, Social, and Governance (ESG) strategy and goals.

By tracking DEI metrics like employee retention and representation and implementing initiatives like employee resource groups and DEI committees, companies can start to build a comprehensive DEI program that employees feel good about and that strengthens the organization.

A study by McKinsey & Company found that companies that ranked lowest for both gender and ethnic/cultural diversity were 29% less likely to achieve above-average profitability. Organizations can no longer put DEI on the backburner but instead need to prioritize it as part of their corporate strategy and everyday operations.

Companies who go a step further by formalizing DEI initiatives as part of their ESG strategy and ESG reporting demonstrate a commitment to taking action on these issues and make them more accountable to stakeholders, furthering progress. If you are still unsure of the longevity of DEI or its importance in ESG management, here are 3 reasons why DEI is not going anywhere:

Employees care about DEI

Employees not only care about DEI but increasingly want their workplaces to prioritize it.

A recent survey by CNBC|SurveyMonkey found that 78% of employees say it is important to work at an organization that prioritizes DEI. The survey also found that employees who say their company is not doing enough work on DEI report lower scores on every aspect of their workforce happiness index.

Being well compensated, having opportunities for career advancement, feeling valued by colleagues, having autonomy at work, and doing meaningful work were among the top factors that employees reported contributing to their happiness rating.

A diverse and inclusive workplace is central to a company’s ability to attract, develop, and retain the talent it needs to compete in the modern marketplace. Companies that want to attract and keep the best employees need to focus on prioritizing DEI in their ESG strategies to create an inclusive and welcoming work environment for people of all backgrounds.

Remote work promotes DEI, and employees want remote work

The COVID pandemic caused a major shift in the idea of what a workplace is. With millions of employees experiencing remote work for the first time, the realization of the many benefits of a remote workforce was discovered.

Companies have found that the option to work from home attracts a more diverse workforce. Working parents, pet owners, caregivers, people with differing abilities, and individuals limited by location and other factors all highly value the increased flexibility and opportunities offered by working remotely or with a hybrid model.

A recent global survey found that up to 75% of employees would like to work from home at least two days per week. And yet another report found that 42% of Americans would change jobs for another that offers the possibility of working remotely. Companies that continue to accommodate these employees’ desires for flexibility beyond the pandemic will attract and create more diverse, inclusive, and successful teams. Your virtual zoom happy hours aren’t going anywhere anytime soon.

DEI helps improve profitability

There are a lot of critical reasons to prioritize and invest in DEI programs, but they can also improve a company’s bottom line.

The McKinsey study also found that companies that ranked highest for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability, and companies that ranked highest for gender diversity on executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation.

Overall, companies with the most ethnically/culturally diverse boards worldwide are 43% more likely to experience higher profits.

The study concluded that, “research supports that diverse and inclusive teams tend to be more creative and innovative than homogenous groups. Diverse teams bring different experiences, perspectives, and approaches to bear on solving complex, non-routine problems.”

As companies embrace DEI in their ESG management, they also reap financial benefits.

Ready to start achieving your DEI goals? We can help. The FigBytes Diversity, Equity, Inclusion Solution can help facilitate your corporation’s DEI strategy and management. Learn more about how we can help, speak with an expert today.

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