Environmental, Social, and Governance (ESG) Concerns  89
Employee Productivity Uplift
A strong ESG proposition can help companies attract and retain quality 
employees, enhance employee motivation by instilling a sense of purpose, 
and increase productivity overall. Employee satisfaction is positively corre-
lated with shareholder returns.11 For example, the London Business School’s 
Alex Edmans found that the companies that made Fortune’s list of the 100 
Best Companies to Work For in America generated 2.3 to 3.8 percent higher 
stock returns per year than their peers, measured over a period of more than 
25 years.12 Moreover, it has long been observed that employees who report 
feeling not just satisfied but also connected perform better. The stronger an 
employee’s perception of impact on the beneficiaries of their work, the greater 
the employee’s motivation to act in a “prosocial” way.13
Recent studies have also shown that positive social impact correlates with 
higher job satisfaction, and field experiments suggest that when companies 
“give back,” employees react with enthusiasm. For instance, randomly se-
lected employees at one Australian bank who received bonuses in the form 
of company payments to local charities reported greater and more immediate 
job satisfaction than their colleagues who were not selected for the donation 
program.14
Just as a sense of higher purpose can inspire employees to perform bet-
ter, a weaker ESG proposition can drag productivity down. The most glaring 
examples are strikes, worker slowdowns, and other labor actions within an 
organization. But it’s worth remembering that productivity constraints can 
also manifest outside of a company’s four walls, across the supply chain.15 
Primary suppliers often subcontract portions of large orders to other firms or 
rely on purchasing agents, and subcontractors are typically managed loosely, 
sometimes with little oversight regarding workers’ health and safety.
11 A. Edmans, “Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity 
Prices,” Journal of Financial Economics 101, no. 3 (September 2011): 621–640.
12 A. Edmans, “The Link between Job Satisfaction and Firm Value, with Implications for Corporate 
Social Responsibility,” Academy of Management Perspectives 26, no. 4 (November 2012): 1–19.
13 A. M. Grant, “Does Intrinsic Motivation Fuel the Prosocial Fire? Motivational Synergy in Predicting 
Persistence, Performance, and Productivity,” Journal of Applied Psychology 93, no. 1 (2008): 48–58; A. M. 
Grant, “Relational Job Design and the Motivation to Make a Prosocial Difference,” Academy of Manage-
ment Review 32, no. 2 (April 2007): 393–417; and J. S. Bunderson and J. A. Thompson, “Violations of 
Principle: Ideological Currency in the Psychological Contract,” Academy of Management Review 28, no. 
4 (2003): 571–586.
14 J.-E. De Neve et al., “Work and Well-Being: A Global Perspective,” in Global Happiness Policy Report, 
ed. Global Council for Happiness and Wellbeing (New York: Sustainable Development Solutions Net-
work, 2018).
15 A.-T. Bové and S. Swartz, “Starting at the Source: Sustainability in Supply Chains,” McKinsey & Co., 
November 2016, www.mckinsey.com.