Your business may have a number of different goals – and I’m betting that one of them is to make money, if you’re in the for-profit arena. But it’s also important to develop your ESG goals alongside.
ESG stands for Environmental, Social and Governance: i.e. the ways in which you might seek to make a positive impact on a local, national or international level.
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Why you should care about ESG
The obvious reason to care about your business’s ESG strategy is to feel good about what your company is doing! You might rest a little easier knowing you’ve taken action to improve the positive impact of your business.
But there are other benefits, too. Studies show that 58% of businesses improving their ESG strategy saw higher financial performance, with a potential profit-boost of up to 60%. Having a robust ESG strategy can also help convince investors that your business can build and maintain a good reputation. What’s more, it may help you recruit and retain motivated employees, with 71% of job seekers looking for companies with strong environmental credentials.
How is salary sacrifice relevant to an ESG strategy?
Salary sacrifice schemes now cover a range of different employee benefits. The principle is similar across all of these: the employee ‘sacrifices’ (or ‘exchanges’) a portion of their salary in return for the benefit. This can then lower their National Insurance bill, and, in some cases, yours too. For some employees, it may also help them duck below certain tax thresholds.
While salary sacrifice schemes are a well-known part of creating an employee benefits strategy, they can also help support your ESG goals:
1. Go green
Two great benefits that help your employees lower their environmental impact are electric vehicle leasing and a cycle to work scheme.
Electric vehicles have zero tailpipe emissions, meaning they don’t release as much pollution as regular cars. This can help to keep our air cleaner and our bodies healthier. At the moment, there are various ways in which they are also cheaper to charge, maintain and drive in restricted clean-air zones, too. However, they can be more expensive to purchase than a petrol car. So a leasing scheme can be a great solution.
Employees pay for the lease over time through sacrificing some of their pre-tax salary, which saves them money in the long term (an average of £1,000 per year, per car).
If employees would prefer to cycle, a cycle to work (aka ‘cycle 2 work’) scheme lets them lease cycling equipment, with tax savings that ultimately take down the ultimate cost.
Both of these schemes can help your employees transition away from more polluting forms of transport to options that are greener, more sustainable, and lower cost.
2. Boost employee wellbeing
The social positive part of your ESG strategy might include special attention to your employees’ wellbeing. Financial wellbeing should be a core part of this – stronger financial wellbeing can mean lower stress and more productivity.
A salary sacrifice pension arrangement can fit in well with your financial wellbeing strategy. Firstly, it can help eligible employees unlock a small pay boost that they can use to start building a savings pot, or cover expenses. The process of making the switch and educating your employees can also help them understand and appreciate their pension savings more, helping them build towards a more secure future.
You can also choose to add your employer National Insurance savings into their pension pots for an added savings bonus, or you might use these to invest in other benefits for your employees.
Another great salary sacrifice option to improve financial wellbeing is the workplace nursery scheme. This can help lower childcare costs for employees with families, making a big difference to their day-to-day finances.
3. Work with trusted providers
Compliance is an important part of effective governance, as is making sure you apply any benefits fairly and ethically. Working with a trusted provider to arrange your salary sacrifice benefits can make a big difference: they can help you stick to the rules and guidelines, educate employees fully about any risks and changes involved in the schemes, and get your paperwork in order.
Maji brings together a range of carefully chosen salary sacrifice providers. The Maji team can also help you set up and run your salary sacrifice pension arrangement, alongside its comprehensive financial wellbeing app, which provides the education your employees need to fully appreciate the scheme and get the most out of it. Its service has supported thousands of employees to build their financial wellbeing, as well as helping their employers implement impactful benefit suites that really make a difference.
To find out how Maji could help your company reach your ESG goals, get in touch for a chat.
