From a Company’s Purpose to the Personal
In this article, originally published in EDHEC Vox Magazine #15, Geert Demuijnck, EDHEC Professor, explores the links between governance, ethics and extra-financial performance.
n recent years, there has been an upsurge in powerful statements among graduates from leading institutions. A new term, “bifurcators,” (1) has even been coined to describe those who are pushing their schools to adapt their curricula to address the ecological transition. Successive studies confirm these new priorities expressed by the younger generation. Among the issues that young business school graduates are most concerned about, ethical governance ranks third, behind environmental and social impact, according to a study conducted by the EDHEC NewGen Talent Centre (2).
How are these underlying trends reflected in the professional world? A study carried out by
the French market research institute Opinionway (3) in September 2022 revealed that nearly 80% of respondents consider a company’s environmental and societal commitments to be either “important” or “a top priority.” In other words, younger generations are as concerned about their employer’s societal actions as they are about their own role within the organisation.
These aspirations have concrete consequences. According to a KPMG UK study in January 2023 (4), nearly 20% of UK employees have turned down a job because it didn’t match their environmental values. Last year, there was even talk of a potential wave of “green resignations,” or “climate quitting.” KPMG UK also found that 1 in 10 employees are actively seeking a job linked to environmental, social and governance (ESG) objectives, a figure that rises to 14% among 18- to 24-year-olds.
It All Starts with Governance
These considerations are not new. Back in 1971, the first fund to incorporate ESG criteria into investment processes appeared in the United States: the Pax World Fund. Pax World scrutinises a company’s activity on three levels: its environmental impact, the way humans are treated throughout the value chain, and the structure’s governance.
‘It’s interesting to note that students rank governance ethics third, behind a company’s environmental and social impact. In reality, governance is the main lever for driving change,’
explains Geert Demuijnck, PhD, professor of governance ethics at EDHEC. ‘The ‘tone at the top,’ meaning the leadership’s commitment to these issues, is crucial.’
Indeed, while major players in France such as Auchan, Veolia or L’Oréal give weight to internal “ethics functions” or ethics committees, this is not yet the norm in most organisations. ‘Much depends on the relationship between the chief ethics and compliance officer and the board of directors or CEO,’ Demuijnck adds.
Nevertheless, tools to measure governance quality do exist. Such processes can ensure that a company isn’t associated with dubious business practices, conduct analyses of board composition (e.g., examining gender balance or the separation of CEO and board chair roles), verify the existence and use of an internal whistleblower protection system, and check the presence of an ethics committee and a code of conduct. These are all factors that contribute to a company’s non-financial performance.
When Regulations Matter
This performance can also be quantified, as dedicated agencies use a list of over 100 indicators to evaluate companies.
‘However, depending on the country and its regulations, not all results are comparable,’ notes Demuijnck. “For example, in France, the requirement for gender quotas on boards (similar to Norway and Iceland) puts us at the top of the rankings — alongside Finland, which has a similar percentage of women without imposing quotas.’ In France, regulations have been particularly attentive to civil society’s expectations, first requiring the evolution of corporate governance at the national level in 2016 with the Sapin 2 law on transparency, anti-corruption, and modernising the economy. This was followed in 2017 by the law on the duty of vigilance for parent companies and subcontractors.
‘France has been a pioneer on several issues, such as the duty of care and the fight against sexism and harassment,’ says Demuijnck.
At the European level, the directive on pay transparency will also force companies to act and may even penalise them for unjustified pay gaps. ‘Certain legal standards are often essential, because these measures come at a cost. For example, a company may have to give up a
lucrative contract with a country that violates several fundamental human rights,’ Demuijnck continues. ‘The good news, however, is that ethical and profitable companies do exist.
Beyond the often cited examples such as Patagonia, many companies manage to be profitable while adequately handling the ethical challenges posed by their activities, even if it sometimes
results in minor financial trade-offs.’
Candidates Scrutinise Non-Financial Performance
From a recruitment perspective, rigorous labels like B-Corp have made ethical commitments easier to read, although understanding all the nuances can be complex. The “Great Insights”
survey by Great Place to Work conducted in January 2024 revealed that 86% of employees
said they would choose a Great Place to Work-certified company over another with an identical job offer.
But beyond governance structures, it’s the day-to-day interactions within a company that make the real difference. From feedback culture to slow management, soft management,
and positive leadership, ‘it’s clear that today’s employees are seeking companies that prioritise dialogue. Unfortunately, there is still some mistrust at the top,’ warns Demuijnck. ‘Fostering a participative culture would lead to greater autonomy and accountability for employees. The company stands to gain a lot from this.’
References
(1) Face à l’urgence écologique, comment le discours des étudiants « bifurqueurs » d’AgroParisTech a essaimé. Le Monde, avril 2023 - https://www.lemonde.fr/campus/article/2023/04/25/face-a-l-urgence-ecologique-comment-les-etudiants-bifurqueurs-d-agroparistech-ont-rendu-credible-une-voie-alternative_6170880_4401467.html
(2) NewGen, NewJob - Baromètre des enjeux du premier emploi (3e éd.), nov. 2023 - https://www.edhec.edu/sites/default/files/2023-11/202311_Baromètre_3ème%20edition.pdf
Do recruiters truly understand the aspirations of the new generation of students? Sept. 2024, The Conversation / EDHEC Vox - https://theconversation.com/do-recruiters-truly-understand-the-aspirations-of-the-new-generation-of-students-240830
(3) Le rapport des jeunes à l’emploi, sept. 2022. Opinion Way - https://www.opinion-way.com/wp-content/uploads/2025/01/OpinionWay-pour-Le-Parisien-Economie-Indeed-Les-jeunes-et-leur-rapport-a-lemploi-Septembre-2022.pdf
(4) Climate quitting - younger workers voting with their feet on employer’s ESG commitments, Jan. 2023, KPMG - https://kpmg.com/uk/en/media/press-releases/2023/01/climate-quitting-younger-workers-voting-esg.html
(5) Great Insights 2024 : dans la tête des salariés français (2024) - https://content.greatplacetowork.fr/dossier-great-insights-2024
Photo de Mimi Thian sur Unsplash
