Millennials and Gen Z Are Willing to Accept Lower Wages to Work in More Sustainable Firms
Firms in more environmentally friendly sectors are better able to attract and retain talent and at lower wages. Millennials and Gen Z, who are climbing the corporate ladder, have more pronounced preferences for sustainability. Investing into environmentally friendly policies thus has increasingly important consequences for firms’ human resources strategies and firms can potentially do well by doing good.
Investor and corporate interest in sustainability—or more generally, in environmental, social, and governance (ESG) issues—has never been higher. Institutions that have committed to sustainability principles now hold half of global institutionally owned public equities. In a similar spirit, survey evidence suggests that only seven percent of Fortune 500 CEOs believe that firms should mainly focus on making profits and not be distracted by social goals. In their 2017 paper, Oliver Hart and Luigi Zingales argue that this is perfectly consistent with the fiduciary duties of corporate directors: Companies should maximize shareholder welfare, not value.
At the same time, research by Roland Benabou and Jean Tirole suggests investing in sustainable business practices can actually contribute positively to firm value, and thus firms can …
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